Harbour Growth & Income Fund

Transcription

1 This semi-annual management report of fund performance contains financial highlights but does not contain the complete semi-annual or annual financial statements of the investment fund. You can get a copy of the semi-annual or annual financial statements at your request, and at no cost, by calling , by writing to us at CI Investments Inc., 2 Queen Street East, Twentieth Floor, Toronto, ON, M5C 3G7 or by visiting our website at or SEDAR at Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. RESULTS OF OPERATIONS The net asset value of the Fund decreased by $339. million to $2,625.4 million from March 31, 18 to September, 18. The Fund had net redemptions of $4.3 million during the period. The portfolio s performance decreased assets by $34.7 million. Class A units returned -2.1% after fees and expenses for the six-month period ended September, 18. Over the same time period, the Fund s benchmark returned 3.5%. The benchmark is a combination of the S&P/TSX Composite Total Return Index - 6% and the FTSE TMX Canada Universe Bond Total Return Index - %. The performance of the Fund s other classes is substantially similar to that of Class A units, except for differences in the structure of fees and expenses. For the returns of the Fund s other classes, please refer to the Past performance section. detracted from performance include Glencore PLC, HeidelbergCement AG and Five Point Holdings LLC. Major sector weightings include financials, energy and materials. Overall, the Fund underperformed its benchmark for the period. RECENT DEVELOPMENTS The number of companies held in the portfolio at the end of the period was 55, which compares with 52 companies six months ago. We expect our holdings to perform well over the long term given that fundamentals continue to remain positive. Net outflows were higher than net inflows during the period although the impact of this on the performance of the Fund was immaterial. At September, 18, the Fund had 66.1% of its assets invested in common stocks (Canadian common 36.9%, foreign common 29.2%), while the Fund s cash and equivalent position was.9% and bond position was 33%. At the beginning of the period, 66.9% of the Fund was invested in common stocks (Canadian common 41.4%, foreign common 25.5%) while the Fund s cash and equivalent position was 2.% and bond position was 29.9%. The mix of Canadian and foreign stocks, bonds and cash will change as individual buying and selling opportunities arise. The Fund ended the period with a 5% hedge against the U.S. dollar, a 95% hedge against the euro, a 95% hedge on the U.K. pound and a 5% hedge on the Japanese yen. Marret Asset Management Inc. ( Marret ) sub-advises on the fixed-income component of the Fund. At the end of the period, 32.4% of the Fund s assets were allocated to Marret, under the guidance of investment-grade bond manager Paul Sandhu. By leveraging Marret s fixed income capabilities we expect to strengthen security selection within the fixed-income sleeve of the Fund. Harbour Advisors, a division of CI Investments Inc., continues to be responsible for the overall asset allocation decisions of the Fund in addition to selecting equity securities. During the period we added to a number of holdings including Alphabet Inc., Microsoft Corp. and Sony Corp. We trimmed positions in a number of holdings including Alibaba Group Holding Ltd., Barrick Gold Corp. and Jamieson Wellness Inc. A number of new positions were established in the Fund including Brookfield Asset Management Inc., IBM and AT&T Inc. There were also a number of holdings eliminated from the Fund including Bank of America Corp., IGM Financial Inc. and Apple Inc. Industry sectors that added to performance of the Fund include consumer discretionary, consumer staples and information technology. Individual stocks that contributed to performance include Sony, VF Corp and Lowe s Companies Inc. The sectors that detracted from performance include real estate, materials and utilities. Individual stocks that Effective September, 18, Tom Eisenhauer became a member of the Board of Governors ( BOG ) and Independent Review Committee ( IRC ), and effective October 15, 18, Mary Robertson resigned as a member of the BOG and IRC. RELATED PARTY TRANSACTIONS Manager, Portfolio Advisor, Trustee and Registrar CI Investments Inc. is the Manager, Portfolio Advisor, Trustee and Registrar of the Fund. CI Investments Inc. is a subsidiary of CI Financial Corp. The Manager, in consideration for management fees, provides management services required in the day-to-day operations of the Fund. The Manager bears all of the operating expenses of the Fund (other than taxes, borrowing costs and new governmental fees) in return for a fixed administration fee. Management fee and fixed administration fee rates as at September, 18, for each of the classes are shown below: Annual management fee rate (%) Annual fixed administration fee rate (%) Class A 2.. Class A Class A Class A Class A Class A Class E Class EF Class F 1.. Class F1.85. CIG - 691

2 Annual management fee rate (%) Annual fixed administration fee rate (%) Class F Class F Class F The Fund relied on the IRC s standing instructions regarding related party transactions during this reporting period. Except as otherwise noted above, the Fund was not a party to any related party transactions during the period ended September, 18. Class I Paid directly by investor - Class O Paid directly by investor.15 Class P Paid directly by investor. Class Z The Manager received $.6 million in management fees and $1.1 million in fixed administration fees for the period. Management Fees Approximately 26% of total management fees were used to pay for sales and trailing commissions. The remaining 74% of management fees were used for investment management and other general administration. Inter-Fund Trading Inter-fund trading occurs when a Fund purchases or sells a security of any issuer from or to another Fund managed by the Manager. These transactions are executed through market intermediaries and under prevailing market terms and conditions. The Independent Review Committee reviews such transactions during scheduled meetings. During the period ended September, 18 the Fund executed inter-fund trades. Portfolio Sub-Advisors Marret Asset Management Inc. and CI Global Investments Inc., affiliates of CI Investments Inc., provide investment advice to the Fund. Independent Review Committee The Fund received standing instructions from the Fund s Independent Review Committee with respect to the following related party transactions: a) trades in securities of CI Financial Corp.; b) purchases or sales of securities of an issuer from or to another investment fund managed by the Manager; and c) purchases or sales of other investment funds managed by the Manager or their affiliates. The applicable standing instructions require that related party transactions be conducted in accordance with the Manager s policies and procedures and that the Manager advise the IRC of any material breach of a condition of the standing instructions. The standing instructions require, among other things, that investment decisions in respect of related party transactions (a) are free from any influence by an entity related to the Manager and without taking into account any consideration relevant to an entity related to the Manager; (b) represent the business judgment of the Manager uninfluenced by considerations other than the best interests of the Fund; (c) are made in compliance with the Manager s policies and procedures; and (d) achieve a fair and reasonable result for the Fund. Transactions made by the Manager under the standing instructions are subsequently reviewed by the IRC on a quarterly basis to monitor compliance.

3 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past six periods, as applicable. Net Assets per Unit ($) (1) (2) (4) * Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding gains (losses) for gains (losses) for (decrease) from income (excluding From From capital Total at the end of the period of period (2) revenue distributions) the period the period operations (2) dividends) dividends (2, 3) gains Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class A Commencement of operations June 27, 1997 Sept., (.24).27 (.66) (.39) Mar. 31, (.49).71 (1.12) (.46) - (.12) (.55) - (.67) Mar. 31, (.5) (.12) (.18) (.39) - (.69).76 Mar. 31, (.51) 1.41 (2.) (.69) (.9) (.21) (1.44) - (1.74) Mar. 31, (.52) 3.32 (1.98) (.1) - - (.1) 22.4 Mar. 31, (.48) Class A1 Sept., (.11).13 (.33) (.19) Mar. 31, (.).38 (.5) (.15) - (.6) (.28) - (.34) 9.46 Class A2 Sept., (.).12 (.33) (.19) Mar. 31, (.).37 (.47) (.13) - (.6) (.28) - (.34) 9.46 Class A3 Sept., (.).12 (.33) (.19) Mar. 31, (.18).36 (.56) (.21) - (.6) (.) - (.36) 9.46 Class A4 Sept., (.9).13 (.33) (.17) Mar. 31, (.18).37 (.63) (.27) - (.6) (.) - (.36) 9.46 Class A5 Sept., (.9).12 (.29) (.14) Mar. 31, (.16).38 (.49) (.9) - (.7) (.32) - (.39) 9.45 *Footnotes for the tables are found at the end of the Net Assets per Unit section of the Financial Highlights.

4 FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (4) * Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding gains (losses) for gains (losses) for (decrease) from income (excluding From From capital Total at the end of the period of period (2) revenue distributions) the period the period operations (2) dividends) dividends (2, 3) gains Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class E Commencement of operations October 4, 11 Sept., (.13).17 (.) (.) Mar. 31, (.27).46 (.68) (.21) - (.8) (.36) - (.44) Mar. 31, (.27) (.8) (.12) (.26) - (.46) Mar. 31, (.28).8 (1.14) (.29) (.6) (.13) (.89) - (1.8) 12. Mar. 31, (.29) 1.93 (1.13).84 - (.3) - - (.3) Mar. 31, (.27) (.2) - - (.2) Class EF Commencement of operations July 29, 15 Sept., (.5).11 (.31) (.14) Mar. 31, (.).33 (.41).2 - (.8) (.36) - (.44) 8.84 Mar. 31, (.) (.8) (.11) (.25) - (.44) 9.35 Mar. 31, (.7).17 (.13).12 (.5) (.11) (.75) - (.91) 8.86 Class F Commencement of operations July 31, 1 Sept., (.12).24 (.59) (.25) Mar. 31, (.24).63 (.97) (.19) - (.14) (.66) - (.8) 17. Mar. 31, (.24) (.14) (.21) (.47) - (.82) Mar. 31, (.25) 1.22 (1.81) (.39) (.9) (.21) (1.45) - (1.75) Mar. 31, (.25) 2.87 (1.7) 1.37 (.1) (.21) - - (.22) Mar. 31, (.23) (.1) (.19) - - (.) Class F1 Sept., (.6).11 (.34) (.17) Mar. 31, (.).42 (.66) (.17) - (.8) (.37) - (.45) 9.45 Class F2 Sept., (.5).14 (.35) (.14) Mar. 31, (.).38 (.89) (.45) - (.8) (.38) - (.46) 9.44 Class F3 Sept., (.5).13 (.27) (.7) Mar. 31, (.9).43 (1.8) (.59) - (.8) (.39) - (.47) 9.44 *Footnotes for the tables are found at the end of the Net Assets per Unit section of the Financial Highlights.

5 FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (4) Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding gains (losses) for gains (losses) for (decrease) from income (excluding From From capital Total at the end of the period of period (2) revenue distributions) the period the period operations (2) dividends) dividends (2, 3) gains Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class F4 Sept., (.4).12 (.33) (.13) Mar. 31, (.8).37 (.57) (.9) - (.8) (.39) - (.47) 9.44 Class I Commencement of operations July 31, 1 Sept., (.62) (.14) Mar. 31, (1.4).3 - (.19) (.9) - (1.9) 18.5 Mar. 31, (.) (.29) (.64) - (1.13) Mar. 31, (1.91) (.14) (.11) (.25) (1.75) - (2.11) Mar. 31, (1.84) 1.69 (.2) (.47) - - (.49).36 Mar. 31, (.2) (.43) - - (.45) Class O Commencement of operations October 4, 11 Sept., (.1).16 (.41) (.11) Mar. 31, (.2).46 (.67).3 - (.12) (.58) - (.7) Mar. 31, (.2) (.13) (.18) (.41) - (.72) Mar. 31, (.2).79 (1.7) - (.7) (.15) (1.1) - (1.23) Mar. 31, (.2) 1.84 (1.7) 1.6 (.1) (.28) - - (.29) Mar. 31, (.2) (.1) (.26) - - (.27) Class P Sept., (.1). (.37) (.16) Mar. 31, (.2).51 (1.29) (.65) - (.) (.45) - (.55) 9.43 Class Z Commencement of operations August 29, 3 Sept., (.18).22 (.55) (.31) Mar. 31, (.37).6 (.93) (.34) - (.11) (.49) - (.6) Mar. 31, (.37) (.11) (.16) (.35) - (.62) Mar. 31, (.38) 1.15 (1.69) (.5) (.8) (.18) (1.22) - (1.48) Mar. 31, (.39) 2.74 (1.64) (.5) - - (.5) Mar. 31, (.35) (.4) - - (.4) (1) This information is derived from the Fund s semi-annual and annual financial statements. (2) Net assets per unit and distributions per unit are based on the actual number of units outstanding for the relevant class at the relevant time. The increase (decrease) in net assets from operations per unit is based on the weighted average number of units outstanding for the relevant class over the fiscal period. (3) Distributions are automatically reinvested in additional units of the Fund. (4) This information is provided for the period ended September, 18 and the years ended March 31.

6 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) * Total net assets (5) Number of units outstanding (5) Management expense ratio before taxes (2) Management expense ratio after taxes (2) Effective HST rate for the period (2) Harmonized Trading Portfolio sales tax (2) expense ratio (3) turnover rate (4) $ s s % % % % % % Class A Commencement of operations June 27, 1997 Sept., ,87 38, Mar. 31, ,222 44, Mar. 31, 17 1,5,794 62, Mar. 31, 16 1,522,263 77, Mar. 31, 15 2,26,564 91, Mar. 31, 14 2,4,99 111, Class A1 Sept., 18 7,726 11, Mar. 31, ,86 11, Class A2 Sept., 18 19,755 2, Mar. 31, 18 19,74 2, Class A3 Sept., 18 8, Mar. 31, 18 8, Class A4 Sept., 18 1, Mar. 31, 18 1, Class A5 Sept., Mar. 31, *Footnotes for the tables are found at the end of the Financial Highlights section.

7 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) * Total net assets (5) Number of units outstanding (5) Management expense ratio before taxes (2) Harmonized sales tax (2) Management expense ratio after taxes (2) Effective HST rate for the period (2) Trading expense ratio (3) Portfolio turnover rate (4) $ s s % % % % % % Class E Commencement of operations October 4, 11 Sept., 18 39,82 3, Mar. 31, 18 45,916 3, Mar. 31, 17 38,516 3, Mar. 31, 16 25,81 2, Mar. 31, 15 21,988 1, Mar. 31, 14 14,21 1, Class EF Commencement of operations July 29, 15 Sept., 18 1, Mar. 31, 18 1, Mar. 31, 17 1, Mar. 31, Class F Commencement of operations July 31, 1 Sept., 18 26,95 1, Mar. 31, 18,523 1, Mar. 31, 17,294 2, Mar. 31, 16 31,762 1, Mar. 31, 15 34,489 1, Mar. 31, 14 29,371 1, Class F1 Sept., 18 6, Mar. 31, 18 6, Class F2 Sept., 18 1, Mar. 31, 18 1, Class F3 Sept., Mar. 31, *Footnotes for the tables are found at the end of the Financial Highlights section.

8 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) * Total net assets (5) Number of units outstanding (5) Management expense ratio before taxes (2) Harmonized sales tax (2) Management expense ratio after taxes (2) Effective HST rate for the period (2) Trading expense ratio (3) Portfolio turnover rate (4) $ s s % % % % % % Class F4 Sept., Mar. 31, Class I Commencement of operations July 31, 1 Sept., 18 1,581,161 88, Mar. 31, 18 1,771,626 98, Mar. 31, 17 2,137,59 111, Mar. 31, 16 2,8, , Mar. 31, 15 2,997, , Mar. 31, 14 3,279, , Class O Commencement of operations October 4, 11 Sept., 18 31,581 2, Mar. 31, 18 35,66 2, Mar. 31, 17 28,569 2, Mar. 31, 16 17,283 1, Mar. 31, 15 8, Mar. 31, 14 3, Class P Sept., Mar. 31, Class Z Commencement of operations August 29, 3 Sept., 18 48,918 3, Mar. 31, 18 53,774 3, Mar. 31, 17 65,212 3, Mar. 31, 16 68,6 4, Mar. 31, 15 84, 4, Mar. 31, 14 92,881 5, *Footnotes for the tables are found at the end of the Financial Highlights section.

9 FINANCIAL HIGHLIGHTS (cont d) (1) This information is derived from the Fund s semi-annual and annual financial statements. (2) Management expense ratio is calculated based on expenses charged to the Fund (excluding commissions and other portfolio transaction costs) and is expressed as an annualized percentage of daily average net assets for the period, including the Fund s proportionate share of any underlying fund(s) expenses, if applicable. The Effective HST tax rate is calculated using the attribution percentage for each province based on unitholder residency and can be different from 13%. (3) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during the period, including the Fund s proportionate share of such expenses of any underlying fund(s), if applicable. (4) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of % is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the fiscal period. The higher a Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a higher turnover rate and the performance of a Fund. Portfolio turnover rate is calculated by dividing the lesser of the cost of purchases and the proceeds of sales of portfolio securities for the period, and excluding cash and short-term investments maturing in less than one year, and before assets acquired from a merger, if applicable, by the average of the monthly fair value of investments during the period. (5) This information is provided for the period ended September, 18 and the years ended March 31.

10 PAST PERFORMANCE This section describes how the Fund has performed in the past. Remember, past returns do not indicate how the Fund will perform in the future. The information shown assumes that distributions made by the Fund in the periods shown were reinvested in additional units of the relevant classes of the Fund. In addition, the information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. Year-by-Year Returns The following charts show the Fund s semi-annual and annual performance for each of the periods shown and illustrate how the Fund s performance has changed from period to period. In percentage terms, the charts show how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period, except where noted. Class A Class A1 Class A2 Class A Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Class A4 Class A5 Class E Class EF Mar. 18 Sept. 18 Mar. 18 Sept. 18 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Class F Class F1 Class F2 Class F Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Mar. 18 Sept. 18 Class F4 Class I Class O Class P Mar. 18 Sept. 18 Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept. 18 Mar. 18 Sept. 18

11 Class Z Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Mar. 14 Mar. 15 Mar. 16 Mar. 17 Mar. 18 Sept return is for the period from May 1, 17 to March 31, return is for the period from October 4, 11 to March 31, return is for the period from July 29, 15 to March 31,

12 SUMMARY OF INVESTMENT PORTFOLIO as at September, 18 Category % of Net Assets Category % of Net Assets Top 25 Holdings % of Net Assets Country allocation Long Positions Canada U.S.A Japan Cayman Islands Sweden Other Net Assets (Liabilities)....8 U.K....7 Options Contracts....6 France....5 Netherlands....4 Jersey Island....2 Foreign Currency Forward Contracts....2 Short-Term Investments....1 Germany....1 Austria.... Cash & Equivalents... (.2) Total Long Positions.... Short Positions: Future Contracts... (.) Total Short Positions... (.) Sector allocation Long Positions Financials Corporate Bonds Information Technology Canadian Government Bonds....1 Energy Materials Consumer Staples Consumer Discretionary Industrials Utilities Foreign Government Bonds Telecommunication Services Other Net Assets (Liabilities)....8 Options Contracts....6 Health Care....5 Real Estate....4 Foreign Currency Forward Contracts....2 Short-Term Investments....1 Warrants.... Cash & Equivalents... (.2) Total Long Positions.... Short Positions: Future Contracts... (.) Total Short Positions... (.) Royal Bank of Canada Microsoft Corp Toronto-Dominion Bank Government of Canada % 12/1/ JPMorgan Chase & Co Alphabet Inc., Class C The Bank of Nova Scotia Sony Corp Government of Canada 2.75% 12/1/ Fairfax India Holdings Corp International Business Machines Corp PrairieSky Royalty Ltd Fairfax Africa Holdings Corp TMX Group Ltd Boralex Inc., Class A NexGen Energy Ltd United States Treasury Note/Bond 3% 8/15/ S&P Global Inc Suncor Energy Inc Corby Spirit and Wine Ltd., Class A Lundin Mining Corp Jamieson Wellness Inc Westaim Corp Northland Power Inc Government of Canada 1% 6/1/ Total Net Assets (in $ s) $2,625,38 The summary of investment portfolio may change due to ongoing portfolio transactions of the Fund and updates will be available on a quarterly basis. A NOTE ON FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made by the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchanges rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.