Harbour Funds Annual Financial St atements as at March 31, 2008

Transcription

1 Harbour Funds Annual Financial Statements as at March 31, 2008

2 A look inside Overview...1 Equity Funds Harbour Fund...2 Balanced Funds Harbour Growth & Income Fund...6 Notes to the Financial Statements...11 About the CI Funds Board of Governors and Letter from the CI Funds Board of Governors...15 Management and Audit Reports Legal Notice...17

3 2 Queen Street East, Twentieth Floor Toronto, Ontario M5C 3G7 Telephone: Toll Free: Facsimile: CI Investments is pleased to present the Annual Financial Statements for ABOUT CI INVESTMENTS your mutual fund holdings for the year ending March 31, Inside is important information about each fund, including financial statements and a complete list of portfolio holdings. Experience. Strength. Diversity. CI Investments has been investing on behalf of Canadians since 1965 and has grown to become one of Canada s largest fund companies, managing If you would prefer to receive future annual and semiannual financial statements and other important documents electronically, you may sign up at InvestorOnline at This service gives you easy online access to uptodate information about your account, and allows you to view and print documents such as this report and your $55 billion in assets. Two million Canadians have placed their trust in CI to help them achieve their financial goals. CI is a corporation controlled by CI Financial Income Fund, a diversified wealth management firm listed on the Toronto Stock Exchange. CI Financial had $99.6 billion in feeearning assets at March 31, account statements, trade confirmations and tax receipts. CI Investments is known for providing the industry s widest selection If you have any questions about this report or CI s funds, please contact your advisor or CI Client Services at of investment products and leading portfolio managers. Our portfolio management expertise is available through several different platforms including mutual and segregated funds, managed solutions and Thank you for investing with CI. alternative investments. Our products are supported by a complete suite of investment services. CI is proud to partner with financial advisors across Canada who offer our funds to their clients. We believe investors are most successful when they follow a sound financial plan developed with the assistance of a qualified advisor. For more information on CI, please visit us online at 1

4 Harbour Fund Statement of Investment Portfolio as at March 31, 2008 No. of Shares/ Average Fair Face Amount Cost ($) Value ($) MATERIALS (20.2%) 2,000,000 Barrick Gold Corp.* 57,831,367 89,620,000 7,500,000 BHP Billiton Ltd.* 127,283, ,915,808 2,000,000 Cameco Corp.* 36,913,952 67,580,000 4,100,000 Goldcorp Inc.* 93,208, ,221,000 4,000,000 Norbord Inc.* 23,004,722 19,960,000 1,000,000 Potash Corp. of Saskatchewan* 28,799, ,270,000 2,800,000 Rio Tinto PLC* 179,189, ,474, ,230,352 1,050,041,070 ENERGY (19.4%) 2,300,000 Canadian Oil Sands Trust 19,245,269 95,404,000 2,400,000 EnCana Corp.* 73,189, ,416,000 4,500,000 Ensign Energy Services Inc.* 31,380,998 89,460,000 1,200,000 GeoGlobal Resources Inc., Restricted Shares 9,267,180 3,399,433 2,500,000 PattersonUTI Energy Inc. 92,492,564 67,126,493 3,500,000 PetroCanada* 93,984, ,345,000 2,600,000 Suncor Energy Inc.* 73,477, ,140,000 8,500,000 Talisman Energy Inc. 47,607, ,445, ,645,605 1,010,735,926 FINANCIALS (17.5%) 2,100,000 AGF Management Ltd., Class B* 28,290,424 45,570,000 3,500,000 Bank of Nova Scotia 90,644, ,365,000 2,300,000 Canadian Imperial Bank of Commerce* 147,857, ,984,000 4,000,000 Discover Financial Services 91,713,109 67,167,549 3,300,000 Manulife Financial Corp.* 124,983, ,459,000 1,000,000 Morgan Stanley* 56,853,881 46,773,002 3,100,000 Royal Bank of Canada* 69,014, ,428,000 2,500,000 TorontoDominion Bank* 98,525, ,750, ,882, ,496,551 INDUSTRIALS (9.1%) 4,000,000 Canadian National Railway Co. 117,151, ,960,000 6,000,000 General Electric Co. 237,487, ,059, ,000 Martin Marietta Materials Inc.* 46,920,794 48,973, ,559, ,993,071 INFORMATION TECHNOLOGY (9.1%) 6,000,000 Cisco Systems Inc. 159,242, ,417,293 4,100,000 Intel Corp. 82,947,411 89,130,435 4,500,000 Microsoft Corp. 139,310, ,926,715 10,000,000 Taiwan Semiconductor Manufacturing Co. Ltd., ADR* 100,061, ,411, ,560, ,885,618 CONSUMER DISCRETIONARY (7.4%) 2,010,000 Bed Bath & Beyond Inc. 58,633,042 60,798, ,000 PetSmart Inc. 4,881,024 4,922,969 2,400,000 Ross Stores Inc.* 70,727,736 73,752,925 2,800,000 Thomson Corp.* 97,808,524 96,544,000 2,600,000 TJX Cos. Inc.* 68,943,599 88,145,092 6,000,000 Yellow Pages Income Fund 83,045,631 62,640, ,039, ,803,422 CONSUMER STAPLES (5.5%) 2,615,000 Cadbury Schweppes PLC 22,706,952 29,457,436 3,200,000 Cott Corp.* 43,661,494 11,520,000 4,200,000 Diageo PLC 66,764,417 86,924, ,000 Nestle SA, Registered Shares 52,403,206 76,809,797 2,350,000 Tim Hortons Inc. 81,434,250 82,038, ,970, ,750,016 No. of Shares/ Average Fair Face Amount Cost ($) Value ($) HEALTH CARE (0.1%) 600,000 Aastrom Biosciences Inc. 1,065, ,488 WARRANTS (0.1%) 600,000 GeoGlobal Resources Inc., Warrants (09Sep07) 6 Commission and other portfolio transaction costs (5,155,331) Total Bonds & Equities (88.2%) 3,224,798,868 4,591,950,168 Short Term Notes (12.5%) 644,141, ,808,625 DERIVATIVE INSTRUMENTS Foreign Currency Forward Contracts (0.8%) (see Schedule A) (42,190,042) Schedule A Foreign Currency Forward Contracts (0.8%) Total Investments (99.9%) 3,868,939,894 5,200,568,751 Other Assets (net) (0.1%) 7,545,756 Total Net Assets (100.0%) 5,208,114,507 Credit Fair Contracts Pay Receive Price Due Date Rating Value $ 1 (11,046,000) Australian $ 10,223,073 Canadian $ June08 A1+ (25,215) 1 (18,881,000) Australian $ 17,439,813 Canadian $ May08 A1+ (145,917) 5 (223,652,000) Australian $ 202,681,953 Canadian $ Apr08 A1+ (6,432,041) 6 (195,686,000) British Pound 388,521,294 Canadian $ Apr08 A1+ (9,435,135) 2 (23,263,000) British Pound 45,102,669 Canadian $ May08 A1+ (2,115,632) 3 (73,890,985) Canadian $ 36,602,000 British Pound Apr08 A1+ 544,596 5 (61,429,000) Swiss Franc 57,373,549 Canadian $ Apr08 A1+ (6,155,324) 1 (7,862,000) Swiss Franc 7,162,509 Canadian $ May08 A1+ (973,074) 3 (2,498,743,469) Taiwanese $ 78,147,010 US $ May08 A1+ (4,295,734) 1 (357,400,032) Taiwanese $ 11,881,650 US $ Nov08 A1+ 45,377 1 (11,881,650) US $ 11,761,051 Canadian $ Nov08 A1+ (485,183) 6 (265,555,000) US $ 266,200,237 Canadian $ June08 A1+ (6,851,033) 5 (678,273,000) US $ 691,589,466 Canadian $ Apr08 A1+ (4,949,449) 3 (78,147,000) US $ 79,344,276 Canadian $ May08 A1+ (916,278) Total Foreign Currency Forward Contracts Value (42,190,042) *Denotes all or part of securities lent. The accompanying notes and supplementary schedules are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund. 2 CIG 690

5 Harbour Fund Financial Statements Statements of Net Assets as at March 31 (in $000 s except for per unit amounts and units outstanding) Assets Investments at fair value* Cash Short term investments Margin for short sales Income taxes recoverable Daily variation margin on derivative investments Unrealized gain on derivative investments Cash collateral received for securities on loan (Note 5) Premium paid for options contract Receivable for unit subscriptions Receivable for securities sold Receivable for dividends and accrued interest Liabilities Bank overdraft Management fees payable Accrued expenses Unrealized loss on derivative investments Premium received from options contract Payable for securities purchased Payable for unit redemptions Payable for cash collateral under securities lending (Note 5) Investments sold short at fair value* Distributions payable Net assets and unitholders' equity *Investments at cost Investments sold short at cost Net assets per class (see schedule of Net Assets Reconciliation) Net assets per unit (see schedule of Net Assets Reconciliation) 4,591,950 4,036,146 16,873 21, , ,459 13,227 7,806 9,833 15,493 5,282,692 4,729, ,190 23,018 9,353 8,509 74,577 8,523 5,208,115 4,721,032 3,224,799 2,512,911 3,744,150 3,449,205 64,593 56,967 1,399,372 1,214, Statements of Operations for the years ended March 31 (in $000 s except for per unit amounts) Income Dividends Interest Securities lending (Note 5) Derivative income (loss) Income distribution from investments Less: Foreign withholding taxes Expenses Management fees (Note 4) Administrative fees (Note 4) Interest expense Goods and services tax Net income (loss) for the year Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs (see Schedule of Commissions) Realized gain (loss) on investments Foreign exchange gain (loss) Commissions and other portfolio transaction costs Capital gain distribution from investments Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments per class per unit (Note 2) 81,474 74,340 37,980 41, (5,904) (4,949) 114, ,215 73,519 65,346 7,419 6, ,645 4,485 85,591 76,421 28,467 34, , ,016 11,274 1,192 (7,313) (188,187) 107, , , , ,584 87, ,326 1,998 4,748 59, , Number of units outstanding (see Schedule of Fund Unit Transactions) 176,787, ,315,971 3,293,373 2,893,645 67,040,727 57,962,097 The accompanying notes and supplementary schedules are an integral part of these financial statements. 3

6 Harbour Fund Financial Statements Statements of Changes in Net Assets for the years ended March 31 (in $000 s) Statements of Changes in Net Assets (cont d) for the years ended March 31 (in $000 s) Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 3,449,205 3,209,691 (2,498) 3,446,707 1,060, , , ,266 (849,869) (904,288) 314, ,580 (76,603) (130,848) (28,731) (5,544) (105,334) (136,392) 87, ,326 3,744,150 3,449,205 Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 1,214,860 1,036,662 (880) 1,213, , ,377 71,549 72,633 (155,938) (166,200) 197, ,810 (52,067) (70,152) (19,512) (2,970) (71,579) (73,122) 59, ,510 1,399,372 1,214,860 Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 56,967 44,159 (41) 56,926 29,263 26,637 2,179 2,449 (23,356) (18,298) 8,086 10,788 (1,757) (2,617) (660) (111) (2,417) (2,728) 1,998 4,748 64,593 56,967 Total Fund Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 4,721,032 4,290,512 (3,419) 4,717,613 1,371,696 1,138, , ,348 (1,029,163) (1,088,786) 520, ,178 (130,427) (203,617) (48,903) (8,625) (179,330) (212,242) 149, ,584 5,208,115 4,721,032 The accompanying notes and supplementary schedules are an integral part of these financial statements. 4

7 Harbour Fund Financial Statements Supplementary Schedules Schedule of Fund Unit Transactions for the years ended March 31 Net Assets Reconciliation (Note 2) as at March 31 ($000 s except for per unit amounts) 2008 Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year 162,315, ,929,054 48,454,662 42,808,098 4,853,059 6,459,702 (38,836,384) (43,880,883) 176,787, ,315,971 2,893,645 2,329,183 1,438,048 1,393, , ,575 (1,148,084) (955,612) 3,293,373 2,893,645 Net assets per class Section 3855 adjustment on net assets Net asset value per class Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Net assets per class Section 3855 adjustment on net assets Net asset value per class 3,744,150 4,165 3,748, , ,665 Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year 57,962,097 51,325,870 12,975,585 11,308,584 3,398,984 3,539,625 (7,295,939) (8,211,982) 67,040,727 57,962,097 Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Net assets per class Section 3855 adjustment on net assets Net asset value per class ,399,372 1,557 1,400,929 Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Schedule of Commissions for the years ended March 31 (in $000 s) Schedule of Fees for the year ended March 31 (%) Brokerage commissions 2, Soft Dollar commissions Annual management fee rate Paid directly by investor Schedule of Tax Loss Carry Forwards as at March 31 (in $000 s) 2008 Annual fixed administration fee rate Net capital loss carried forward Noncapital losses expiring: Total Schedule of Securities Lending (Note 5) as at March 31 (in $000 s) Loaned Collateral (noncash) 1,013, ,166 1,077, ,149 A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund. The accompanying notes are an integral part of these financial statements. 5

8 Harbour Growth & Income Fund Statement of Investment Portfolio as at March 31, 2008 No. of Shares/ Average Fair Face Amount Cost ($) Value ($) FINANCIALS (14.5%) 1,200,000 AGF Management Ltd., Class B* 20,473,291 26,040,000 4,000,000 Bank of Nova Scotia 158,034, ,560,000 2,500,000 Canadian Imperial Bank of Commerce* 189,220, ,200,000 5,000,000 Discover Financial Services* 110,024,089 83,959,437 3,200,000 Manulife Financial Corp.* 122,612, ,536,000 1,000,000 Morgan Stanley 54,018,508 46,773,002 3,140,000 Royal Bank of Canada* 106,074, ,343,200 2,700,000 TorontoDominion Bank* 130,786, ,370, ,243, ,781,639 ENERGY (13.5%) 3,300,000 Baytex Energy Trust* 67,863,568 75,075,000 2,000,000 Canadian Oil Sands Trust 24,095,482 82,960,000 2,100,000 EnCana Corp.* 88,830, ,989,000 2,350,000 Ensign Energy Services Inc.* 20,727,577 46,718,000 2,000,000 PattersonUTI Energy Inc. 70,469,089 53,701,195 2,400,000 PetroCanada 82,305, ,208,000 2,400,000 Suncor Energy Inc. 140,019, ,360,000 6,500,000 Talisman Energy Inc. 71,046, ,105, ,357, ,116,195 MATERIALS (13.2%) 2,200,000 Barrick Gold Corp.* 69,393,069 98,582,000 4,000,000 BHP Billiton Ltd.* 68,296, ,355,097 1,800,000 Cameco Corp.* 45,136,316 60,822,000 4,000,000 Goldcorp Inc. 95,725, ,240,000 4,000,000 Norbord Inc.* 28,734,746 19,960, ,000 Potash Corp. of Saskatchewan 16,051, ,397,750 2,500,000 Rio Tinto PLC* 163,848, ,494, ,186, ,851,724 INDUSTRIALS (6.4%) 3,500,000 Canadian National Railway Co. 137,377, ,090,000 5,500,000 General Electric Co. 220,474, ,138, ,000 Martin Marietta Materials Inc.* 36,484,714 38,090, ,336, ,318,497 INFORMATION TECHNOLOGY (6.2%) 5,000,000 Cisco Systems Inc. 131,436, ,681,077 3,300,000 Intel Corp. 68,472,128 71,739,130 4,000,000 Microsoft Corp. 124,730, ,490,413 9,000,000 Taiwan Semiconductor Manufacturing Co. Ltd., ADR 82,599,440 94,870, ,238, ,780,678 GOVERNMENT BONDS (5.8%) 7,749,000 Canadian Government Bond 11% 06/01/ ,335,239 8,488,565 75,000,000 Canadian Government Bond 5.5% 06/01/2009* 77,925,000 77,458,500 75,000,000 Canadian Government Bond 5.5% 06/01/2010* 79,057,500 79,563,000 65,000,000 Canadian Government Bond % 12/01/2021* 111,103, ,729,931 75,000,000 Canadian Government Bond 6% 06/01/2011* 81,645,000 82,268,250 16,987,000 Canadian Government Bond 9% 03/01/ ,625,742 19,928, ,691, ,437,225 No. of Shares/ Average Fair Face Amount Cost ($) Value ($) CONSUMER DISCRETIONARY (5.1%) 2,270,000 Bed Bath & Beyond Inc. 66,686,973 68,662,910 1,800,000 Ross Stores Inc. 52,835,131 55,314,694 2,500,000 Thomson Corp.* 87,132,068 86,200,000 1,500,000 TJX Cos. Inc. 41,315,690 50,852,938 7,000,000 Yellow Pages Income Fund 91,867,627 73,080, ,837, ,110,542 CONSUMER STAPLES (3.8%) 2,000,000 Cadbury Schweppes PLC 20,275,949 22,529,588 3,000,000 Cott Corp.* 41,284,971 10,800,000 3,400,000 Diageo PLC 60,773,413 70,367, ,000 Nestle SA, Registered Shares* 59,668,954 76,809,797 1,900,000 Tim Hortons Inc. 65,962,250 66,329, ,965, ,835,662 Commission and other portfolio transaction costs (4,388,263) Total Bonds & Equities (68.5%) 3,710,468,275 4,500,232,162 Short Term Notes (28.4%) 1,850,451,233 1,868,293,445 DERIVATIVE INSTRUMENTS Foreign Currency Forward Contracts (0.5%) (see Schedule A) (33,028,254) Schedule A Foreign Currency Forward Contracts (0.5%) Total Investments (96.4%) 5,560,919,508 6,335,497,353 Other Assets (net) (3.6%) 244,127,559 Total Net Assets (100.0%) 6,579,624,912 Credit Fair Contracts Pay Receive Price Due Date Rating Value $ 1 (10,070,000) Australian $ 9,301,357 Canadian $ May08 A1+ (77,823) 5 (119,282,000) Australian $ 108,097,922 Canadian $ Apr08 A1+ (3,430,414) 1 (5,890,000) Australian $ 5,451,195 Canadian $ June08 A1+ (13,445) 6 (155,670,000) British Pound 308,968,597 Canadian $ Apr08 A1+ (7,609,376) 1 (21,352,000) British Pound 43,118,869 Canadian $ June08 A1+ (136,584) 2 (47,114,321) Canadian $ 23,406,000 British Pound Apr08 A1+ 485,242 1 (4,072,000) British Pound 7,895,438 Canadian $ May08 A1+ (369,744) 1 (20,055,000) Swiss Franc 20,464,703 Canadian $ June08 A1+ (297,741) 1 (3,484,000) Swiss Franc 3,174,025 Canadian $ May08 A1+ (431,212) 5 (45,752,000) Swiss Franc 42,645,971 Canadian $ Apr08 A1+ (4,670,003) 2 (1,929,305,387) Taiwanese $ 60,781,004 US $ May08 A1+ (2,862,189) 1 (384,747,264) Taiwanese $ 12,790,800 US $ Nov08 A1+ 48,849 1 (12,790,800) US $ 12,660,973 Canadian $ Nov08 A1+ (522,308) 4 (297,582,000) US $ 299,866,078 Canadian $ June08 A1+ (6,116,273) 6 (508,863,250) US $ 516,670,612 Canadian $ Apr08 A1+ (5,896,343) 2 (60,781,000) US $ 61,295,985 Canadian $ May08 A1+ (1,128,890) Total Foreign Currency Forward Contracts Value (33,028,254) *Denotes all or part of securities lent. The accompanying notes and supplementary schedules are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund. 6 CIG 691

9 Harbour Growth & Income Fund Financial Statements Statements of Net Assets as at March 31 (in $000 s except for per unit amounts and units outstanding) Assets Investments at fair value* Cash Short term investments Margin for short sales Income taxes recoverable Daily variation margin on derivative investments Unrealized gain on derivative investments Cash collateral received for securities on loan (Note 5) Premium paid for options contract Receivable for unit subscriptions Receivable for securities sold Receivable for dividends and accrued interest Liabilities Bank overdraft Management fees payable Accrued expenses Unrealized loss on derivative investments Premium received from options contract Payable for securities purchased Payable for unit redemptions Payable for cash collateral under securities lending (Note 5) Investments sold short at fair value* Distributions payable Net assets and unitholders' equity *Investments at cost Investments sold short at cost Net assets per class (see schedule of Net Assets Reconciliation) Class Z Net assets per unit (see schedule of Net Assets Reconciliation) Class Z 4,500,232 3,172, , ,581 1,868,293 1,753,654 33,053 15,899 17,608 18,497 6,645,502 5,122, ,028 25,654 7,179 7,242 65,877 7,256 6,579,625 5,115,541 3,710,468 2,326,776 3,662,900 3,156,407 36,420 26,600 2,706,790 1,744, , , Statements of Operations for the years ended March 31 (in $000 s except for per unit amounts) Income Dividends Interest Securities lending (Note 5) Derivative income (loss) Income distribution from investments Less: Foreign withholding taxes Expenses Management fees (Note 4) Administrative fees (Note 4) Interest expense Goods and services tax Net income (loss) for the year Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs (see Schedule of Commissions) Realized gain (loss) on investments Foreign exchange gain (loss) Commissions and other portfolio transaction costs Capital gain distribution from investments Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments per class Class Z per unit (Note 2) Class Z 69,058 53, ,625 87, (4,101) (3,243) 167, ,699 70,497 60,333 7,158 6, ,449 4,136 82,134 70,608 85,103 68, , ,450 11, (5,728) (67,459) 46,204 72, , , ,440 68, , ,793 83, ,581 4,673 11, Number of units outstanding (see Schedule of Fund Unit Transactions) Class Z 201,683, ,074,264 2,283,334 1,660, ,903, ,510,806 11,632,630 12,524,677 The accompanying notes and supplementary schedules are an integral part of these financial statements. 7

10 Harbour Growth & Income Fund Financial Statements Statements of Changes in Net Assets for the years ended March 31 (in $000 s) Statements of Changes in Net Assets (cont d) for the years ended March 31 (in $000 s) Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 3,156,407 2,598,121 (2,071) 3,154,336 1,238,124 1,078,336 82, ,261 (797,161) (694,757) 523, ,840 (42,971) (103,739) (41,310) (26,478) (84,281) (130,217) 68, ,663 3,662,900 3,156,407 Class Z Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 187, ,532 (123) 187,515 16,875 21,985 4,921 8,658 (35,533) (43,258) (13,737) (12,615) (2,526) (6,919) (2,410) (1,763) (4,936) (8,682) 4,673 11, , ,638 Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 26,600 21,808 (18) 26,582 20,100 18,332 1,051 1,350 (11,084) (15,242) 10,067 4,440 (575) (1,149) (552) (292) (1,127) (1,441) 898 1,793 36,420 26,600 Total Fund Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 5,115,541 3,948,977 (3,354) 5,112,187 2,247,551 1,663, , ,186 (936,532) (802,131) 1,509,880 1,096,381 (102,246) (189,068) (98,102) (48,189) (200,348) (237,257) 157, ,440 6,579,625 5,115,541 Net assets, beginning of year Section 3855 transitional adjustment Adjusted Net assets, beginning of year Capital transactions Proceeds from units issued Reinvested distributions (Note 6) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of year 1,744,896 1,131,516 (1,142) 1,743, , , ,004 96,917 (92,754) (48,874) 989, ,716 (56,174) (77,261) (53,830) (19,656) (110,004) (96,917) 83, ,581 2,706,790 1,744,896 The accompanying notes and supplementary schedules are an integral part of these financial statements. 8

11 Harbour Growth & Income Fund Financial Statements Supplementary Schedules Schedule of Fund Unit Transactions for the years ended March 31 Net Assets Reconciliation (Note 2) as at March 31 ($000 s except for per unit amounts) 2008 Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year 173,074, ,551,730 67,090,186 59,968,667 4,554,138 7,109,839 (43,035,403) (38,555,972) 201,683, ,074,264 1,660,568 1,380,581 1,236,240 1,156,652 65,908 85,465 (679,382) (962,130) 2,283,334 1,660,568 Net assets per class Section 3855 adjustment on net assets Net asset value per class Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Net assets per class Section 3855 adjustment on net assets Net asset value per class 3,662,900 1,157 3,664, , ,431 Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year Class Z Balance, beginning of year Units issued for cash Units issued for reinvested distributions (Note 6) Units redeemed Balance, end of year 104,510,806 68,673,746 57,267,564 32,883,898 6,650,793 5,905,969 (5,525,693) (2,952,807) 162,903, ,510,806 12,524,677 13,376,335 1,106,105 1,485, , ,602 (2,327,520) (2,921,764) 11,632,630 12,524,677 Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Net assets per class Section 3855 adjustment on net assets Net asset value per class Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit Class Z Net assets per class Section 3855 adjustment on net assets Net asset value per class ,706, ,707, , ,570 Net assets per unit Section 3855 adjustment on net assets per unit Net asset value per unit The accompanying notes are an integral part of these financial statements. 9

12 Harbour Growth & Income Fund Financial Statements Supplementary Schedules Schedule of Commissions for the years ended March 31 (in $000 s) Schedule of Fees for the year ended March 31 (%) Brokerage commissions 2, Soft Dollar commissions Annual management fee rate Insight Units Paid directly by investor 1.75 Schedule of Tax Loss Carry Forwards as at March 31 (in $000 s) 2008 Annual fixed administration fee rate Insight Units Net capital loss carried forward Noncapital losses expiring: Total Schedule of Securities Lending (Note 5) as at March 31 (in $000 s) Loaned Collateral (noncash) 930, , , ,029 A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund. The accompanying notes are an integral part of these financial statements. 10

13 Notes to the Financial Statements CI Mutual Funds 1. THE FUNDS The following funds are openended mutual fund trusts created under the laws of Ontario by declarations of trust or share classes of a corporation incorporated under the laws of Ontario. CI Funds Inception Date of Units Inception Date of Units Inception Date of Units CI Alpine Growth Equity Fund May 1, 1997 December 13, 1999 May 31, 2006 CI American Equity Fund May 25, 1989 July 17, 2000 July 31, 2001 CI American Small Companies Fund September 9, 1985 July 17, 2000 July 31, 2001 CI American Value Fund May 27, 1957 November 17, 2000 November 1, 1996 CI Canadian Asset Allocation Fund September 1, 1992 November 17, 2000 November 1, 1996 CI Canadian Bond Fund January 20, 1993 July 17, 2000 July 31, 2001 CI Canadian Investment Fund November 16, 1932 November 17, 2000 November 1, 1996 CI Canadian Small/Mid Cap Fund November 1, 1992 December 13, 1999 June 20, 2005 CI Emerging Markets Fund September 10, 1991 July 17, 2000 July 31, 2001 CI European Fund September 10, 1991 July 31, 2001 May 25, 2004 CI Global Fund February 28, 1986 July 17, 2000 July 31, 2001 CI Global Bond Fund August 31, 1992 July 17, 2000 July 31, 2001 CI Global High Dividend Advantage Fund January 20, 2006 January 20, 2006 May 15, 2006 CI Global Small Companies Fund April 7, 1993 July 17, 2000 July 31, 2001 CI Global Value Fund June 12, 1996 July 17, 2000 July 31, 2001 CI International Balanced Fund September 29, 1994 July 17, 2000 July 31, 2001 CI International Fund August 5, 1999 July 17, 2000 August 29, 2003 CI International Value Fund June 12, 1996 July 31, 2001 July 31, 2001 CI LongTerm Bond Fund June 15, 1989 November 17, 2000 November 1, 1996 CI Money Market Fund October 1, 1990 July 31, 2001 July 31, 2001 CI Mortgage Fund May 1, 1993 December 13, 1999 August 28, 2006 CI Pacific Fund October 31, 1981 July 17, 2000 July 31, 2005 CI ShortTerm Bond Fund May 31, 1976 November 17, 2000 November 1, 1996 CI US Money Market Fund January 30, 1995 Portfolio Select Series Select Staging Fund November 7, 2005 November 7, 2005 Select Income Managed Fund November 27, 2006 Select Canadian Equity Managed Fund November 27, 2006 Select U.S. Equity Managed Fund November 27, 2006 Select International Equity Managed Fund November 27, 2006 Harbour Funds Harbour Fund June 27, 1997 July 17, 2000 July 31, 2001 Harbour Growth & Income Fund June 27, 1997 July 31, 2001 July 31, 2001 Knight Bain Funds Knight Bain Canadian Bond Fund* (Formerly Lakeview KBSH Diversified Income Explorer Fund) July 27, 2007 July 27, 2007 July 27, 2007 Knight Bain Corporate Bond Fund* (Formerly Lakeview KBSH Premium Bond Explorer Fund) September 1, 2006 September 1, 2006 September 1, 2006 Knight Bain Diversified Monthly Income Fund* (Formerly Lakeview KBSH Equity Income Explorer Fund) September 1, 2006 September 1, 2006 September 1, 2006 Knight Bain Pure Canadian Equity Fund* (Formerly Lakeview KBSH Large Cap Explorer Fund) September 1, 2006 September 1, 2006 September 1, 2006 Knight Bain Small Cap Fund* (Formerly Lakeview KBSH Small Cap Explorer Fund) September 1, 2006 September 1, 2006 September 1, 2006 Signature Funds Signature Canadian Balanced Fund June 25, 1997 July 17, 2000 July 18, 2003 Signature Canadian Resource Fund April 11, 1997 July 31, 2001 Signature Corporate Bond Fund December 17, 2001 July 15, 2003 July 15, 2003 Signature Dividend Fund October 29, 1996 July 31, 2001 August 29, 2003 Signature Global Income & Growth Fund February 22, 2007 February 22, 2007 February 22, 2007 Signature High Income Fund December 18, 1996 July 31, 2001 August 28, 2002 Signature Income & Growth Fund October 14, 1994 July 31, 2001 March 29, 2005 Signature Select Canadian Fund May 13, 1998 July 17, 2000 July 31,

14 Notes to the Financial Statements CI Mutual Funds THE FUNDS (cont d) Synergy Funds Inception Date of Units Inception Date of Units Inception Date of Units Synergy American Fund August 31, 1992 July 17, 2000 July 31, 2001 Synergy Focus Canadian Equity Fund April 10, 2000 November 13, 2000 _ Synergy Focus Global Equity Fund January 26, 2001 January 26, 2001 _ Synergy Tactical Asset Allocation Fund September 18, 1998 November 13, 2000 August 22, 2002 Portfolio Series Funds Portfolio Series Balanced Fund November 9, 1988 November 17, 2000 November 1, 1996 Portfolio Series Conservative Fund December 1, 1997 November 17, 2000 December 1, 1997 Portfolio Series Income Fund December 1, 1997 November 17, 2000 December 1, 1997 Portfolio Series Balanced Growth Fund December 17, 2001 December 17, 2001 November 8, 2005 Portfolio Series Conservative Balanced Fund December 17, 2001 December 17, 2001 October 31, 2005 Portfolio Series Growth Fund December 17, 2001 December 17, 2001 October 11, 2002 Portfolio Series Maximum Growth Fund December 17, 2001 December 17, 2001 October 31, 2005 Name change effective July 24, The following Funds offered Insights units to investors commencing on July 15, 2003: CI American Value Fund CI Global Small Companies Fund CI Canadian Bond Fund CI International Fund CI Canadian Investment Fund CI International Value Fund CI Global Bond Fund Signature Corporate Bond Fund CI Global Fund Signature Select Canadian Fund CI Alpine Growth Equity Fund, CI Canadian Small/Mid Cap Fund and CI Mortgage Fund offered Class B units to investors commencing on December 13, Signature Dividend Fund offered Class X units and Class Y units to investors commencing August 29, Harbour Growth & Income Fund and Signature Dividend Fund offered Class Z units to investors commencing on August 29, Signature Select Canadian Fund and Signature Canadian Balanced Fund offered Class Z Units to investors commencing on August 2, CI Money Market Fund offered Class M units to investors commencing October 18, Select Staging Fund offered Class W units to investors commencing November 7, The date of inception of each Fund is shown above. units are available to all investors. and W units are available to certain investors including those who participate in feebased programs through their financial advisers or who are members of certain groups. and M units are available to institutional clients and investors who have entered into or M Account Agreements with CI Investments Inc. Insight units are issued to investors of the Insight Program, for use in feebased accounts. Class X, Class Y or Class Z units were issued to certain investors in connection with various mutual fund reorganizations and are generally only available for purchase by those investors. Effective as of close of business on July 28, 2006 the following funds were merged. The purchase method of accounting has been adopted for the merger of the Funds. Under this method, one of the Funds in each merger is identified as the acquiring Fund, and is known as the Continuing Fund, and the other Fund is known as the Terminated Fund. The mergers were effected by transferring the net assets of the Terminated Funds in exchange for securities of the Continuing Funds. The value of the securities of the Continuing Funds issued in connection with these mergers was equal to the market value of the net assets transferred from the Terminated Funds. The Terminated Funds are not included in these financial statements. The Statement of Investment Portfolio, Schedule of Income Tax Loss Carry Forwards and Net Assets Reconciliation for each of the Funds are as at March 31, 2008 and the Statement of Net Assets and Schedule of Securities Lending are as at March 31, 2008 and March 31, 2007, except for Knight Bain Funds for which the Statement of Net Assets and Schedule of Securities Lending are as at March 31, 2008 and December 31, The Statements of Operations, Changes in Net Assets, Schedule of Fund Unit Transactions, Schedule of Fees and Schedule of Commissions for each Fund are for the year ended March 31, 2008 and March 31, 2007, except for Funds established during either period, in which case the information provided relates to the period form inception to March 31, 2008 or to March 31, The Statement of Operations, Changes in Net Assets, Schedule of Fund units Transaction, Schedule of Fees and Schedule of Commission for each Knight Bain Funds are for the year ended March 31, 2008 and December 31, 2006, except for Knight Bain Canadian Bond Fund for which the information provided relates to the period from July 27, 2007 to March 31, SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The following is a summary of significant accounting policies of the Funds: Adoption of New Accounting Standards The Canadian Institute of Chartered Accountants ( CICA ) issued Section 3855, Financial Instruments: Recognition and Measurement, effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, This section establishes standards for the fair valuation of investments and the way transaction costs are recorded for financial reporting purposes. Terminated Funds CI Explorer Fund CI Canadian Growth Portfolio CI Canadian Maximum Growth Portfolio Continuing Funds CI American Small Companies Fund Portfolio Series Balanced Growth Fund (Formerly CI Global Balanced Portfolio) Portfolio Series Maximum Growth Fund (Formerly CI Global Maximum Growth Portfolio) The Canadian Securities Administrators ( CSA ) issued National Instrument 81106, section 14.2 in 2005 which requires net asset value of an investment fund be calculated in accordance with Canadian Generally Accepted Accounting Principles ( GAAP ). The adoption of Section 3855 results in a different valuation method for calculating Net Asset Value. As a result the CSA has granted temporary relief to investments funds, for the purposes of calculating and reporting net asset value other than for financial reporting purposes, from complying with Section 3855 until September 30,

15 Notes to the Financial Statements CI Mutual Funds In accordance with this decision made by the CSA, reconciliation between the net asset value calculated in accordance with GAAP (referred to as Net Assets ) and the price used for subscriptions and redemptions (referred to as Net Asset Value ) is required to be disclosed in the financial statements. This is shown in the Net Assets Reconciliation schedule. On April 1, 2007, the Funds adopted Section 3855 on a retrospective basis without restatement of prior year periods. Accordingly, the opening net assets in the Statements of Changes in Net Assets for the period ended March 31, 2007 has been adjusted. (d) Net Asset Value Per Unit Net asset value per unit for each class is calculated at the end of each day on which the Toronto Stock Exchange is open for business by dividing the net assets of each class by its outstanding units. The net asset value of each class is computed by calculating the value of that class s proportionate share of the Fund s assets less that class s proportionate share of the Fund s common liabilities and less class specific liabilities. Expenses directly attributable to a class are charged to that class. Other income and expenses are allocated to each class proportionately based upon the relative net asset value of each class. Some Funds invest only in units of underlying funds. As a result, the new standards do not impact the Funds valuation policies. The underlying fund will continue to be valued at their net asset value as reported by the fund manager. The investment transactions of these Funds are not subject to transaction costs. In accordance with Section 3855, transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities, are included in Commissions and other portfolio transaction costs in the Statements of Operations. Prior to this new standard, these costs were added to the cost of the securities purchased or deducted from the proceeds of sale. There is no impact to the net assets or the net asset value of the Funds in using either of these methods. (a) Valuation of Investments Listed securities are valued based on the bid price for long securities and the ask price for securities held short on the valuation date. Securities with no available bid prices are valued at the last traded price for the day. Unlisted securities are valued based on price quotations from recognized investment dealers, or failing that, management s best estimate of fair value. Shortterm fixed income securities are valued at the evaluated bid quotation from recognized investment dealers. Underlying funds are valued on each business day at their Net Asset Value as reported by the fund manager. This Net Asset Value is an observable market input. (e) Forward Contracts Forward contracts are markedtomarket, using a bid price on the related public exchange, each valuation day according to the gain or loss that would be realized if the contracts were closed out. All gains or losses arising from forward and swap contracts are recorded as unrealized appreciation (depreciation) on investments until the contracts are closed out or expire, at which time the gains (losses) are realized. The valuation of the investments sold forward and the value of the underlying fund are valued based on market close price. (f) Short Selling Certain Funds have obtained relief from the required regulators to engage in short selling. When a Fund sells a security short, it will borrow that security from a broker to complete the sale. The Fund will incur a loss as a result of a short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund closes out its short position by buying that security. The Fund will realize a gain if the security declines in price between those dates. The gain or loss that would be realized if, on the valuation date, the position were to be closed out is reflected in the Statements of Operations as part of Change in unrealized appreciation (depreciation) in value of investments and in the Statements of Net Assets in Investments sold short at market value. When the short position is closed out, gains and losses are realized and included in Net realized gain (loss) on sale of investments. (b) Foreign Exchange Foreign currency amounts are translated into Canadian dollars as follows: market value of investments, forward currency contracts, other assets and liabilities at the closing rate of exchange on each business day; income, expenses and purchases, sales and settlements of investments at the rate of exchange prevailing on the respective dates of such transactions. (c) Investment Transactions and Income Recognition Investment transactions are accounted for on the trade date for financial statement purposes and any realized gains and losses from such transactions are calculated on an average cost basis. Dividend income is recognized on the exdividend date and interest income on the accrual basis. Stock dividends are recorded as dividend income determined by reference to market value. For share basket forwards, forward fees are accrued daily and included in the valuation of the share basket forward. Daily variation margin on derivative instruments is treated as a cash account reflecting the daily transfer of cash on the Statement of Net Assets. Realized gains and losses are not recognized until the contracts are settled. Dividend income and distributions from investments are recognized on the exdividend/exdistribution date and interest income on the accrual basis. Distributions received from income trust holdings are recorded as income, capital gains or a return of capital, based on the best information available to the Manager. Due to the nature of these investments, actual allocations could vary from this information. Distributions from income trusts that are treated as a return of capital for income tax purposes reduce the average cost of the underlying investment trust on the Statement of Investments. Distributions received from investment fund holdings are recognized by the funds in the same form in which they were received from the underlying funds. (g) Increase (Decrease) in Net Assets from Operations per Unit per unit in the Statements of Operations is calculated by dividing the increase (decrease) in net assets from operations per class of the Fund by the weighted average number of units outstanding during the period for that class. (h) Use of Estimates The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 3. INCOME TAXES The Funds qualify as mutual fund trusts under the provisions of the Income Tax Act (Canada) and, accordingly, are not subject to tax on net income, including net realized capital gains for the taxation year, which is paid or payable to unitholders at the end of the taxation year. However, such part of each Fund s taxable income and net realized capital gains that is not so paid or payable will be taxable to that Fund. Income tax on net realized capital gains not paid or payable will generally be recoverable by virtue of refunding provisions contained in the Income Tax Act (Canada) and provincial income tax legislation, as redemptions occur. It is the intention of each Fund to pay all net taxable income and sufficient net realized capital gains so that the Fund will not be subject to income tax. Occasionally, a Fund may distribute more than it earns. This excess distribution is a return of capital and is not taxable to unitholders. Net capital losses may be carried forward indefinitely to reduce future net realized capital gains. Noncapital losses arising in taxation years up to 2003 may be carried forward seven years. Noncapital losses arising in taxation years 2004 and 2005 may be carried forward ten years. Noncapital losses arising in taxation years after 2005 may be carried forward twenty years. Refer to fund specific schedules in the financial statements for tax loss carried forward information. 13

16 Notes to the Financial Statements CI Mutual Funds 4. MANAGEMENT FEES AND OTHER EXPENSES CI Investments Inc. is the Manager of each Fund and, in consideration of management fees, provides management services required in the daytoday operations of the Funds including management of the investment portfolios of the Funds. The management fee is calculated on the net assets value of each Fund at the end of each business day. Effective September 2005, the manager bears all of the operating expenses of the Funds (other than certain taxes, borrowing costs and new governmental fees) in return for fixed annual administration fees (the Administration Fees ). Fund (cont d) For the year ended March 31, 2008 ($) Synergy Focus Global Equity Fund 647 Synergy Tactical Asset Allocation Fund 2,487 Signature Income and Growth Fund 14,254 Synergy Focus Canadian Equity Fund 10,222 Knight Bain Diversified Monthly Income Fund 6,496 Knight Bain Corporate Bond Fund 12 CI Canadian Asset Allocation Fund 1,656 CI Alpine Growth Equity Fund 369 CI Canadian Small/Mid Cap Fund 45,395 Each Administration Fee is calculated as a fixed annual percentage of the net asset value of each class of the Fund at the end of each business day. Refer to fund specific schedules in the financial statements for management fee and administration fee rates applicable to each class. 5. SECURITIES LENDING Certain Funds have entered into a securities lending program with their custodian, RBC Dexia Investor Services Trust ("RBC Dexia"). The aggregate market value of all securities loaned by a Fund cannot exceed 50% of the net assets of the Fund. A Fund will receive collateral of at least 102% of the value of securities on loan. Collateral will generally be comprised of cash and obligations of or guaranteed by the Government of Canada or a province thereof, or by the United States government or its agencies, but may include obligations of other governments with appropriate credit ratings. RBC Dexia has indemnified the Funds against the credit risk of the borrowers. For those Funds participating in the program, amounts for securities loaned and the collateral received, appear on the fund specific schedules in the financial statements, income from securities lending is included in "Securities lending" in the Statements of Operations and any cash collateral received or cash collateral payable is included in the Statement of Net Asset in Cash collateral received for securities on loan or Payable for cash collateral under securites lending. 6. REINVESTMENT OF DISTRIBUTIONS When a Fund pays a distribution to a unitholder, it will be paid in the same currency in which the units are held. Distributions are automatically reinvested without charge in the same Fund. The Manager may change the distribution policy at its discretion. Further information regarding reinvestment of distributions can be found in the funds Simplified Prospectus. 7. RELATED PARTY TRANSACTIONS Sun Life Financial Inc. ( Sun Life ) owns a significant interest in CI Financial Income Fund, the parent company of the Manager, and is therefore considered a related party to the Funds. Sun Life did not hold investments in the Funds at March 31, 2008 or March 31, The Funds paid the following brokerage commissions to Blackmont Capital Inc., an affiliated company of CI Investments Inc.: Fund For the year ended March 31, 2008 ($) Signature Dividend Fund 5,315 Signature Canadian Resource Fund 6,889 Signature Select Canadian Fund 30,151 Signature Canadian Balanced Fund 10,137 Signature High Income Fund 32,713 Harbour Fund 59,700 Harbour Growth & Income Fund 64,712 Select Income Managed Fund 103 Select Canadian Equity Managed Fund 360 Signature Global Income & Growth Fund SHORT SELLING AND DERIVATIVE RISKS There is no assurance that securities will decline in value during the period of the short sale sufficient to offset the interest paid by the mutual fund and make a profit for the mutual fund, and securities sold short may instead increase in value. The mutual fund may also experience difficulties repurchasing and returning the borrowed securities if a liquid market for the securities does not exist. The lender from whom the mutual fund has borrowed securities may go bankrupt and the mutual fund may lose the collateral it has deposited with the lender. The use of derivatives comes with a number of risks. Hedging with derivatives may not always work and could restrict the Fund s ability to increase in value. There are no guarantees that a derivative contract can be obtained when needed, that the regulators may impose limits on trading of derivatives or that the other party to a derivative contract can honour the terms of the contract, thus preventing the Fund from making a profit or limiting a loss. The price of a derivative may not reflect the true value of the underlying security or if based on an index, could be distorted if some or all of the stocks included in the index stop trading. Derivatives traded on foreign markets may be harder to close than those traded in Canada. In some circumstances, investment dealer and futures brokers may hold some of the Fund s assets on deposit as collateral to a derivative contract, thus increasing risk because another party is responsible for the safekeeping of the assets. 9. FUTURE ACCOUNTING STANDARDS On April 1, 2007, the Funds adopted Section 1506 of the CICA Handbook Accounting Changes, which prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. This standard did not affect the Funds net assets. Recent Canadian accounting pronouncements issued and not yet adopted include: CICA Handbook Sections 3862 and 3863 The new Sections 3862 and 3863 replace Handbook Section 3861 Financial Instruments Disclosure and Presentation, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the Funds manage those risks. The new standards apply to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007, specifically April 1, 2008 for the Funds. This standard will impact the Funds disclosures provided but will not affect the Funds net assets. 14