Red Sky Canadian Equity Corporate Class (Class A, AT5, AT8, E, ET5, ET8, F, FT5, FT8, I, IT8, O, OT5 and OT8 shares)

Transcription

1 No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. CI Investments Annual Information Form dated December 20, 2012 Red Sky Canadian Equity Corporate Class (Class A, AT5, AT8, E, ET5, ET8, F, FT5, FT8, I, IT8, O, OT5 and OT8 shares)

2 TABLE OF CONTENTS Name, Formation and History of the Fund... 2 Investment Restrictions and Practices... 3 Your Rights as an Investor... 6 How Portfolio Securities are Valued... 6 Purchases, Switches and Redemptions... 8 Operation of the Fund Fund Governance Brokerage Arrangements...34 Principal Holders of Securities...35 Affiliated Entities Canadian Federal Income Tax Considerations Material Contracts Additional Information Auditor s Consent Certificate of the Fund, the Manager and the Promoter... 43

3 NAME, FORMATION AND HISTORY OF THE FUND CI Investments In this document, we, us, our, the Manager and CI refer to CI Investments Inc., the manager of the Red Sky Canadian Equity Corporate Class. The fund or the Corporate Class is the mutual fund described in this annual information form. The Corporate Class refers to the assets and liabilities attributable to the classes of convertible special shares of CI Corporate Class Limited that have the same investment objectives and strategies and thereby constitute the fund. An underlying fund is a mutual fund managed by us in which the fund invests some or all of its assets. Financial advisor means a broker or dealer who is qualified to sell the fund described in this document. This annual information form contains details about the fund. It is intended to be read along with the simplified prospectus of the fund you re investing in. If you have questions after reading these documents, please contact your financial advisor or us. The fund is managed by: CI Investments Inc. 2 Queen Street East Twentieth Floor M5C 3G7 How the fund is structured The fund has been established as a class of shares of CI Corporate Class Limited (Corporate Classes) by articles of amendment dated December 20, We manage CI Corporate Class Limited, a mutual fund corporation, which was formed by articles of incorporation dated July 8, 1987 under the laws of Ontario. In structuring the fund, our objective has been to maximize tax efficiencies and provide you with choice and flexibility. For ease of reference, we refer to Corporate Class as the fund. Corporate Classes offer shares. Shares of Corporate Classes are referred to as securities. The year-end of the fund for financial reporting purposes is March 31. Qualification for registered plans Shares of the Corporate Classes are qualified investments under the Income Tax Act (Canada) (the Income Tax Act ) for registered plans. These registered plans include: Registered Retirement Savings Plans (RRSPs) Locked-in Retirement Accounts (LIRAs) Locked-in Registered Retirement Savings Plans (LRSPs) Registered Retirement Income Funds (RRIFs) Locked-in Retirement Income Funds (LRIFs) Life Income Funds (LIFs) 2

4 Deferred Profit Sharing Plans (DPSPs) Registered Education Savings Plans (RESPs) Prescribed Retirement Income Funds (PRIFs) Tax-Free Savings Accounts (TFSAs) Québec Education Savings Incentive (QESI) Note that not all of the registered plans are available in all provinces or territories or through all our programs. The fund may be eligible for other registered plans offered through your financial advisor. INVESTMENT RESTRICTIONS AND PRACTICES Except as described below, the fund is subject to and follows the investment practices and restrictions outlined in securities legislation, including National Instrument ( NI ) of the Canadian securities administrators. This helps to ensure the fund s investments are diversified and relatively easy to trade. They also ensure proper administration of the fund. The fund will not engage in any undertaking other than the investment of its fund property for purposes of the Income Tax Act. If the fund is or becomes a registered investment, it will not acquire an investment which is not a qualified investment under the Income Tax Act if, as a result thereof, the fund would become subject to tax under Part X.2 of the Income Tax Act. Short Selling The fund may short sell as permitted by securities regulations. A short sale by the fund involves borrowing securities from a lender and selling those securities in the open market (or selling short the securities). At a later date, the same number of securities are repurchased by that fund and returned to the lender. In the interim, the proceeds from the first sale are deposited with the lender and the fund pays compensation to the lender on the borrowed securities. If the value of the securities declines between the time that the fund borrows the securities and the time it repurchases and returns the securities to the lender, the fund will make a profit for the difference (less any compensation the fund is required to pay to the lender). Selling short provides the fund with more opportunities for profits when markets are generally volatile or declining. The fund will engage in short selling only within certain controls and limitations. Securities will be sold short only for cash and the fund will receive the cash proceeds within normal trading settlement periods for the market in which the short sale is made. All short sales will be effected only through market facilities through which those securities normally are bought and sold. At the time securities of a particular issuer are sold short by the fund, the aggregate market value of all securities of that issuer sold short will not exceed 5% of its total assets of the fund and the aggregate market value of all securities sold short by the fund will not exceed 20% of its total assets. The fund may deposit assets with lenders in accordance with industry practice in relation to its obligations arising under short sale transactions. The fund also will hold cash cover in an amount, including the fund s assets deposited with lenders, that is at least 150% of the aggregate market value of all securities it sold short on a daily marked-to-market basis. No proceeds from short sales will be used by the fund to purchase long positions other than cash cover. 3

5 IRC Approved Transactions The fund has received permission from its independent review committee to (and may from time to time): invest in securities ( related party investments ) of (i) CI Financial Corp., (ii) a Canadian chartered bank which owns approximately 37% of the common shares of CI Financial Corp., and (iii) certain issuers in which such Canadian chartered bank has a significant interest ( related parties ), including unlisted debt securities, and trade in portfolio securities with other mutual funds managed by CI or any of its affiliates ( inter-fund transfers ). Related party investments must comply with the rules relating thereto contained in National Instrument ( NI ) of the Canadian securities administrators. Additionally, among other matters, we or the fund s portfolio advisor must certify that the related party investment (i) represented the business judgment of CI or the portfolio advisor uninfluenced by considerations other than the best interests of the fund and was, in fact, in the best interests of the fund, (ii) was made free from any influence by the related party or any affiliate or associate thereof (other than CI) and without taking into account any consideration relevant to the related party or any associate or affiliate thereof, and (iii) was not part of a series of transactions aiming to support or otherwise influence the price of the securities of the related party or related to another form of misconduct. Inter-fund transfers are subject to the rules relating thereto contained in NI Additionally, among other matters, an inter-fund transfer cannot be intended to (i) smooth out or influence performance results, (ii) realize capital gains or losses, (iii) avoid taxable or distributable income or dividends, or (iv) artificially maintain or otherwise manipulate market prices of the portfolio security. Inter-fund transfers The fund has received permission from the Canadian securities authorities to deviate from the requirements of NI and other securities legislation to purchase securities from, or sell debt securities to, related investment funds or fully managed accounts managed or advised by us or our affiliate provided that (i) the independent review committee of the fund has approved the transaction as contemplated by NI ; and (ii) the transfer complies with certain terms of NI Unlisted Debt Securities and Primary Offering Securities The fund has received permission from the Canadian securities authorities to deviate from the requirements of Canadian securities legislation by purchasing and holding unlisted debt securities of related parties ( unlisted debt securities ) provided that (i) each purchase and holding by the fund of unlisted debt securities is consistent with, or is necessary to meet, the investment objective of the fund; (ii) each unlisted debt security is a debt security issued by a related party that has, at the time of the purchase, an approved credit rating by an approved credit rating organization; (iii) the independent review committee of the fund has approved the transaction as contemplated by NI ; (iv) CI and the independent review committee comply 4

6 with certain requirements of NI in connection with the transactions; (v) the price payable for the unlisted debt security purchased is not more than the ask price of the unlisted security; (vi) the ask price of the unlisted security is determined as follows: (a) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or (b) if the purchase does not occur on a marketplace (A) the fund pays the price for the unlisted debt security at which an independent arm s length seller is willing to sell the unlisted debt security; or (B) if the fund does not purchase the unlisted debt security from an independent arm s length seller, the fund pays the price quoted publicly by an independent marketplace or obtains, immediately before the purchase, at least one quote from an independent arm s length purchaser or seller and pays not more than that quote; (vii) the unlisted debt security is purchased in the secondary market; (viii) the transaction complies with any applicable market integrity requirements as defined in NI ; and (ix) no later than the time the fund files its annual financial statements, the fund files with the securities regulatory authorities or regulator the particulars of any such investments. The fund has received permission from the Canadian securities authorities to deviate from the requirements of Canadian securities legislation to purchase and hold non-exchange traded debt securities of related parties issued pursuant to a primary distribution or treasury offering ( Primary Offering ) provided that (i) the purchase or holding is consistent with, or is necessary to meet, the investment objective of the fund; (ii) at the time of the purchase the independent review committee of the fund has approved the transaction in accordance with NI ; (iii) CI and the independent review committee comply with certain requirements of NI in connection with the transactions; (iv) the size of the Primary Offering is at least $100 million; (v) at least 2 purchasers who are independent, arm s length purchasers, collectively purchase at least 20% of the Primary Offering; (vi) the fund shall not participate in the Primary Offering if following its purchase the fund together with related funds will hold more than 20% of the securities issued in the Primary Offering; (vii) the fund shall not participate in the Primary Offering if following its purchase the fund would have more than 5% of its net assets invested in non-exchange traded debt securities of a related party; (viii) the price paid for the security by the fund in the Primary Offering shall be no higher than the lowest price paid by any of the arm s length purchasers who participate in the Primary Offering; and (ix) no later than the time the fund files its annual financial statements, the fund files with the securities regulatory authorities or regulator the particulars of any such investments. Pre-Authorized Chequing Plans We are not required to send a simplified prospectus to investors who participate in preauthorized investment plans unless they request it at the time they enrol in the investment plan or subsequently request it from their financial advisor. The simplified prospectus and any amendments thereto may be found at or You will not have a withdrawal right for purchases under a pre-authorized investment plan, other than the initial purchase or sale, but you will have the rights described under What are your legal rights? in the simplified prospectus for any misrepresentation about the fund contained in the simplified prospectus, annual information form or financial statements. 5

7 YOUR RIGHTS AS AN INVESTOR As an investor in a Corporate Class, you have the right to share in any dividends that are declared and any capital that is returned through a distribution on the class of shares of the Corporate Class you hold. You can sell your shares at any time and transfer or convert from one fund to another fund. If the fund stops operating, you have the right to share in the fund s net assets after it has paid any outstanding debts. You can pledge your shares as security, but you may not transfer or assign them to another party. Pledging shares held in a registered plan may result in adverse tax consequences. You are entitled to receive notice of shareholder meetings where you will have one vote for each whole share you own. You have the right to vote on the following matters: a change in the method of calculating, or the introduction of, a fee or expense charged to the fund if the change could increase the charges to the fund or its securityholders appointment of a new manager, unless the new manager is an affiliate of the current manager a change in the fund s fundamental investment objective any decrease in the frequency of calculating the net asset value per share of the fund in certain circumstances, a merger with, or transfer of assets to, another mutual fund if: the fund will be discontinued, and investors in the discontinued fund will become investors in another fund a merger with or acquisition of assets from, another mutual fund if: the fund will continue investors in the other fund will become investors in the fund that continues the transaction would be a significant change to the fund that continues If you hold shares of a Corporate Class, you have the right to vote with the common shareholders of CI Corporate Class Limited on the following matters: a material change in the investment management agreement a change to the investment manager of the fund, unless the change is made to an affiliate of the investment manager. The rights, privileges, conditions and restrictions of shares of a Corporate Class may only be changed by a vote of shareholders of the class. If you own securities of any class of the fund, you will be entitled to vote at any meeting of securityholders of that class, for example, to change the management fee payable by that class. You will also be entitled to vote at any meeting called that affects the fund as a whole, for example, to change the investment objective of the fund. If the fund invests in an underlying fund it will not vote any of the securities it holds of the underlying fund. However, we may arrange for you to vote your share of those securities. HOW PORTFOLIO SECURITIES ARE VALUED The price of a share is called the net asset value (or NAV) per share, or the share value. We calculate a separate NAV for each class of the fund s shares. We take the fair value of the assets 6

8 in the class of fund shares, subtract the fair value of any liabilities of the class of fund shares and divide the balance by the number of shares investors in that class are holding. When you buy, sell, transfer or convert shares of the fund, the price is the next NAV we calculate after receiving your order. We calculate NAV at 4:00 p.m. Eastern time on each valuation day which is each day that the Toronto Stock Exchange is open for a full day of business. We calculate the value of the fund s assets in Canadian dollars. We calculate the value of the assets of certain funds in Canadian and U.S. dollars. When we do so, we determine the net asset value in Canadian dollars and convert it to U.S. dollars using the exchange rate at 4:00 p.m. Eastern time that valuation day. The valuation day used to process your order is called the trade date. In calculating the NAV, the fund values the various assets as described below. We may deviate from these valuation practices in circumstances where this would be appropriate, for example, if trading in a security is halted because of significant negative news about the company. Type of asset Liquid assets, including cash on hand or on deposit, accounts receivable and prepaid expenses Money market instruments Bonds, term notes, shares, subscription rights and other securities listed or traded on a stock exchange Bonds, term notes, shares, subscription rights and other securities not listed or traded on a stock exchange Restricted securities as defined in NI Long positions in clearing corporation options, options on futures, over-the-counter options, debt-like securities and listed warrants Method of valuation Valued at full face value unless we determine the asset is not worth full face value, in which case we will determine a fair value. The purchase cost amortized to the instrument s due date. The latest available sale price reported by any means in common use. If a price is not available, we determine a price not higher than the latest available asked price and not lower than the latest available bid price. If the securities are listed or traded on more than one exchange, the fund calculates the value in a manner that we believe accurately reflects fair value. If we believe stock exchange quotations do not accurately reflect the price the fund would receive from selling a security, we can value the security at a price we believe reflects fair value. The price quotation or valuation that we believe best reflects fair value. The market value of securities of the same class which are not restricted, multiplied by the percentage that the fund s acquisition cost was of the market value of such securities at the time of acquisition, provided that a gradual taking into account of the actual value of the securities may be made where the date on which the restrictions will be lifted is known or such lower value as may be available from reported quotations in common use. The current market value. 7

9 Type of asset Premiums received from written clearing corporation options, options on futures or over-thecounter options Futures contracts, forward contracts and swaps Assets valued in foreign currency, deposits, contractual obligations payable to the fund in foreign currency and liabilities and contractual obligations the fund must pay in foreign currency Precious metals Securities of other mutual funds Method of valuation Treated as deferred credits and valued at an amount equal to the market value that would trigger closing the position. The deferred credit is deducted when calculating the net asset value of the fund. Any securities that are the subject of a written clearing corporation option or over-the-counter option will be valued as described above. Valued according to the gain or loss the fund would realize if the position were closed out on the day of the valuation. If daily limits are in effect, the value will be based on the current market value of the underlying interest. Valued using the exchange rate at 4:00 p.m. Eastern time that valuation day. Precious metals (certificates or bullion) and other commodities are valued at their fair market value, generally based on prevailing market prices as reported on exchanges or other markets. The value of the securities will be the net asset value per security on that day or, if the day is not a valuation date of the mutual fund, the net asset value per security on the most recent valuation date for the mutual fund. We may appoint an agent to perform valuation services for us. Any valuation services will be done using the methods of valuation described above. When a portfolio transaction becomes binding, the transaction is included in the next calculation of the fund s net asset value. Sales and purchases of fund shares are included in the next calculation of net asset value after the purchase or sale is completed. The liabilities of each class of a Corporate Class include: its proportionate share of the amounts listed above that are common to more than one class all liabilities the class incurs directly. National Instrument Investment Fund Continuous Disclosure requires the fund to calculate its net asset value by determining the fair value of its assets and liabilities. In doing so, the fund calculates the fair value of its assets and liabilities using the valuation policies described above. This differs from Canadian Generally Accepted Accounting Principles ( Canadian GAAP ) which require the fair value of long positions to be determined using bid prices and the fair value of short positions to be determined using ask prices. The financial statements of the fund will contain a comparison of the net assets in accordance with Canadian GAAP and the net asset value used by the fund for all other purposes. PURCHASES, SWITCHES AND REDEMPTIONS The fund is sold in shares, each representing an equal interest in the fund. You will find a list of all of the classes of shares they offer on the front cover of this annual information form. 8

10 Each class of shares offered by the fund is different from other classes offered by that fund. These differences are summarized below. Class Generally available Class A, AT5 and AT8 shares Class E, ET5 and ET8 shares Class O, OT5 and OT8 shares Features Class A, AT5 and AT8 shares are available to all investors in the fund. Class AT5 and AT8 shares have the added feature that they pay monthly distributions. Monthly distributions on Class AT5 and AT8 shares will be tax-free returns of capital until the adjusted cost base of your shares for tax purposes is exhausted. Class E, ET5 and ET8 shares are available to investors through PIM. The minimum initial investment for these classes of shares is $100,000 per fund. However, in certain circumstances where an investor has a minimum investment of $250,000 within one account with us, the minimum initial investment into a fund within PIM may be reduced to $25,000. Class ET5 and ET8 shares have the added feature that they pay monthly distributions. Monthly distributions on Class ET5 and ET8 shares will be tax-free returns of capital until the adjusted cost base of your shares for tax purposes is exhausted. Class O, OT5 and OT8 shares are available to investors through PIM. The minimum initial investment for these classes of shares is $100,000 per fund. However, in certain circumstances where an investor has a minimum investment of $250,000 within one account with us, the minimum initial investment into a fund within PIM may be reduced to $25,000. No management fees are charged to the fund with respect to Class O, OT5 or OT8 shares; each investor will be charged a management fee directly by us and payable directly to us. Available to fee-based accounts Class F, FT5 and FT8 shares Class OT5 and OT8 shares have the added feature that they pay monthly distributions. Monthly distributions on Class OT5 and OT8 shares will be tax-free returns of capital until the adjusted cost base of your shares for tax purposes is exhausted. Class F, FT5 and FT8 shares are available only to investors who participate in fee-based programs through their financial advisor. These investors pay their financial advisor s dealer, and in certain cases, we will collect these fees on behalf of the financial advisor s dealer, an annual investment advisory fee (which the investor negotiates with their financial advisor) for 9

11 ongoing services. Since we pay no commissions or trailing commissions to their financial advisor s dealer and our servicing costs are lower, we charge a lower management fee to the fund in respect of these classes than we charge the fund for its Class A, AT5 or AT8 shares. You can only buy these classes if your financial advisor s dealer and we approve it. Availability of these classes through your financial advisor is subject to our terms and conditions. Other groups of investors may be permitted to purchase these classes if we incur no distribution costs and it makes sense for us to charge a lower management fee. Class FT5 and FT8 shares have the added feature that they pay monthly distributions. Monthly distributions on Class FT5 and FT8 shares will be tax-free returns of capital until the adjusted cost base of your shares for tax purposes is exhausted. Available to institutional investors Class I and IT8 shares Class I and IT8 shares are available only to institutional clients and investors who have been approved by us and have entered into a Class I Account Agreement with us. The criteria for approval may include the size of the investment, the expected level of account activity and the investor s total investment with us. The minimum initial investment for these classes of shares is determined when the investor enters into a Class I Account Agreement with us. No management fees are charged to the fund with respect to Class I or IT8 shares; each investor will negotiate a separate fee which is payable directly to us. Each investor also pays his/her financial advisor s dealer an annual investment advisory fee (which the investor negotiates with his/her financial advisor) for ongoing services. Class I and IT8 shares also are available to directors and employees of us and our affiliates. For convenience of reference in this document: Class IT8 shares have the added feature that they pay monthly distributions. Monthly distributions on Class IT8 shares will be tax-free returns of capital until the adjusted cost base of your shares for tax purposes is exhausted. Class A, AT5 and AT8 shares are sometimes referred to, collectively, as A shares, Class E, ET5 and ET8 shares are sometimes referred to, collectively, as E shares, Class F, FT5 and FT8 shares are sometimes referred to, collectively, as F shares, 10

12 Class O, OT5 and OT8 shares are sometimes referred to, collectively, as O shares, Class I and IT8 shares are sometimes referred to, collectively, as I shares. The fund can issue as many shares of a class as it chooses, including fractions. Class E, ET5, ET8, O, OT5 and OT8 shares are available only to investors who participate in our program called Private Investment Management (or PIM). As mentioned above, holders of Class AT5, AT8, ET5, ET8, FT5, FT8, IT8, OT5 and OT8 shares (also called the T-Class Securities) receive regular monthly cash distributions called a Monthly Amount. We determine the Monthly Amount by multiplying the net asset value per share of the class at the end of the previous calendar year (or, if no shares of the class were outstanding at the end of the previous calendar year, the date on which the shares are first available for purchase in the current calendar year) by 5% for Class AT5, ET5, FT5 and OT5 shares or by 8% for Class AT8, ET8, FT8, IT8 and OT8 shares, and dividing the result by 12. T- Class Securities are not available for purchase through a registered plan (other than a tax-free savings account). If the value of your shares in the fund is less than $500 ($5,000 in the case of T-Class Securities (other than ET5, ET8, OT5 and OT8)) and $100,000 per fund in the case of Class E, ET5, ET8, O, OT5, OT8 shares (or such other amount as agreed)), we can sell your shares and send you the proceeds. We will give your financial advisor 10 days notice first. If we become aware that you no longer qualify to hold E shares, F shares, I shares or O shares of the fund, we may change your shares to A shares or F shares (whichever class is most comparable) of the same fund after we give your financial advisor 30 days notice. To buy the fund or transfer your investment to other funds in the CI Funds family, contact a financial advisor. Transferring is also known as switching. A transfer from a Corporate Class to another CI Fund of CI Corporate Class Limited is called a conversion. We reserve the right to change the minimum required amount to participate in PIM at any time upon giving 30 days prior written notice to your financial advisor s dealership. If the value of your securities in PIM is less than the minimum amount we determine (currently $100,000 per fund (or such other amount as agreed by us)), your participation in PIM will be terminated and we can sell your shares and send you the proceeds or switch the securities in your PIM account(s) to Class A, AT5, AT8, F, FT5 or FT8 shares (whichever is most comparable) of the same fund. However, before doing so, your financial advisor will be notified and given 30 days to invest the amount necessary to increase the size of your investment to an amount equal to or greater than the new minimum required investment size. To sell your fund securities, contact your financial advisor or us. Selling your securities is also known as redeeming. We base all transactions on the next net asset value per share calculated after receiving your order to buy, transfer or sell. 11

13 How to buy the fund You can invest in the fund by completing a purchase application, which you can get from your financial advisor. The minimum initial investment for Class A and F shares of the fund (other than T-Class Securities) is $500 ($5,000 in the case of T-Class Securities). The minimum for each subsequent investment is $50. Private Investment Management (PIM) The minimum initial investment for Class E, ET5, ET8, O, OT5 and OT8 shares of the fund is $100,000. However, in certain circumstances where an investor has a minimum investment of $250,000 within one account with us, the minimum initial investment into a new fund within PIM may be reduced to $25,000. With a $250,000 initial investment and with all assets held within one account with us, investors may create a PIM Household Group, where the aggregate of all assets will be taken into account for management fee rebates. The minimum for each subsequent investment into an existing fund is $5,000. All purchases Your financial advisor s dealer or we will send you a confirmation once we have processed your order. If you buy through the pre-authorized chequing plan, we will send you a confirmation only for the first transaction and all other transactions will be reported on your semi-annual and annual statements if your investments are made no less frequently than monthly, otherwise we will confirm each subsequent purchase. A confirmation shows details of your transaction, including the name of the fund, the number and class of shares you bought, the purchase price and the trade date. We do not issue certificates of ownership for the fund. We can refuse an order to buy the fund within one business day of receiving it. If we do so, we will return all money received, without interest, to you or your financial advisor s dealer, once the payment clears. You have to pay for your shares when you buy them. If we do not receive payment for your purchase from your financial advisor within three business days of the trade date, we are obliged under securities regulations to sell your shares on the fourth (or second, as the case may be) business day after the trade date (or when we first learn that your payment will not be honoured), unless we receive your payment before we sell the shares. If the proceeds from the sale are more than the cost of buying the shares, the fund will keep the difference. If the proceeds are less than the cost of buying the shares, your financial advisor s dealer must pay the difference and any related costs. Your financial advisor s dealer may require you to reimburse the amount paid if the financial advisor s dealer suffers a loss because you failed to settle a purchase of fund shares. 12

14 Purchase options There is usually a charge for investing in A, AT5, AT8, E, ET5 and ET8 shares. You have two options for Class A, AT5 and AT8 shares: the initial sales charge or the deferred sales charge. If you do not make a choice, we will apply the standard deferred sales charge option. Class E, ET5 and ET8 shares can be purchased only through the initial sales charge option. Class F, FT5, FT8, I, IT8, O, OT5 and OT8 shares can be purchased only through the no load option. Initial sales charge option With the initial sales charge option, you usually pay a sales commission to your financial advisor s dealer when you buy securities of the fund. The sales commission is a percentage of the amount you invest and is paid to your financial advisor s dealer, but cannot exceed 5% of the amount you invest. You negotiate the actual commission with your financial advisor. We deduct the commission from your purchase and pay it to your financial advisor s dealer. For more information, see the simplified prospectus. Deferred sales charge option Under the deferred sales charge, there are two options: the standard deferred sales charge and the low-load sales charge. If you choose a deferred sales charge option, you pay no commission when you invest in the fund. The entire amount of your investment goes toward buying fund securities and we pay the financial advisor s commission directly to our financial advisor s dealer. However, if you sell your securities within seven years of buying them (under the standard deferred sales charge) or within three years of buying them (under the low-load sales charge), you will pay a redemption fee. Standard deferred sales charge The redemption fee is based on a percentage of the cost of the shares. It starts at 5.5% and decreases each year over a seven year period. If you hold your fund shares for more than seven years, you pay no redemption fee. If you choose the standard deferred sales charge, you can sell or change some of your shares each year without paying a fee or so that they are no longer subject to a redemption fee, as applicable, under the free redemption right. You will find more details about the standard deferred sales charge in the fund s simplified prospectus. Low-load sales charge The redemption fee is based on the cost of the shares. It starts at 3% in the first year and decreases each year over a three year period. If you hold your fund shares for more than three years, you pay no redemption fee. You will find more details about the low-load sales charge in the fund s simplified prospectus. If you choose the low-load sales charge, you may not sell your shares until the beginning of the fourth year without paying a redemption fee. 13

15 Investment advisory fee option For Class F, FT5, FT8, I, IT8, O, OT5 and OT8 shares, we may have an arrangement to collect the investment advisory fee on behalf of your financial advisor s dealer by redeeming (without charges) a sufficient number of shares from your account on a quarterly basis. Where we collect the investment advisory fee on behalf of your financial advisor s dealer, the investment advisory fee must not exceed 1.50% in the case of Class F, FT5 and FT8 shares, and, in the absence of instructions to the contrary, will be presumed to be 1.50%. For Class I and IT8 shares, the investment advisory fee must not exceed 1.00%, and it will be presumed to be 0% in the absence of instructions to the contrary. For Class O, OT5 and OT8 shares, default investment advisory fees are automatically charged to you and collected by us on behalf of your financial advisor s dealer and paid to your financial advisor s dealer (as shares redeemed from your holdings on a quarterly basis). Alternatively, you may negotiate a different investment advisory fee with your financial advisor, which may not exceed 1.25%. Written instructions must be received by us in order to change the default investment advisory fee. For Class I, IT8, O, OT5 and OT8 shares, these investment advisory fees are in addition to other fees that are separately negotiated with and directly payable to us. Note that these investment advisory fees are subject to applicable provincial and federal taxes. Reduced management fees To encourage large investments in the fund, we may reduce the management fees we charge. If you make a large investment in the fund, we may rebate a portion of the management fee directly to you, which is called a management fee rebate. We negotiate the amount of the reduction with you. It is based on the size of your holdings (generally, your holdings must be more than $10 million), among other things. We calculate management fee rebates on each business day. It is paid regularly to eligible investors. Management fee rebates will not have adverse tax consequences to the fund. Management fee rebates are paid by us. For all classes with a prescribed management fee rate, other than Class E, ET5 and ET8, we will reinvest the rebate in the fund with respect to which a rebate was paid, unless you tell us you want to receive it in cash or reinvest it in another fund. CI Private Investment Management Fee Reduction Program If you invest in Class E, ET5 and/or ET8 shares and have a minimum investment of $250,000 in a single account with us, we may, in our sole discretion, offer you the opportunity to participate in the Fee Reduction Program. The Fee Reduction Program will allow you to benefit from management fee reductions and the amount of fee reduction is calculated in accordance with a fixed schedule. However, we may negotiate a further fee reduction with you if the size of your holdings or your PIM Household Group s holdings is greater than $5 million. We will rebate a portion of the management fee directly to you in the form of a management fee rebate. 14

16 The calculation of the average net asset value of Class E, ET5 and ET8 shares of the fund for the Fee Reduction Program will be based on an investor s daily aggregate investment in Class E, ET5 and ET8 shares of the fund during each quarter. Following the end of each quarter, the fees that would otherwise be payable indirectly by the investor who qualified and participated in the Fee Reduction Program will be rebated to the investor in the form of a reinvestment in additional shares of the respective class of the fund. There is no option to have the rebate paid out in cash. Management fee rebates will not have adverse tax consequences to the fund. We may vary the terms, conditions and investor qualifications of the Fee Reduction Program from time to time in our sole discretion or may discontinue the program. Transferring or converting to another fund You can transfer from one fund to another fund by contacting your financial advisor. A transfer from one Corporate Class to another Corporate Class is called a conversion. Give your financial advisor the name of the fund and the class you hold, the dollar amount or number of shares you want to transfer or convert and the name of the fund and the class to which you are transferring or converting. You can only transfer or convert between funds in the same class that are priced in the same currency. If a fund is available in both Canadian and U.S. dollars, you can transfer or convert your shares in one currency to shares of the same fund in the other currency. If you transfer or convert shares you bought under a deferred sales charge option, the same deferred sales charge option will apply to your new shares. You pay no redemption fee when you transfer or convert shares you bought under the deferred sales charge option, but you may have to pay a redemption fee when you sell the new units or shares. If the redemption fee applies, we will calculate it based on the cost of the original shares and the date you bought the original shares. You may have to pay your financial advisor s dealer a fee of up to 2% of the value of the shares you are transferring or converting. The fee is negotiable. If you have held the shares 30 business days or less, you may also have to pay a short-term trading fee. Transferring shares from one fund to another fund (other than a conversion) is a disposition for tax purposes. If you hold your shares outside a registered plan, you may realize a taxable capital gain. Converting shares from one Corporate Class to another Corporate Class is not a disposition for tax purposes. Changing or converting to another class You can change or convert your shares of one class to shares of another class of the same fund by contacting your financial advisor. If you bought your shares under a deferred sales charge option, you will pay us a reclassification fee equal to the redemption fee you would pay if you redeemed your shares. No other fees apply. 15

17 You can only change shares into a different class if you are eligible to buy them. Changing or converting shares from one class to another class of the same fund is not a disposition for tax purposes except to the extent that shares are redeemed to pay a reclassification fee. If those redeemed shares are held outside a registered plan, you may realize a taxable capital gain. Selling shares To sell your shares, send your signed instructions in writing to your financial advisor or to us. Once we receive your order, you cannot cancel it. We will send you a confirmation once we have processed your order. You will receive payment in the currency in which you bought the fund. We will send your payment within three business days of receiving your properly completed order. Your signature on your instructions must be guaranteed by a bank, trust company, or financial advisor s dealer if the sale proceeds are: more than $25,000, or paid to someone other than the registered owner. If the registered owner of the shares is a corporation, partnership, agent, fiduciary or surviving joint owner, we may require additional information. If you are unsure whether you need to provide a signature guarantee or additional information, check with your financial advisor or us. You must provide all required documents within 10 business days of the trade date. If you do not, we will buy back the shares on the 11th business day. If the cost of buying the shares is less than the sale proceeds, the fund will keep the difference. If the cost of buying the shares is more than the sale proceeds, your financial advisor s dealer must pay the difference and any related costs. Your financial advisor s dealer may require you to reimburse the amount paid if the financial advisor s dealer suffers a loss because you failed to meet the requirements for redeeming fund shares. Suspending your right to sell shares Securities regulations allow us to temporarily suspend your right to sell your fund securities and postpone payment of your sale proceeds: during any period when normal trading is suspended on any exchange on which securities or derivatives that make up more than 50% of the fund s value or its underlying market exposure are traded, provided those securities or derivatives are not traded on any other exchange that is a reasonable alternative for the fund, or with the approval of securities regulators. This includes the right to suspend redemptions of the fund if it invests all of its assets directly and/or through derivatives in units or shares of underlying funds during periods when the right to redeem its underlying funds is suspended. 16

18 We will not accept orders to buy fund securities during any period when we have suspended investors rights to sell their securities. Short-term trading We have computerized systems in place for detecting short-term trading in shares of the fund. It is our policy that the fund may charge a fee of up to 2% of the value of the shares redeemed or switched if the redemption or switch involved short-term trading. This fee is paid to the fund and is in addition to any other fees that may apply. No short-term trading fees are charged for any systematic transactions, such as periodic switches or redemptions, or trades as part of an automatic portfolio rebalancing service. We may waive the short-term trading fee charged by the fund for other trades if the size of the trade was small enough or the short-term trade did not otherwise harm other investors in the fund. The fund does not have any arrangements, formal or informal, with any person or company to permit short-term trading. We will adopt policies on short-term trading mandated by regulation if and when implemented by securities regulators. The policies will be adopted without amendment to the simplified prospectus or annual information form or notice to you, unless otherwise required by securities laws. 17

19 OPERATION OF THE FUND Manager CI Investments Inc. 2 Queen Street East Twentieth Floor M5C 3G As manager, we are responsible for managing the day-to-day undertakings of the fund. We provide all general management and administrative services, including valuation of fund assets, accounting and keeping investor records. You will find details about our management agreement with the fund under Material contracts Management agreement below. The following is a list of individuals who are the directors and officers of CI Investments Inc. No payments or reimbursements have been made by the fund to such directors and officers. Name and municipality of residence Peter W. Anderson Markham, Ontario Office held with CI Principal occupation in the last 5 years Investments Inc. Director Director, CI Investments Inc. since November 2011 Before October 2012, Executive Vice-President, CI Financial Corp. since December 2008 and Chief Investment Officer since June 2011 Before March 2010, Chief Executive Officer, CI Investments Inc. since June 2006 Before September 2010, Director since June 2006 and Chairman since March 2010, CI Investments Inc. Before October 2012, Director and Executive Vice- President, CI Financial General Partner Corp. since June 2006 Paul W. Derksen Clarksburg, Ontario A. Winn Oughtred Director Director, CI Financial Corp. since December 2008 Before December 2008, Trustee of CI Financial Income Fund or director of its predecessors since July 2002 Director Director, CI Financial Corp. since December 2008 Before December 2008, Trustee of CI Financial Income Fund or director of its predecessors since April 1994 Before January 2009, Partner, Borden Ladner Gervais LLP since May

20 Name and municipality of residence Derek J. Green Douglas J. Jamieson David C. Pauli Mississauga, Ontario Chris von Boetticher Office held with CI Investments Inc. President and Chief Executive Officer Senior Vice-President, Finance and Chief Financial Officer Executive Vice-President and Chief Operating Officer Vice-President, General Counsel and Secretary Principal occupation in the last 5 years Before December 2010, Director, CI Investments Inc. since September 2010 Chief Executive Officer of CI Investments Inc. since March 2010 and President since September 2006 Before December 2010, Director, CI Investments Inc. since September 2010 Senior Vice-President and Chief Financial Officer, CI Financial Corp. since December 2008 Senior Vice-President and Chief Financial Officer, CI Financial General Partner Corp. since July 2006 Before December 2010, Director, CI Investments Inc. since September 2010 Executive Vice-President and Chief Operating Officer, CI Financial Corp. since December 2008 Executive Vice-President and Chief Operating Officer, CI Financial General Partner Corp. since August 2007 Executive Vice-President and Chief Operating Officer, CI Investments Inc. since May 2005 Before December 2010, Director, CI Investments Inc. since September 2010 Vice-President, General Counsel and Secretary, CI Investments Inc. since March 2009 Before March 2009, Vice-President, Legal, CI Investments Inc. since July

21 Name and municipality of residence Sheila A. Murray Gerald F. Coleman Oakville, Ontario Stephen F. Jenkins St. Catharines, Ontario Eric B. Bushell Neal A. Kerr Giuseppe (Joe) D Angelo Office held with CI Investments Inc. Executive Vice-President Co-Chief Investment Officer and Senior-Vice President Co-Chief Investment Officer and Senior-Vice President Senior Vice-President, Portfolio Management Senior Vice-President Vice-President, Portfolio Management Principal occupation in the last 5 years Executive Vice-President, General Counsel and Secretary, CI Financial Corp. since February 2009 Before February 2009, Senior Vice-President, General Counsel and Secretary, CI Financial Corp. since December 2008 Director, Executive Vice-President, General Counsel and Secretary, CI Financial General Partner Corp. since February 2009 Before February 2009, Director, Senior Vice-President and General Counsel, CI Financial General Partner Corp. since January 2008 Before September 2010, Director, CI Investments Inc. since March 2009 Executive Vice-President, CI Investments Inc. since March 2009 Before March 2009, Director, Executive Vice- President, General Counsel and Corporate Secretary, CI Investments Inc. since February 2009 Before February 2009, Director, Senior Vice-President, General Counsel and Corporate Secretary, CI Investments Inc. since January 2008 Before January 2008, Partner of Blake, Cassels & Graydon, LLP since 1982 Co-Chief Investment Officer and Senior Vice President since November 2012 Before November 2012, Senior Investment Officer, CI Investments Inc. since June 1997 Co-Chief Investment Officer and Senior Vice President since November 2012 Before November 2012, Senior Investment Officer, CI Investments Inc. since June 1997 Senior Vice-President, Portfolio Management, CI Investments Inc. since January 2000 Senior Vice-President, CI Investments Inc. since November 2006 Vice-President, Portfolio Management, CI Investments Inc. since January