CI Canadian Growth Portfolio Annual Report as at December 31

Transcription

1 CI Canadian Growth Portfolio 2002 Annual Report as at December 31

2 A Message from the President The past three years have been the most challenging on global markets in 50 years. What makes this more unsettling is that these conditions follow a decade of unprecedented market growth. So, for many investors, these markets may be a new experience. Service CI s Client Services team can be reached toll-free at or by at service@cifunds.com. You can also access your account through CI s state-of-the-art website at by clicking on My Account. In addition, our site has a great deal of information about our funds and about In times like these, it is tough to stay focused on the long term. investing in general. However, history tells us that the markets will turn around and resume their long-term upward trend, reflecting the ongoing growth of companies and the overall economy. We know the markets are challenging, but our goals have never changed to provide you, through your adviser, with the products and services you need to meet your financial goals. In spite of the current market conditions, CI has taken steps to ensure we continue to provide you with the investment options you need. Here is what CI offers: Thank you for investing with CI Funds. We realize that it is a privilege to manage your money. If you have any questions, please contact your adviser or our Client Services Department. Experience CI has been providing investment products and services since We manage over $30 billion on behalf of Yours truly, more than 1.4 million Canadians. Choice Whether you re looking for Canadian or global equity funds, fixed-income or balanced funds, they are all available from CI. Our varied investment options include mutual funds, segregated funds, tax-advantaged funds, RSP-eligible foreign funds and the CI Portfolio Series. Peter W. Anderson President, CI Mutual Funds Inc. Expertise Our wide range of investment funds is combined February 1, 2003 with world-class portfolio managers like Gerry Coleman (named Fund Manager of the Year at the 2001 Canadian Mutual Fund Awards and manager of Harbour Fund, named Best Canadian Equity Fund in 2002), Eric Bushell (manager of Signature Dividend Fund, which was selected Best Dividend Fund in 2001 and 2002, and of Signature Select Canadian Fund, named Best Canadian Equity Fund in 2001), and Bill Miller (named Fund Manager of the Decade for the 1990s by Morningstar).

3 CI Canadian Growth Portfolio (Formerly Spectrum Canadian Growth Portfolio) The CI Canadian Growth Portfolio offers diversification across asset classes, investment styles, economic sectors and geographic regions. This portfolio features strong Canadian equity content complemented by global equities with some fixed-income securities to control volatility. This portfolio is for long-term investors who are seeking strong capital growth and are comfortable with short-term volatility. Fund Objective: To achieve long-term capital growth by investing primarily in equity mutual funds. The portfolio may also invest in income mutual funds to reduce overall portfolio volatility. Portfolio Adviser: CI Mutual Funds Inc. (since July 2002; prior to that Spectrum Investment Management Limited) Fund Assets: $60.4 million AT A GLANCE Compound Annual Returns [%] Class A Class F Class I 1 year years -3.4 N/A years 1.6 N/A 3.8 Since Inception Current Value of $10,000 Investment in Class A units $15,000 $10,000 $5,000 $10,891 PERFORMANCE Total Annual Distribution: Class A Class F Class I 2002 $ - $ - $ - C$ NAV at December 31 each year: Class A Class F 2002 $ x.xx $ x.xx NAV per Unit: Class A Cdn $9.49 Class F Cdn $8.02 Class I Cdn $10.36 Inception: November 1997 Nov. '97 '98 '99 '00 '01 Dec. '02 ALLOCATION RSP/RIF Eligible: 100% Distribution: Paid annually Management Expense Ratio: Class A 2.58% Class F 1.57% Class I 0.39% Fund Code: CIG Front End DSC Class A Cdn 7780 Cdn 7785 Class F Cdn 7786 Cdn Class I Cdn 7900 Cdn Target Asset Allocation Weighting [%] Canadian Fixed Income Canadian Equities Global Equities Allocated Underlying Fund Percentage [%] Canadian Fixed Income 20 CI Mid-Term Bond Fund 15 Signature High Income Fund 5 Canadian Equities 55 CI Canadian Equity Fund 20 CI Canadian Stock Fund 18 CI Canadian Investment Fund 10 CI Canadian Small-Cap Fund 7 Global Equities 25 CI World Equity Fund 9.5 CI TACTONICS Fund 10 CI Global Small Companies Fund 3 CI Emerging Markets Fund 2.5 CI Canadian Growth Portfolio 2002 Annual Report as at December 31, 2002

4 CI Canadian Growth Portfolio Top 5 Holdings of Underlying Funds Underlying Fund Name: CI Mid-Term Bond Fund Fund Adviser: J. Zechner Associates Inc. Canadian Gov't 6% 06/01/ [Canada, Government Bonds] Canadian Gov't 8.75% 12/01/ [Canada, Government Bonds] Canadian Gov't 6% 06/01/ [Canada, Government Bonds] Province of Ontario 7.5% 01/19/06... [Canada, Government Bonds] Province of Ontario 6.2% 11/19/09... [Canada, Government Bonds] Underlying Fund Name: Signature High Income Fund Fund Adviser: CI Mutual Funds Inc. Enerplus Resources Fund [Canada, Energy] Canadian Oil Sands Trust [Canada, Energy] ARC Energy Trust [Canada, Financials] Davis & Henderson Income Fund... [Canada, Industrials] Atlas Cold Storage Income Trust.... [Canada, Industrials] Underlying Fund Name: CI Canadian Equity Fund Fund Adviser: Sionna Investment Managers, Inc. Royal Bank of Canada [Canada, Financials] Bank Of Montreal [Canada, Financials] Magna Intl Inc [Canada, Consumer Discretionary] Bank of Nova Scotia [Canada, Financials] Power Corp [Canada, Financials] Underlying Fund Name: CI TACTONICS Fund Fund Adviser: Webb Capital Management LLP Placer Dome Inc [Canada, Materials] Barrick Gold Corp [Canada, Materials] Goldcorp Inc [Canada, Materials] Meridian Gold Inc [Canada, Materials] Glamis Gold Ltd [Canada, Materials] Underlying Fund Name: CI Global Small Companies Fund Fund Adviser: Steinberg Priest & Sloane Capital Management, LLC Alliant Techsystems Inc [United States, Industrials] Stada Arzneimittel AG [Germany, Health Care] Kaba Holdings AG [Switzerland, Industrials] Arch Capital Group Ltd [United States, Financials] Campari Group [Italy, Consumer Staples] Underlying Fund Name: CI Emerging Markets Fund Fund Adviser: Trident Investment Management, LLC Yukos, ADR [Russia, Energy] GP Capital Partners L.P [Brazil, Materials] EnCana Corp [Canada, Energy] Sasol Ltd [South Africa, Materials] Sony Corp [Japan, Consumer Discretionary] Underlying Fund Name: CI Canadian Stock Fund Fund Adviser: MFS Institutional Advisors, Inc. Royal Bank of Canada [Canada, Financials] Bank of Nova Scotia [Canada, Financials] EnCana Corp [Canada, Energy] BCE Inc [Canada, Telecommunication Services] National Bank of Canada [Canada, Financials] Underlying Fund Name: CI Canadian Investment Fund Fund Adviser: Sionna Investment Managers, Inc. Royal Bank of Canada [Canada, Financials] Bank of Montreal [Canada, Financials] Magna International Inc [Canada, Consumer Discretionary] Alcan Inc [Canada, Materials] Bank of Nova Scotia [Canada, Financials] Underlying Fund Name: CI Canadian Small-Cap Fund Fund Adviser: Howson Tattersall Investment Counsel Limited Aur Resources Inc [Canada, Materials] Robbins & Myers [United States, Industrials] Baytex Energy Ltd [Canada, Energy] NQL Drilling Tools Inc [Canada, Energy] Canadian Western Bank [Canada, Financials] Underlying Fund Name: CI World Equity Fund Fund Adviser: MFS Institutional Advisors, Inc. Syngenta AG [Switzerland, Materials] Diageo PLC [Britain, Consumer Staples] Reckitt Benckiser PLC [Britain, Consumer Staples] Praxair Inc [United States, Materials] Unilever N.V [Netherlands, Consumer Staples] The accompanying notes are an integral part of these financial statements. CI Canadian Growth Portfolio 2002 Annual Report as at December 31, 2002

5 CI Canadian Growth Portfolio Statements of Financial Highlights (for the periods ended December 31 and September 30 (Note 1)) Class A Class F Class I Period ended Years ended Period ended Year ended Period ended Years ended Dec. 31 Sept. 30 Dec. 31 Sept. 30 Dec. 31 Sept. 30 Net asset value per unit, beginning of period Distribution per unit: From net income From net realized gain Net income (loss) per unit Net realized and unrealized appreciation (depreciation) of investments per unit Surplus (deficiency) of capital transactions over original cost per unit (f) Net asset value per unit, end of period 2002 $ 2001 $ 2000 $ 1999 $ 1998 $ 2002 $ 2001 $ 2002 $ 2001 $ 2000 $ 1999 $ 1998 $ (0.04) (0.06) (0.08) (0.11) (0.14) (0.09) - (0.58) (0.11) (0.11) (0.46) - (0.65) - (0.65) (0.13) (0.19) (0.46) - (0.58) (0.15) (0.17) (0.54) - (0.65) - (0.65) (0.24) (0.33) (0.55) (0.14) (0.03) (0.06) (0.04) (0.09) (0.01) (0.03) 0.15 (0.03) (0.15) (1.96) (0.78) (0.12) (1.20) (0.16) (1.83) (0.86) (0.29) (1.99) (0.87) (0.13) (1.23) (0.01) (1.86) (0.68) Ratios & Supplemental Data Total return (%) (a) Average net assets ($000 s) (b) Management expense information (c) Management expense ratio before absorption of operating expenses (%) Management and operating expenses (%) Goods and services tax expenses (%) Total management expense ratio (%) Portfolio turnover rate (d) (1.97) (16.70) (0.98) (14.93) ,048 44,321 33,249 18,167 8, ,035 18,508 13,913 1,000 1, Units Issued and Outstanding Balance beginning of period Units issued for cash including re-invested distributions Units redeemed Balance end of period 4,218,174 3,562,185 2,168-1,717,864 1,446, ,015 1,077,133 9,651 2, , ,983 (815,247) (421,144) (10,560) - (214,170) (435,504) 4,210,942 4,218,174 1,259 2,168 1,968,358 1,717,864 Additional Fund Notes (in $000 s) Brokerage Commissions Net capital loss carried forward Non-capital loss carried forward (e) - - 4, (a) (b) (c) (d) (e) (f) Total return is the historical annualized rate of return of an investment for the period, assuming reinvestment of all distributions at net asset value. Average net assets are calculated based on the daily net assets outstanding. Management expense information is calculated based on expenses charged directly to the fund plus, if applicable, expenses of the underlying funds, calculated on a weighted average basis based on the percentage weighting of each underlying fund, and is expressed as annualized percentage of average net assets for the period. Portfolio turnover rate equals the lesser of purchases or sales divided by the average net assets of the fund. Losses will expire within seven years. For the years prior to 2002, the amount is included in Net realized and unrealized appreciation (depreciation) of investments per unit. Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements. The accompanying notes are an integral part of these financial statements. CI Canadian Growth Portfolio 2002 Annual Report as at December 31, 2002

6 CI Canadian Growth Portfolio Investment Portfolio (as at December 31, 2002) Average Market No. of Units Investment Cost ($) Value ($) 283,494 Signature High Income Fund (Class I) 2,838,957 2,925, ,167 CI TACTONICS Fund (Class I) 5,307,066 5,610, ,869 CI World Equity Fund (Class I) 7,351,350 6,104, ,725 CI Mid-Term Bond Fund (Class I) 8,483,057 8,888, ,410 CI Canadian Stock Fund (Class I) 11,609,132 11,114, ,727 CI Canadian Investment Fund (Class I) 5,292,092 6,066, ,099 CI Canadian Equity Fund (Class I) 13,015,314 11,999, ,196 CI Canadian Small Cap Fund (Class I) 4,469,568 4,437, ,430 CI Emerging Markets Fund (Class I) 1,330,159 1,385, ,246 CI Global Small Companies Fund (Class I) 1,603,521 1,652,141 Total Investments (99.7%) 61,300,216 60,185,213 Other Assets (net) (0.3%) 201,060 Total Net Assets (100.0%) 60,386,273 The accompanying notes are an integral part of these financial statements. Percentages shown in brackets relate investments at market value to total net assets of the fund. CI Canadian Growth Portfolio 2002 Annual Report as at December 31, 2002

7 CI Canadian Growth Portfolio Financial Statements (Note 1) Statements of Net Assets as at December 31 and September 30 (in 000 s except for per unit amounts and units outstanding) Statements of Operations for the periods ended December 31 and September 30 (000 s) Statements of Changes in Net Assets for the periods ended December 31 and September 30 (000 s) Assets Investments at market value (Note 2) Cash Receivable for unit subscriptions Receivable for securities sold Dividends and accrued interest receivable Liabilities Payable for securities purchased Payable for unit redemptions Accrued expenses Net assets and unitholders equity Net asset value per unit: Class A Dec. 31 Sept $ 2001 $ 60,185 58, ,788 58, ,386 58, Income Dividends Interest Income distribution from investments Expenses Management fees (Note 4) Administrative (Note 4) Custody Legal Audit Goods and services tax Expenses borne by management company Net income (loss) for the period Dec. 31 Sept $ 2001 $ ,051-1, , ,372 1,108 - (4) 1,372 1,104 (318) (184) Net assets, beginning of period Capital Transactions Proceeds from units issued (including reinvested distributions) Amounts paid for units redeemed Distributions to investors Distribution from net realized gains Distribution from net income Increase (decrease) in net assets from operations Net assets, end of period Dec. 31 Sept $ 2001 $ 58,809 62,397 13,219 20,289 (10,407) (9,643) 2,812 10,646 - (3,240) (3,240) (1,235) (10,994) 60,386 58,809 Class F Class I Realized and unrealized gain (loss) on investments Number of units outstanding Realized gain (loss) on investments (a) Capital gain distribution from investments (4,760) (14,279) 20 3,469 Class A 4,210,942 4,218,174 Change in unrealized appreciation Class F Class I 1,259 2,168 1,968,358 1,717,864 (depreciation) of investments Net gain (loss) on investments Increase (decrease) in net assets 3,823 - (917) (10,810) from operations (1,235) (10,994) Approved on behalf of the Board of Directors: G. Raymond Chang Director William T. Holland Director (a) Realized gain (loss) on investments Proceeds from sale of investments including foreign exchange gain (loss) (b) (c) Investments at cost, beginning of period Investments purchased Change in cost of short-term notes held 23,689 63,571 26,178-89,749 (7,761) 52,530 17,559-70,089 Investments at cost, end of period Cost of investments sold Realized gain (loss) on investments 61,300 28,449 (4,760) 63,571 6,518 (14,279) (b) Proceeds on sales of short-term notes sold during the period not included above - - (c) Foreign exchange gain (loss) included above - (14,515) The accompanying notes are an integral part of these financial statements. CI Canadian Growth Portfolio 2002 Annual Report as at December 31, 2002

8 Notes to the Financial Statement 1. THE FUNDS The following CI Funds are open-ended mutual fund trusts created under the laws of Ontario by declarations of trust: Fund Names Dated CI American Growth Fund September 1, 1967 CI American Growth RSP Fund December 2, 1999 CI American Value Fund May 27, 1957 CI Asian Dynasty Fund November 16, 1993 CI Canadian Asset Allocation Fund September 1, 1992 CI Canadian Equity Fund November 30, 1971 CI Canadian Investment Fund November 16, 1932 CI Canadian Small Cap Fund November 30, 1971 CI Canadian Stock Fund June 19, 1987 CI Diversified Fund June 19, 1987 CI Dividend Fund June 19, 1987 CI European Growth Fund February 28, 1995 CI European Growth RSP Fund September 11, 2000 CI International Bond RSP Fund January 22, 1993 CI Long-Term Bond Fund June 15, 1989 CI Mid-Term Bond Fund June 19, 1987 CI Short-Term Bond Fund May 31, 1976 CI TACTONICS Fund April 4, 2001 CI TACTONICS RSP Fund April 4, 2001 CI World Equity Fund September 6, 1990 CI Canadian Balanced Portfolio November 9, 1988 CI Canadian Conservative Portfolio December 1, 1997 CI Canadian Growth Portfolio December 1, 1997 CI Canadian Income Portfolio December 1, 1997 CI Canadian Maximum Growth Portfolio December 1, 1997 Class I units were offered to investors commencing on November 1, 1996 except for the following Funds: Fund Names Inception Date of Class I Units CI Canadian Conservative Portfolio December 1, 1997 CI Growth Portfolio December 1, 1997 CI Canadian Income Portfolio December 1, 1997 CI Canadian Maximum Growth Portfolio December 1, 1997 CI American Growth RSP Fund December 13, 1999 CI European Growth RSP Fund September 11, 2000 CI TACTONICS Fund May 1, 2001 CI TACTONICS RSP Fund May 1, 2001 CI American Growth RSP Fund and CI European Growth RSP Fund currently do not have any Class I units issued. Class A units are available to all investors. Class F units are available to certain investors including those who participate in fee-based programs through their financial advisers or who are members of certain groups. Class I units are available to institutional clients and investors who have entered into a Class I Account Agreement with CI Mutual Fund Inc. In 2002 the Funds fiscal year end was changed to December 31. As a result, the financial statements as presented for the fiscal year 2002 are for the fifteenmonth period ended or as at December 31, All comparative information is for the year ended or as at September 30, 2001 except for the statement of financial highlights, which is for each of the years or periods (since inception) in the four-year period ended September 30. Sometimes referred to herein individually as Fund, and collectively as the Funds. Each fund offers Class A, Class F and Class I units. Class A units were offered to investors on the date of the formation of the Funds. Class F units were offered to investors commencing on November 17, 2000 except for the following Funds: Fund Names Inception Date of Class F Units CI TACTONICS Fund April 4, 2001 CI TACTONICS RSP Fund April 4, 2001 Comparative financial statement information for the year ended or as at September 30, 2001 has been reclassified in accordance with the current year basis. Effective as of the close of business on October 11, 2002 the following funds were merged. Non-taxable Mergers Terminated Fund Continuing Fund Spectrum RRSP World Equity Fund CI TACTONICS RSP Fund Taxable Mergers Terminated Funds Continuing Funds Spectrum Canadian Small-Mid Cap Fund CI Canadian Small Cap Fund Spectrum Optimax USA Fund CI Amercian Value Fund Notes to the Financial Statement 2002 Annual Report as at December 31, 2002

9 Notes to the Financial Statement The merger was effected by transferring the net assets of the terminated funds in exchange for units of the continuing funds. The value of the units of the continuing funds issued in connection with this merger was equal to the market value of the net assets transferred from the terminated funds. With respect to the non-taxable merger, the terminated and continuing fund was deemed to have a taxation year end as at October 11, In accordance with the Income Tax Act, all unrealized losses and certain unrealized gains of that fund s investment portfolio were deemed to be realized at October 11, All tax losses available to that fund as at October 11, 2002 expired on that date. These financial statements do not include the operating results of the terminated funds prior to the merger date. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies of the Fund: (a) Valuation of Investments Mutual Funds are valued on each business day at their closing net asset value. Listed securities are valued on each business day at their latest available sale price. In the absence of recorded sales on that day, they are valued at the average of the last recorded bid and ask prices where appropriate. Unlisted securities are valued on each business day based on price quotations from recognized investment dealers, or failing that, management s best estimate. Short-term fixed income securities are valued at cost which, together with accrued interest, approximates market value. (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 trade date and any realized gains and losses from such transactions are calculated on an average cost basis. Dividend income is recognized on the ex-dividend date and interest income on the accrual basis. Stock dividends are recorded as dividend income determined by reference to market value. 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. (e) Futures, Forward, Swap and Option Contracts Futures, forward, swap and option contracts are valued on each business day according to the gain or loss that would be realized if the contracts were closed out, unless daily limits are in effect in which case they are valued based on the current market value of the underlying interest. Any payments made to satisfy initial and variation margin are reflected as a receivable balance in daily variation margin on the Statement of Net Assets. Margin consisting of assets other than cash is noted in the Statement of Investment Portfolio. Gains or losses arising from futures, forward, swap and option contracts which are held as hedges for capital investments are recorded as unrealized gains (losses) on investments until the contracts are closed or expire. Gains or losses arising from futures, forward, swap and option contracts not held as hedges for capital investments are recorded as income (loss) on a daily basis. 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 Funds 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 be generally 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. Derivative investments are recorded in the same manner for tax purposes as for accounting purposes. Net capital losses may be carried forward indefinitely to reduce future net realized capital gains. Net capital loss amounts appear under Additional Fund Notes on the Statements of Financial Highlights. (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 Fund s manager is open for business by dividing the net assets of each class by its outstanding units. 4. MANAGEMENT FEES AND OTHER EXPENSES CI Mutual Funds Inc. is the manager of each Fund and, in consideration of management fees received, provides management services required in the day-to-day operations of the Funds including management of the investment portfolio of the Funds. Notes to the Financial Statement 2002 Annual Report as at December 31, 2002

10 Notes to the Financial Statement The management fee is calculated on the net assets of each Fund at the end of each business day and is paid daily. Each Fund also bears all operating and administrative expenses including audit and legal fees, registry and transfer agency fees, custody fees, expenses relating to reporting and making distributions to unitholders, all other costs and fees imposed by statute or regulation and expenses of all communications with unitholders. To encourage large purchases in the Funds, the manager may reduce the management fee that it would otherwise be entitled to receive from a Fund with respect to an investment in a Fund provided that the amount of the management fee reduction is distributed to the investor for whose benefit the fees were reduced. In order to reduce the effective MER s of certain funds, some or all of the management fees and/or operating expenses may have been waived or absorbed by the Manager. The total amount absorbed by the Manager is presented in the Statement of Operations as Expenses borne by management company. 6. RELATED PARTY TRANSACTIONS Sun Life Financial Services of Canada Inc. ( Sun Life ) owns a significant interest in CI Mutual Funds Inc. and is therefore considered a related party to the Funds. The following is a summary of the investments by Sun Life in the Funds at December 31, Fund Names Net Asset Value ($ooo s) CI TACTONICS Fund Class F 1,167 CI American Value Fund Class F 934 CI Asian Dynasty Fund Class F 294 CI Canadian Small Cap Fund Class F 177 CI TACTONICS RSP Fund Class F PORTFOLIO TRANSACTIONS A copy of the Statement of Portfolio Transactions (unaudited) for any Fund for the period ended December 31, 2002 is available without charge upon written request to the manager, CI Mutual Funds Inc., CI Place, 151 Yonge Street, Eleventh Floor, Toronto, Ontario M5C 2W7. 5. SECURITIES LENDING Certain Funds have entered into a securities lending program with their custodian, Royal Trust Company of Canada ("Royal Trust"). The aggregate market value of all securities loaned by a Fund cannot exceed 50% of the 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. Royal Trust has indemnified the Funds against the credit risk of the borrowers. For those Funds participating in the program, amounts for securities loaned, the collateral received, and the income collected appear on the Statement of Net Assets and income from securities lending is included in "Interest Income" in the Statement of Operations. Notes to the Financial Statement 2002 Annual Report as at December 31, 2002

11 Management and Audit Reports MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared by CI Mutual Funds Inc., the manager of the Funds, and approved by the Board of Directors of the manager. The Funds manager is responsible for the information and representations contained in these financial statements and other sections of the Annual Report. CI Mutual Funds Inc. maintains appropriate processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with accounting principles generally accepted in Canada and include certain amounts that are based on estimates and judgments. The significant accounting policies which management believes are appropriate for the Funds are described in Note 2 to the financial statements. Deloitte & Touche LLP are the external auditors of the Funds, appointed by the unitholders. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out at the right. AUDITORS REPORTS To the unitholders of each of the CI Funds (as defined in Note 1) ( the Funds ): We have audited the Investment Portfolio of each of the CI Funds as at December 31, 2002, their Statements of Net Assets as at December 31, 2002 and September 30, 2001, their Statements of Operations and Changes in Net Assets for the periods then ended and the Statements of Financial Highlights for the period ended December 31, 2002 and each of the years in the four-year period ended September 30, These financial statements are the responsibility of each of the Fund s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. President CI MUTUAL FUNDS INC. Chief Financial Officer CI MUTUAL FUNDS INC. In our opinion, these financial statements present fairly, in all material respects, the financial position of each of the CI Funds as at December 31, 2002 and September 30, 2001, the results of their operations and changes in their net assets for the periods then ended and their financial highlights for the period ended December 31, 2002 and each of the years in the four-year period ended September 30, 2001 in accordance with Canadian generally accepted accounting principles. Toronto, Ontario February 21, 2003 DELOITTE & TOUCHE LLP Chartered Accountants Management and Audit Reports 2002 Annual Report as at December 31, 2002

12 Head Office CI Place, 151 Yonge Street, Eleventh Floor Toronto, Ontario M5C 2W7 Tel: Toll Free: Client Services Team: Sales Offices Calgary Tel: Toll Free: Halifax Tel: Toll Free: Montreal Tel: Toll Free: Vancouver Tel: Toll Free: CI Teleservice: Automated account information