Portfolio Review Third Quarter 2018

Transcription

1 Portfolio Review Third Quarter 2018 Q3

2 The Gherkin, London, United kingdom 3 Portfolio Series Income Fund 7 Portfolio Series Conservative Fund 11 Portfolio Series Conservative Balanced Fund 15 Portfolio Series Balanced Fund 19 Portfolio Series Balanced Growth Fund 23 Portfolio Series Growth Fund 27 Portfolio Series Maximum Growth Fund We are pleased to provide Portfolio Review, your latest quarterly report on Portfolio Series. Portfolio Review provides an enhanced level of detail on the holdings and activity in the Portfolio Series funds. A separate report is available for each of the seven Portfolios. The information provided in Portfolio Review includes: Underlying fund allocations Top 10 holdings by individual security Performance Allocations by sector, region and asset class. In addition, each report includes detailed commentary explaining the fund s performance for the quarter. The commentary is provided by CI Multi-Asset Management, CI s in-house team of investment professionals responsible for managing and monitoring the Portfolio Series portfolios. We hope you find Portfolio Review to be useful and informative.

3 Portfolio Series Income Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (November 2000) -0.7% -0.3% -0.1% 1.8% 3.5% 5.2% 6.4% 5.9% 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 Portfolio Series Income Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 59.0% 27.0% 10.0% 4.0% Government & investment-grade bonds REITs, trusts & equities High-yield bonds Cash 40.5% 34.4% 9.1% 4.3% 2.5% 2.3% 2.0% 1.8% 1.6% 1.5% Canada U.S. Cash and other countries U.K. France Emerging markets Japan Italy Switzerland Spain Equity Industry Sector Equity Market Cap 23.7% 11.9% 11.9% 8.5% 8.1% 7.8% 6.8% 5.6% 4.8% 4.3% 3.4% 3.2% Financial services Consumer staples Energy Health care Utilities Industrials Information technology Telecommunication services Materials Consumer discretionary Real estate Other 97.1% 1.6% 1.3% Large-cap Mid-cap Small-cap 3

4 Portfolio Series Income Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Signature Global Bond Fund 18.4% Signature Corporate Bond Fund 18.0% Signature Canadian Bond Fund 13.3% CI Global High Dividend Advantage Fund 7.9% CI Income Fund 6.8% Signature Tactical Bond Pool 5.6% CI Investment Grade Bond Fund 5.4% Signature Dividend Corporate Class 4.6% Cambridge Global Dividend Fund 4.6% CI U.S. Income US$ Pool 4.1% Signature Global Dividend Corporate Class 3.7% Lawrence Park Strategic Income Fund 3.4% Signature Income & Growth Fund 3.2% Cash 0.7% Signature Diversified Yield II Fund 0.5% Top Ten Holdings U.S. Treasury N/B 2.375% 30Apr20 1.3% Japan Gov t Five Year Bond 0.1% 20Dec22 1.3% U.S. Treasury N/B 2.5% 31May20 1.1% Canada Gov t Bond 1.75% 01May20 1.0% Italy Buoni Poliennali Del 1.2% 01Apr22 1.0% Ontario Province 2.6% 02Jun25 0.9% Quebec Province 2.5% 01Sep26 0.9% Canada Gov t Bond 1.25% 01Feb20 0.9% Quebec Province 3.5% 01Dec48 0.8% Canada Gov t Bond 2.0% 01Jun28 0.8% Bond Information Portfolio yield (approx.) Duration in years 3.3% 5.9 4

5 Portfolio Series Income Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Performance Summary The portfolio declined 0.3% during the third quarter of 2018, underperforming its blended benchmark (70% FTSE Canada Universe Bond Index, 15% S&P/TSX Composite Index and 15% MSCI World Index), which returned 0.0%. Contributors to Performance Key contributors to relative performance during the quarter were high-yield bonds and dividend-paying equities. Signature Corporate Bond Fund contributed to absolute performance due to its exposure to high-yield securities. Cambridge Global Dividend Fund added value over the quarter due to strong stock selection in consumer staples and information technology, as well as its overweight U.S. exposure. Signature Dividend Corporate Class made a positive relative contribution, due to strong stock selection and an underweighting in materials. 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Global Bond Fund was the biggest detractor to absolute return, yet added value on a relative basis. Canadian investors global bond returns were held back as most major foreign currencies depreciated against the loonie. Signature Canadian Bond Fund detracted from absolute return as Canadian interest rates rose. On a relative basis, the fund outperformed the benchmark (FTSE Canada Universe Bond Index) due to its shorter duration amid rising rates and an overweight allocation to corporate issues, for which credit spreads tightened. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 69.6% fixed income, 25.9% equity and 4.5% cash. The overall yield was 3.3%, while the fixed-income component had a duration of 5.9 years. We gradually trimmed our corporate bond exposure by selling Signature Corporate Bond Fund and Signature Diversified Yield II Fund. 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. 5

6 Portfolio Series Income Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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 putoption 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. 6

7 Portfolio Series Conservative Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (December 1997) -0.8% -0.1% 0.7% 3.0% 4.1% 5.8% 6.4% 5.8% 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 Portfolio Series Conservative Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 32.1% 25.4% 14.1% 12.8% 5.4% 5.3% 2.6% 1.2% 1.1% Canadian bond Foreign bond Canadian equity U.S. equity European equity Cash Asian equity Other equity Emerging markets equity 45.5% 29.2% 10.8% 3.3% 3.2% 2.4% 1.7% 1.5% 1.4% 1.1% Canada U.S. Cash and other countries Britain Japan Emerging markets France Switzerland Italy Spain Equity Industry Sector Equity Market Cap 26.2% 10.9% 10.4% 9.6% 8.6% 8.1% 7.1% 5.8% 5.5% 3.6% 2.5% 1.7% Financial services Energy Industrials Information technology Consumer staples Consumer discretionary Health care Utilities Materials Real estate Telecommunication services Other 90.8% 7.2% 2.0% Large-cap Mid-cap Small-cap 7

8 Portfolio Series Conservative Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Signature Canadian Bond Fund 21.1% Signature Global Bond Fund 15.1% Signature Corporate Bond Fund 13.2% Synergy Canadian Corporate Class 8.5% CI Income Fund 6.1% Cambridge Canadian Dividend Fund 4.9% First Asset MSCI World Low Risk Weighted ETF 4.7% Signature Select Canadian Fund 4.0% CI International Value Corporate Class 3.9% Signature Tactical Bond Pool 3.4% Cambridge Global Equity Corporate Class 2.9% CI U.S. Income US$ Pool 2.8% CI Canadian Investment Fund 2.6% Harbour Fund 2.5% CI American Value Corporate Class 2.0% Signature Emerging Markets Corporate Class 0.9% Black Creek International Equity Fund 0.7% Signature Diversified Yield II Fund 0.5% Cash 0.3% Top Ten Holdings Canada Gov t Bond 1.75% 01May20 1.5% Ontario Province 2.6% 02Jun25 1.2% U.S. Treasury N/B 2.375% 30Apr20 1.1% Quebec Province 2.5% 01Sep26 1.1% Canada Gov t Bond 1.25% 01Feb20 1.1% Japan Gov t Five Year Bond 0.1% 20Dec22 1.1% Quebec Province 3.75% 01Sep24 1.0% Quebec Province 3.5% 01Dec48 1.0% Quebec Province 3% 01Sep23 0.9% Ontario Province 2.8% 02Jun48 0.8% 8

9 Portfolio Series Conservative Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Performance Summary The portfolio declined 0.1% during the third quarter of 2018, underperforming its blended benchmark (60% FTSE Canada Universe Bond Index, 20% S&P/TSX Composite Index and 20% MSCI World Index), which rose 0.2%. Contributors to Performance In the income portion of the portfolio, Signature Corporate Bond Fund added value due to its exposure to high-yield bonds. In the equity component, Canadian, U.S. and global holdings made positive contributions. Canadian equities in the portfolio outperformed the S&P/TSX Composite Index, led by Cambridge Canadian Dividend Fund s strong stock selection in financials, industrials and materials. An overweight allocation to U.S. equities also added value. The portfolio s U.S. equities underperformed the benchmark (S&P 500 Index), but made a positive contribution on an absolute basis. This was due to defensive positioning including its cash position and an underweighting in the technology sector. Within the global equity portion, Cambridge Global Equity Corporate Class added relative value due to strong stock selection in financials 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Global Bond Fund was the biggest detractor to absolute return, yet added value on a relative basis. Canadian investors global bond returns were held back as most major foreign currencies depreciated against the loonie. Signature Canadian Bond Fund detracted from absolute return as Canadian interest rates rose. On a relative basis, the fund outperformed the benchmark (FTSE Canada Universe Bond Index) due to its shorter duration amid rising rates and an overweight allocation to corporate issues, for which credit spreads tightened. Signature Emerging Markets Corporate Class detracted on an absolute basis due to selection in information technology and materials. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 57.5% fixed income, 37.2% equity and 5.3% cash. We gradually trimmed our corporate bond exposure by selling Signature Corporate Bond Fund and Signature Diversified Yield II Fund. 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. 9

10 Portfolio Series Conservative Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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 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 putoption 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. 10

11 Portfolio Series Conservative Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (December 2001) -0.6% 0.6% 1.7% 3.7% 5.0% 6.6% 6.8% 5.1% 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 Portfolio Series Conservative Balanced Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 24.3% 21.0% 19.2% 17.3% 6.3% 6.3% 2.8% 1.6% 1.2% Canadian bond Foreign bond U.S. equity Canadian equity Cash European equity Asian equity Other equity Emerging markets equity 41.2% 32.8% 12.2% 3.4% 3.0% 2.2% 1.6% 1.6% 1.1% 1.0% Canada U.S. Cash and other countries Britain Japan Emerging markets Switzerland France Italy Spain Equity Industry Sector Equity Market Cap 24.1% 11.7% 10.7% 10.2% 8.3% 8.2% 8.1% 6.2% 5.6% 3.2% 2.5% 1.2% Financial services Industrials Information technology Energy Consumer discretionary Consumer staples Health care Materials Utilities Real estate Telecommunication services Other 91.7 % 6.7 % 1.6 % Large-cap Mid-cap Small-cap 11

12 Portfolio Series Conservative Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Signature Canadian Bond Fund 15.0% Signature Global Bond Fund 12.4% Signature Corporate Bond Fund 11.5% Synergy Canadian Corporate Class 6.9% Cambridge Canadian Equity Corporate Class 5.7% CI Income Fund 5.5% Cambridge Canadian Dividend Fund 5.3% First Asset MSCI World Low Risk Weighted ETF 5.0% CI American Managers Corporate Class 4.3% Signature Select Canadian Fund 4.3% CI International Value Corporate Class 4.1% CI Canadian Investment Fund 3.9% Cambridge Global Equity Corporate Class 3.4% Harbour Fund 2.9% Signature Tactical Bond Pool 2.0% CI American Value Corporate Class 1.8% Signature Diversified Yield II Fund 1.7% CI U.S. Income US$ Pool 1.5% Signature Emerging Markets Corporate Class 0.9% Black Creek International Equity Fund 0.9% Cash 0.7% Top Ten Holdings Canada Gov t Bond 1.75% 01May20 1.1% U.S. Treasury N/B 2.375% 30Apr20 0.9% Japan Gov t Five Year Bond 0.1% 20Dec22 0.9% Ontario Province 2.6% 02Jun25 0.9% Royal Bank of Canada 0.9% Canada Gov t Bond 1.25% 01Feb20 0.8% Quebec Province 2.5% 01Sep26 0.8% Toronto-Dominion Bank 0.7% Quebec Province 3.75% 01Sep24 0.7% Quebec Province Canada 3.5% 01Dec48 0.7% 12

13 Portfolio Series Conservative Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Performance Summary The portfolio gained 0.6% during the third quarter of 2018, underperforming its blended benchmark (50% FTSE Canada Universe Bond Index, 25% S&P/TSX Composite Index and 25% MSCI World Index), which rose 1.0%. Contributors to Performance In the income portion of the portfolio, Signature Corporate Bond Fund added value due to its exposure to high-yield bonds. In the equity component, Canadian, U.S. and global holdings made positive contributions. Canadian equities in the portfolio outperformed the S&P/TSX Composite Index, led by Cambridge Canadian Dividend Fund s strong stock selection in financials, industrials and materials. An overweight allocation to U.S. equities also added value. The portfolio s U.S. equities underperformed the benchmark (S&P 500 Index), but made a positive contribution on an absolute basis. This was due to defensive positioning including its cash position and an underweighting in the technology sector. Within the global equity portion, Cambridge Global Equity Corporate Class added relative value due to strong stock selection in financials 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Global Bond Fund was the biggest detractor to absolute return, yet added value on a relative basis. Canadian investors global bond returns were held back as most major foreign currencies depreciated against the loonie. Signature Canadian Bond Fund detracted from absolute return as Canadian interest rates rose. On a relative basis, the fund outperformed the benchmark (FTSE Canada Universe Bond Index) due to its shorter duration amid rising rates and an overweight allocation to corporate issues, for which credit spreads tightened. Signature Emerging Markets Corporate Class detracted on an absolute basis due to selection in information technology and materials. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 45.3% fixed income, 48.4% equity and 6.3% cash. We gradually trimmed our corporate bond exposure by selling Signature Corporate Bond Fund and Signature Diversified Yield II Fund. 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 13

14 Portfolio Series Conservative Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 to wealth destruction. For example, last year s investor darling, the bitcoin cryptocurrency, has plunged 66% in less than a year. 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 putoption 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. 14

15 Portfolio Series Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (November 2000) -0.6% 0.8% 2.0% 4.3% 5.9% 7.3% 7.1% 5.8% 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 Portfolio Series Balanced Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 23.7% 19.4% 18.2% 16.6% 7.8% 6.8% 3.3% 2.1% 2.1% U.S. equity Canadian bond Canadian equity Foreign bond European equity Cash Asian equity Emerging markets equity Other equity 37.2% 34.6% 13.1% 3.6% 3.1% 3.0% 1.7% 1.5% 1.1% 1.0% Canada U.S. Cash and other countries Britain Emerging markets Japan Switzerland France Bermuda Italy Equity Industry Sector Equity Market Cap 23.6% 12.1% 11.6% 9.6% 8.9% 8.4% 8.0% 6.3% 4.9% 3.1% 2.4% 1.1% Financial services Industrials Information technology Energy Consumer discretionary Health care Consumer staples Materials Utilities Real estate Telecommunication services Other 90.2% 8.2% 1.6% Large-cap Mid-cap Small-cap 15

16 Portfolio Series Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Signature Canadian Bond Fund 12.4% Signature Global Bond Fund 10.1% Signature Corporate Bond Fund 8.2% Synergy Canadian Corporate Class 7.0% Cambridge Canadian Equity Corporate Class 6.1% Cambridge Canadian Dividend Fund 5.8% CI American Managers Corporate Class 5.3% First Asset MSCI World Low Risk Weighted ETF 4.8% CI International Value Corporate Class 4.8% CI Income Fund 4.5% Cambridge Global Equity Corporate Class 4.4% Signature Select Canadian Fund 4.4% CI Canadian Investment Fund 4.3% CI American Small Companies Corporate Class 3.4% Harbour Fund 3.1% Signature Emerging Markets Corporate Class 2.5% Signature Diversified Yield II Fund 1.9% Black Creek International Equity Fund 1.8% CI American Value Corporate Class 1.7% Signature Tactical Bond Pool 1.6% CI U.S. Income US$ Pool 1.0% Cash 0.9% Top Ten Holdings Canada Gov t Bond 1.75% 01May20 0.9% Royal Bank of Canada 0.9% Toronto-Dominion Bank 0.7% Japan Gov t Five Year Bond 0.1% 20Dec22 0.7% U.S. Treasury N/B 2.375% 30Apr20 0.7% Ontario Province 2.6% 02Jun25 0.7% Walgreens Boots Alliance Inc. 0.7% Bank of Nova Scotia 0.7% Canada Gov t Bond 1.25% 01Feb20 0.6% Quebec Province 2.5% 01Sep26 0.6% 16

17 Portfolio Series Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Performance Summary The portfolio gained 0.8% during the third quarter of 2018, underperforming its blended benchmark (40% FTSE Canada Universe Bond Index, 30% S&P/TSX Composite Index and 30% MSCI World Index), which rose 1.1%. Contributors to Performance In the income portion of the portfolio, Signature Corporate Bond Fund added value due to its exposure to high-yield bonds. In the equity component, Canadian, U.S. and global holdings made positive contributions. Canadian equities in the portfolio outperformed the S&P/TSX Composite Index, led by Cambridge Canadian Dividend Fund s strong stock selection in financials, industrials and materials. An overweight allocation to U.S. equities also added value. The portfolio s U.S. equities made positive contributions on both an absolute and relative basis. CI American Managers Corporate Class outperformed the benchmark (S&P 500 Index) due to a dynamic currency-hedging strategy and the strong performance of the underlying managers. Within the global equity portion, Cambridge Global Equity Corporate Class added relative value due to strong stock selection in financials 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Global Bond Fund was the biggest detractor to absolute return, yet added value on a relative basis. Canadian investors global bond returns were held back as most major foreign currencies depreciated against the loonie. Signature Canadian Bond Fund detracted from absolute return as Canadian interest rates rose. On a relative basis, the fund outperformed the benchmark (FTSE Canada Universe Bond Index) due to its shorter duration amid rising rates and an overweight allocation to corporate issues, for which credit spreads tightened. Signature Emerging Markets Corporate Class detracted on an absolute basis due to selection in information technology and materials. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 36.0% fixed income, 57.2% equity and 6.8% cash. We gradually trimmed our corporate bond exposure by selling Signature Corporate Bond Fund and Signature Diversified Yield II Fund. 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 17

18 Portfolio Series Balanced Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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 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 putoption 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. 18

19 Portfolio Series Balanced Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (December 2001) -0.7% 0.9% 2.2% 4.4% 6.7% 7.8% 7.4% 5.8% 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 Portfolio Series Balanced Growth Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 26.9% 19.8% 15.8% 10.4% 10.3% 7.0% 3.7% 3.2% 2.9% U.S. equity Canadian equity Canadian bond European equity Foreign bond Cash Asian equity Emerging markets equity Other equity 35.1% 34.0% 14.0% 4.2% 4.1% 3.1% 1.6% 1.5% 1.5% 1.0% Canada U.S. Cash and other countries Britain Emerging markets Japan Bermuda France Switzerland Netherlands Equity Industry Sector Equity Market Cap 23.5% 13.1% 12.4% 9.7% 9.2% 9.0% 6.9% 6.7% 3.8% 2.6% 2.1% 1.0% Financial services Industrials Information technology Consumer discretionary Health care Energy Materials Consumer staples Utilities Real estate Telecommunication services Other 87.8% 10.6% 1.6% Large-cap Mid-cap Small-cap 19

20 Portfolio Series Balanced Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Signature Canadian Bond Fund 12.3% Cambridge Canadian Equity Corporate Class 10.3% Signature Select Canadian Fund 6.8% Signature Global Bond Fund 6.8% Synergy Canadian Corporate Class 6.2% Black Creek International Equity Fund 6.0% CI American Managers Corporate Class 5.9% Cambridge Global Equity Corporate Class 5.2% Signature Corporate Bond Fund 5.0% Harbour Fund 5.0% First Asset MSCI World Low Risk Weighted ETF 4.8% CI Canadian Investment Fund 4.6% CI International Value Corporate Class 3.9% CI American Small Companies Corporate Class 3.6% Signature Emerging Markets Corporate Class 3.5% CI Canadian Small/Mid Cap Fund 3.5% CI Income Fund 2.9% CI American Value Corporate Class 1.8% Signature Diversified Yield II Fund 1.2% Cash 0.5% Top Ten Holdings Royal Bank of Canada 1.1% Bank of Nova Scotia 0.9% Gilead Sciences Inc. 0.9% Toronto-Dominion Bank 0.9% CSX Corp. 0.9% Canada Gov t Bond 1.75% 01May20 0.8% Athene Holding Ltd. 0.7% Anthem Inc. 0.7% Canadian Pacific Railway Ltd. 0.7% Alphabet Inc. 0.7% 20

21 Portfolio Series Balanced Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Performance Summary The portfolio gained 0.9% during the third quarter of 2018, underperforming its blended benchmark (30% FTSE Canada Universe Bond Index, 35% S&P/TSX Composite Index and 35% MSCI World Index), which rose 1.4%. Contributors to Performance In the income portion of the portfolio, Signature Corporate Bond Fund added value due to exposure to high-yield bonds. In the equity component, Canadian, U.S. and global holdings made positive contributions. Canadian equities in the portfolio outperformed the S&P/TSX Composite Index, led by Cambridge Canadian Equity Corporate Class s strong stock selection in financials, industrials and materials. An overweight allocation to U.S. equities also added value. The portfolio s U.S. equities underperformed the benchmark (S&P 500 Index), but made a positive contribution on an absolute basis. This was due to defensive positioning including its cash position and an underweighting in the technology sector. Within the global equity portion, Cambridge Global Equity Corporate Class added relative value due to strong stock selection in financials 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Global Bond Fund was the biggest detractor to absolute return, yet added value on a relative basis. Canadian investors global bond returns were held back as most major foreign currencies depreciated against the loonie. Signature Canadian Bond Fund detracted from absolute return as Canadian interest rates rose. On a relative basis, the fund outperformed the benchmark (FTSE Canada Universe Bond Index) due to its shorter duration amid rising rates and an overweight allocation to corporate issues, for which credit spreads tightened. Signature Emerging Markets Corporate Class detracted on an absolute basis due to selection in information technology and materials. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 26.1% fixed income, 66.9% equity and 7.0% cash. 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. 21

22 Portfolio Series Balanced Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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 putoption 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. 22

23 Portfolio Series Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (December 2001) -0.5% 1.2% 2.9% 5.1% 7.4% 8.3% 7.7% 5.6% 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 Portfolio Series Growth Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 27.7% 23.3% 11.5% 11.0% 9.5% 6.7% 3.9% 3.4% 3.0% U.S. equity Canadian equity Canadian bond European equity Cash Foreign bond Asian equity Emerging markets equity Other equity 34.6% 34.0% 15.3% 4.0% 3.8% 2.8% 1.7% 1.5% 1.2% 1.1% Canada U.S. Cash and other countries Emerging markets Britain Japan Bermuda Switzerland Netherlands France Equity Industry Sector Equity Market Cap 23.2% 13.4% 12.4% 9.6% 9.2% 9.2% 7.4% 6.7% 3.8% 2.4% 2.2% 0.5% Financial services Industrials Information technology Consumer discretionary Energy Health care Materials Consumer staples Utilities Telecommunication services Real estate Other 88.0% 10.5% 1.5% Large-cap Mid-cap Small-cap 23

24 Portfolio Series Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Underlying Fund Allocations Cambridge Canadian Equity Corporate Class 13.0% Signature Canadian Bond Fund 10.5% Signature Select Canadian Fund 7.0% Synergy Canadian Corporate Class 6.3% CI American Managers Corporate Class 6.0% Black Creek International Equity Fund 5.9% Cambridge Global Equity Corporate Class 5.8% CI International Value Corporate Class 5.0% First Asset MSCI World Low Risk Weighted ETF 5.0% Marret Short Duration High Yield Fund 4.4% CI Canadian Small/Mid Cap Fund 4.1% CI Canadian Investment Fund 4.1% Signature Emerging Markets Corporate Class 3.8% CI American Small Companies Corporate Class 3.4% Harbour Voyageur Corporate Class 3.3% Harbour Fund 3.2% Cash 2.5% Marret High Yield Bond Fund 2.4% CI American Value Corporate Class 2.2% Signature Global Bond Fund 1.9% Top Ten Holdings Royal Bank of Canada 1.1% CSX Corp. 1.0% Gilead Sciences Inc. 1.0% Toronto-Dominion Bank 0.9% Canadian Pacific Railway Ltd. 0.9% Bank of Nova Scotia 0.9% Athene Holding Ltd. 0.9% Anthem Inc. 0.8% Alphabet Inc. 0.8% Praxair Inc. 0.7% 24

25 Portfolio Series Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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 income portion of the portfolio, Marret High Yield Bond Fund and Marret Short Duration High Yield Fund added relative value as credit spreads tightened. In the equity component, Canadian, U.S. and global holdings made positive contributions. Canadian equities in the portfolio outperformed the S&P/TSX Composite Index, led by Cambridge Canadian Equity Corporate Class s strong stock selection in financials, industrials and materials. An overweight allocation to U.S. equities also added value. The portfolio s U.S. equities underperformed the benchmark (S&P 500 Index), but made a positive contribution on an absolute basis. This was due to defensive positioning including its cash position and an underweighting in the technology sector. Within the global equity portion, Cambridge Global Equity Corporate Class added relative value due to strong stock selection in financials 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 Over the quarter, the portfolio s exposure to global and Canadian government bonds detracted from absolute performance. Signature Emerging Markets Corporate Class detracted on an absolute basis due to selection in information technology and materials. CI American Small Companies Fund underperformed the MSCI World Index due to its holdings in consumer discretionary and health care. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 18.2% fixed income, 72.3% equity and 9.5% cash. 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 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 25

26 Portfolio Series Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 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. 26

27 Portfolio Series Maximum Growth Fund Portfolio Review Third Quarter 2018 as at September 30, 2018 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (December 2001) -0.4% 1.6% 3.7% 6.1% 8.6% 9.5% 8.2% 6.8% 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 Portfolio Series Maximum Growth Fund, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 33.5% 27.9% 12.4% 10.0% 4.3% 4.2% 3.6% 3.1% 1.0% U.S. equity Canadian equity European equity Cash Asian equity Emerging markets equity Other equity Foreign bond Canadian bond 37.4% 28.7% 16.3% 4.7% 4.2% 2.8% 2.1% 1.5% 1.2% 1.1% U.S. Canada Cash and other countries Emerging markets Britain Japan Bermuda Switzerland Netherlands France Equity Industry Sector Equity Market Cap 22.4% 13.7% 12.8% 9.8% 9.2% 9.0% 7.5% 6.6% 3.7% 2.4% 2.2% 0.7% Financial services Industrials Information technology Consumer discretionary Energy Health care Materials Consumer staples Utilities Telecommunication services Real estate Other 87.6% 10.8% 1.6% Large-cap Mid-cap Small-cap 27