Select 60i40e Managed Portfolio. Portfolio Review Fourth Quarter 2017

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1 Select 60i40e Managed Portfolio Portfolio Review Fourth Quarter 2017 Q4

2 Portfolio Review Fourth Quarter 2017 as at December 31, 2017 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (September 2006) -0.4% 2.3% 2.2% 5.4% 4.4% 7.0% 5.4% 4.6% Asset Allocation Overview and Activity Different types of investments will respond differently to the markets, reinforcing the importance of a multi-level diversification strategy. A balanced asset mix ensures that investors are not dependent on any one asset class or security type to provide returns. CI Multi-Asset Management combines its portfolio construction expertise with ongoing comprehensive research and recommendations from State Street Global Advisors, a world leader in asset allocation, to create portfolios designed to capture evolving opportunities in the various asset classes. This report is designed to provide you with an up-to-date portfolio overview of the Select 60i40e Managed Portfolio, including the allocations across asset class, geographic region, equity sector and market capitalization. The arrows indicate whether the allocation for each category has increased or decreased since the previous quarter-end. Asset Class Geographic Regions 25.4% 21.8% 17.3% 12.3% 8.8% 7.7% 2.6% 2.4% 1.7% Canadian bond Foreign bond U.S. equity Canadian equity European equity Cash Asian equity Emerging markets equity Other equity 37.6% 31.9% 15.6% 4.2% 3.1% 2.6% 1.4% 1.4% 1.1% 1.1% Canada U.S. Cash and other countries Emerging markets U.K. Japan Italy Switzerland France Bermuda Equity Market Cap Equity Industry Sector 83.7% 15.0% 1.3% Large-cap Mid-cap Small-cap 20.7% 11.3% 11.3% 10.8% 9.5% 9.5% 8.6% 7.8% 4.8% 3.3% 2.3% 0.1% Financial services Information technology Materials Industrials Consumer discretionary Energy Consumer staples Health care Utilities Real estate Telecommunication services Other Portfolio Select Series 15

3 Portfolio Review Fourth Quarter 2017 as at December 31, 2017 Underlying Fund Allocations CI Income Fund 54.6% Select U.S. Equity Managed Fund 14.0% Select International Equity Managed Fund 13.2% Select Canadian Equity Managed Fund 12.3% Signature Global Bond Fund 4.7% Cash 1.2% Top Ten Holdings Canada Gov t Bond 1% 01Jun27 3.0% SPDR Gold Trust 2.1% Canada Gov t Bond 1% 01Sep22 1.5% ishares 20+ Yr Treasury Bond ETF 1.2% Ontario Province 2.85% 02Jun23 1.1% U.S. Treasury N/B 2.25% 15Aug27 1.0% Ontario Province 3.5% 02Jun24 0.9% Italy Buoni Poliennali Del 1.2% 01Apr22 0.9% Ontario Province 2.4% 02Jun26 0.9% Ontario Province 2.6% 02Jun25 0.8% 16 Portfolio Select Series

4 Portfolio Review Fourth Quarter 2017 as at December 31, 2017 Portfolio Commentary The portfolio gained 2.3% during the quarter, underperforming its benchmark (60% FTSE TMX Canada Universe Bond Index, 20% S&P/TSX Composite Index, 20% MSCI World Index C$), which rose 3.4%. Diversified exposure to global dividend-paying equities and long-term government bonds made positive contributions to relative performance, while U.S.-government bonds and highyield corporate issues detracted. Within the equity portion, the Canadian and international equity pools contributed to underperformance. Our overall equity asset allocation made a positive contribution, as did our overweight exposure to U.S. equities. Global equity markets produced healthy returns, capping off a strong year as investors were motivated by encouraging economic data, historically low interest rates, tepid inflation and expanding corporate activity. The S&P/TSX Composite Index rebounded during the quarter, propelled by the financial services sector and a recovery of prices for oil and other commodities. However, Canada lagged global markets, weighed down by its underrepresentation in sectors that outperformed, such as technology. Central banks worldwide continued to weigh options for scaling back monetary policies designed to stimulate the economy. The U.S. Federal Reserve Board announced a quarter-point increase in its benchmark interest rate in mid- December to 1.5%, citing a strong labour market and healthy economic activity. This followed three rate hikes during the year. The Bank of Canada, however, opted to keep its overnight lending rate unchanged at 1%, following two previous increases. Central banks in Europe and Japan also maintained accommodative monetary policies. Government bond yields in many countries rose modestly during the quarter, reflecting the expectation of higher interest rates. As 2018 begins, we expect the stock rally to continue, despite high valuations, a tight credit spread, rising interest rates and a shrinking money supply. The recent tax cuts in the United States were a positive factor for equities. We are mindful that insufficient market exposure could result in underperformance. Yet the potential downside is increasing across all asset classes, due to a high degree of correlation. Inflation could return temporarily to trigger lower bond prices, as the yield curve steepens. These factors emphasize the potential for extreme investment performance in either direction. Fixed-income markets were generally more volatile, as investors debated the consequences of the rate hikes. The prospect of higher inflation made investors overly sensitive to economic news. Short-term interest rates rose in response to the Fed s hikes. However, rising rates increased concerns about weaker economic growth going forward, causing longterm rates to fall and the yield curve to flatten. We introduced new strategies and added new asset classes to the portfolio, including gold bullion, which has been out of favour for years. We are building this position in anticipation of higher gold prices as market conditions change. Our credit exposure was decreased, as the premium is too small to justify the risk. Our portfolio s duration (a measurement of interestrate sensitivity) is less than that of the benchmark, and is diversified with assets that generally are negatively correlated to rate movements. The portfolio s ability to recover does not rely on a single factor or a rebound of any one asset class. We have tools to manage interest-rate, currency and equity risk. These will be deployed on a proactive basis, as needed. During the fourth quarter, we used derivatives to enhance the upside and downside characteristics of the sovereign bond portion. Selling covered call options can produce additional income. From time to time, we may take a long position in lieu of direct bond investment, or own put options to limit any downside for our positions. We remain prepared for any inflation shocks. Our U.S.-dollar exposure will be limited to a maximum of 10%, as we recognize the greenback is at least at fair value. The global addiction to leverage remains a concern. Debt expansion has created an artificial demand for assets and this, in turn, has inflated prices. We are at a late stage of the economic cycle, which means debt levels have limited room to grow without negative consequences for investors. In our Portfolio Select Series 17

5 Portfolio Review Fourth Quarter 2017 as at December 31, 2017 view, the Fed s plan to shrink its balance sheet is prudent, and will result in tighter lending conditions. While this could slow the economy, it will add sustainability for future growth. We favour asset classes such as gold and long-term bonds that are expected to provide a negative correlation to the current rising trend in equities. We expect the yield curve to flatten further, and will continue to monitor this actively, under the assumption that inflation may return temporarily. Market volatility has been depressed due to money flows and should increase amid tighter monetary conditions. Our portfolios will benefit from volatility spikes, and put options provide protection. We do not believe our decision to hedge part of the portfolio, including the put-option strategy, will result in significant performance drag if the markets continue to reward risk. These strategies allow us to enhance the upside and downside characteristics and, hence, our risk-adjusted return. Our equity allocation is more diversified than that of the Canadian economy and the S&P/TSX Composite Index. We had overweight exposure to defensive sectors, such as health care and consumer staples, and were underweight in cyclical and interest-rate-sensitive sectors, such as energy and telecommunications. Select International Equity Managed Fund underperformed its benchmark, the MSCI EAFE Index. Our holdings in consumer discretionary and information technology detracted from relative value. An allocation to emerging markets added value. The international equity portion had overweight allocations to information technology and materials, with underweight positions in industrials, real estate and utilities. Geographically, we had overweight exposure to emerging markets, mainly in Asia and Latin America, and were significantly underweight Australia and Japan. Alfred Lam, CFA, Senior Vice-President and Chief Investment Officer Yoonjai Shin, CFA, Vice-President and Portfolio Manager Marchello Holditch, CFA, Director Milica Stojanovic, Associate Director Byron Monaghan, CFA, CIPM, Senior Analyst Desta Tadesse, Analyst Zoe Li, Junior Analyst Select Canadian Equity Managed Fund underperformed its benchmark, the S&P/TSX Composite Index. The fund has underweight allocations to the resources and financials sectors, and overweight positions in other areas such as utilities, information technology and consumer staples positioning that we believe enhances risk-adjusted return potential. Our holdings in the health care, financials and consumer discretionary sectors detracted from value, as did our high cash position. Select U.S. Equity Managed Fund underperformed its benchmark, the S&P 500 Index. The fund favours areas of the market that are tied to economic growth, while maintaining underweight positions in defensive sectors. Our holdings in information technology and consumer staples detracted from relative value. 18 Portfolio Select Series

6 Portfolio Management Teams In the Portfolio Select Series program CI Investments Sub-advisors 39 Portfolio Select Series Portfolio Select Series 39

7 For more information on Portfolio Select Series, please contact your CI Sales Representative or visit All commentaries are published by CI Investments Inc., the manager of all the funds described herein. They are provided as a general source of information and should not be considered personal investment advice or an offer or solicitation to buy or sell securities. Every effort has been made to ensure that the material contained in the commentaries is accurate at the time of publication. However, CI Investments Inc. cannot guarantee their accuracy or completeness and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. This report may contain forward-looking statements about the funds, future performance, strategies or prospects, and possible future fund action. These statements reflect the portfolio managers current beliefs and are based on information currently available to them. Forward-looking statements are not guarantees of future performance. We caution you not to place undue reliance on these statements as a number of factors could cause actual events or results to differ materially from those expressed in any forward-looking statement, including economic, political and market changes and other developments. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. CI Investments, the CI Investments design, Harbour Advisors, Harbour Funds and Cambridge are registered trademarks of CI Investments Inc. Portfolio Select Series, Signature Funds, Signature Global Asset Management and CI Multi-Asset Management are trademarks of CI Investments Inc. First Asset is a trademark of FA Capital, a wholly owned subsidiary of CI Financial Corp Asset Management L.P. and the 1832 Asset Management design are trademarks of The Bank of Nova Scotia, used under licence. All trademarks used under licence. All Rights Reserved. Published January Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I Head Office / Toronto Calgary Montreal Vancouver Client Services _E (01/18)