This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling 1-8-563-5181, by writing to us at CI Investments Inc., 2 Queen Street East, Twentieth Floor, Toronto, ON M5C 3G7 or by visiting our website at www.ci.com or SEDAR at www.sedar.com. 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. INVESTMENT OBJECTIVE AND STRATEGIES The objective of the (the Fund ) is to generate a high level of dividend income and to preserve capital by investing primarily in preferred shares and dividend paying common shares of Canadian companies. It may also invest in other common shares, fixed-income securities and income trusts, as well as in foreign securities. The portfolio advisor identifies companies that have the potential for growth and value in their industry and then considers the impact of economic trends. The portfolio advisor decides how much of the Fund s assets are invested in equity and fixed-income securities according to market conditions. The portfolio advisor uses techniques such as fundamental analysis to assess the value and growth potential of a company. This means evaluating the financial condition and management of a company, its industry and the overall economy. The largest sector weighting for the Fund remains financial services, which generated rewarding performance during the period. The financials sector accounted for more than % of the average equity weight over the year and the weighted average return in our sector holdings approached 14%. The biggest disappointment within the sector was our large position in TD Bank, the share price of which was unchanged over the year. We continue to view this franchise as offering attractive earnings and dividend growth at a reasonable valuation. Better gains in financials came from names including CIBC, Wells Fargo, Lloyds, Citigroup, Bank Mandiri, Bangkok Bank and Kasikornbank. Our equity positions in the energy sector disappointed during the period with holdings including Occidental Petroleum and Devon Energy declining by more than %. Our decision to underweight the more cyclical sectors such as energy, however, did support relative returns. The Fund may use derivatives, but only as permitted by securities regulations. In order to earn additional income, the Fund may also enter into securities lending transactions, repurchase transactions and reverse repurchase transactions, to the extent permitted by securities regulations. RISK The risks associated with investing in this Fund remain as discussed in the prospectus. The Fund is suitable for investors who want to receive dividend income, are investing for the medium and/or long term and can tolerate medium risk. RESULTS OF OPERATIONS The net asset value of the Fund increased by $75.1 million to $1,252. million from March 31, 12 to March 31, 13. The Fund had net redemptions of $5.8 million during the period. The portfolio s performance increased assets by $1.4 million. The Fund paid distributions totalling $49.5 million. The one-year return for Class A units was 11.3%, Class E units was.6%, Class F units was 11.9%, Class I units was 13.4%, Class O units was 13.1%, Class X units was 11.9%, Class Y units was 12.1% and Class Z units was 11.4%, as compared to the return of its benchmark of 6.1%. The benchmark is a combination of the Total Return Index 6% and the BMO Capital Markets Preferred Total Return Index %. The 12-month period under review included periods of dramatic fear and volatility in global equity markets. Over the past year investors have focused on a number of issues, including the inflation or deflation debate, risk of government bond defaults and ongoing regulatory changes in the banking industry. While there has been plenty to worry about, equity investors have been compensated by attractive earnings yields and free cash flow yields relative to supposedly risk-free investments. The best returns for this period were generated in our health care positions, which returned almost 48%. Key positions in this sector generating fantastic returns included Bayer, Eli Lilly, Novartis and Roche. Another notable contributor was Telstra, an Australian telecommunications company that returned almost % during the period, and importantly this position was significant in size. These types of equities have performed well as investors gravitate towards more reliable free cash flow generating businesses, an attribute this Fund focuses on. The Canadian preferred share market remains very stable. Average returns for the asset class have been steady at around 4.5% over the period. We have been primarily invested in perpetual preferred shares, which have outperformed other structures over the past few years. The Fund s preferred share allocation has declined over the reporting period to about 31% from 37% last fall. Although preferred share returns remain good, we are able to achieve higher yields and potential gains with dividend-paying common shares. Overall, the Fund outperformed its benchmark during the period. RECENT DEVELOPMENTS We expect the trend of positive market performance to continue as equity valuations generally remain reasonable on a global basis relative to bond yields. We view the recent significant increase in U.S. bank dividends and repurchase initiatives announced following regulatory approval and stress tests as a significant confidence booster. As banks return significantly more of their earnings to shareholders, their relative cost of capital should improve, strengthening confidence in the overall financial system and equity markets. 1 CIG - 6
The Office of the Superintendant of Financial Institutions is requiring that the Canadian banks improve their credit quality. As a result, we expect all the bank preferred shares, including perpetual issues, to be redeemed and reissued in coming weeks and months. This will have the effect of shrinking the market slightly, but liquidity is expected to remain manageable. International Financial Reporting Standards As previously confirmed by the Canadian Accounting Standards Board ( AcSB ), most Canadian publicly accountable entities adopted International Financial Reporting Standards ( IFRS ), as published by the International Accounting Standards Board, on January 1, 11. However, the AcSB has allowed most investment funds to defer adoption of IFRS until fiscal years beginning on or after January 1, 14. Accordingly, the Fund will adopt IFRS for its fiscal period beginning April 1, 14, and will issue its initial financial statements in accordance with IFRS, including comparative information, for the interim period ending September, 14. 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 March 31, 13, for each of the classes are shown below: Annual management fee rate (%) Annual fixed administration fee rate (%) Class A 1.. Class E 1.95.15 Class F 1.. Class I Class O Paid directly by investor Paid directly by investor -.15 Management Fees Approximately % of total management fees were used to pay for sales and trailing commissions and other services required. The remaining 7% of management fees were used to pay for investment management and other general administration. Broker commissions During the period, the Fund paid $22,1 in brokerage commissions to The Bank of Nova Scotia or its subsidiaries. The Bank of Nova Scotia has a significant interest in CI Financial Corp., the parent company of CI Investments Inc. Independent Review Committee The Fund received standing instructions from the Board of Governors ( BoG ) in its capacity as the Independent Review Committee ( IRC ) with respect to the following Related Party Transactions: a) trades in securities of CI Financial Corp. and The Bank of Nova Scotia; b) purchases or sales of securities of an issuer from or to another investment fund managed by the Manager (referred to as Inter-Fund Trades ); and c) mergers of funds with another fund that is subject to National Instrument 81-2 ( Fund Mergers ). The applicable standing instructions require that Related Party Transactions be conducted in accordance with the Manager s policies and procedures. The Manager is required to advise the BoG of any material breach of a condition of the standing instructions. The standing instructions require, among other things, that the investment decision in respect to Related Party Transactions (a) are made by the Manager free from any influence by any entities related to the Manager and without taking into account any consideration to any affiliate of the Manager; (b) represent the business judgment of the Manager uninfluenced by considerations other than the best interests of the Fund; and (c) are made in compliance with the Manager s policies and procedures. Transactions made by the Manager under the standing instructions are subsequently reviewed by the BoG on a quarterly basis to monitor compliance. The Fund relied on the BoG s standing instructions regarding Related Party Transactions during this reporting period. Class X 1.. Class Y.75. Class Z 1.. The Manager received $14.4 million in management fees and $2.1 million in fixed administrative fees for the period. 2
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 five years, as applicable. The shown below are based on net asset values. Class A Commencement of operations October 29, 1996 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $ 12.13 12.63 11.91 8.88 12..46.47.47.49.52 (.23) (.23) (.22) (.) (.19). (.49).43.47 (1.17).69.13. 2.73 (1.9) 1.32 (.12) 1.18 3.49 (2.74) - - (.16) (.4) (.11) (.25) (.24) - (.23) (.38) (.23) (.24) (.32) (.21) (.8) (.48) (.48) (.48) (.48) (.57) 12.98 12.13 12.63 11.91 8.88 89,46 766,89 913,458 883,115 642,68 62,285 63,55 72,233 74,8 72,26 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14 13. 12.15 12.65 11.93 8.92 1.7 1.7 1.7 1.7 1.7.18.17.15.9.8 1.88 1.87 1.85 1.79 1.78.2.22 8.87 5. 5. 3
Class E Commencement of operations October 4, 11 Period from Year ended Inception to March 31, 13 March 31, 12 $ $.95..44.23 (.26) (.12).48.1 1.6.66 1.72.78 - - (.) - - - (.19) (.17) (.39) (.17) 11.7.95 2,9 9 6 37 49.85 51.72.12.14 11.71.97 2. 2.9.26.19 2.36 2.28.65. 4
Class F Commencement of operations July 31, 1 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $ 9.7.11 9.54 7.12 9.81.37.38.38.39.42 (.13) (.13) (.13) (.11) (.11).32 (.44).35.37 (.94).55..39 2.17 (1.56) 1.11.11.99 2.82 (2.19) - - (.15) (.4) (.9) (.23) (.22) - (.21) (.34) (.22) (.22) (.) (.) (.7) (.45) (.44) (.45) (.45) (.).37 9.7.11 9.54 7.12 13,7 12,3 11,189 9,838 6,212 1,259 1,256 1,6 1,29 868 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14.38 9.71.12 9.56 7.16 1. 1. 1. 1. 1..13.14.11.6.6 1.33 1.34 1.31 1.26 1.26.61.9 9.44 5. 5. 5
Class I Commencement of operations August 29, 3 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $..51 9.92 7.42.22.38.41.39.41.43.35 (.8).36.39 (1.3).65 (.87).47 2.24 (1.51) 1.38 (.54) 1.22 3.4 (2.11) - - (.) (.5) (.12) (.) (.29) - (.28) (.44) (.29) (.29) (.39) (.26) (.) (.59) (.58) (.59) (.59) (.66).81..51 9.92 7.42 149,941 111,25 313,7 254,924 16,2 13,858,978 29,82 25,6 21,3 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14.82.11.53 9.94 7.45 6
Class O Commencement of operations October 4, 11 Period from Year ended Inception to March 31, 13 March 31, 12 $ $.99..43.21 (.2) (.1).37 (.6) 1.25.83 2.3.97 - - (.31) - - - (.29) (.25) (.6) (.25) 11.79.99 2,294 74 194 7 49.85 51.72.12.14 11.8 11.1.15.15.2.1.17.16.65. 7
Class X Commencement of operations August 29, 3 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $.19.61.1 7.47.26.39...41.44 (.14) (.13) (.13) (.12) (.11).33 (.44).36.39 (.96).55.17.39 2.39 (1.64) 1.13-1.2 3.7 (2.27) - - (.15) (.4) (.) (.23) (.23) - (.22) (.35) (.22) (.23) (.) (.) (.8) (.45) (.46) (.45) (.46) (.53).91.19.61.1 7.47 176,4 185,415 221,82 242,363 2,69 16,153 18,157,86 24,175 28,14 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14.93.21.63.3 7. 1. 1. 1. 1. 1..13.13.11.6.6 1.33 1.33 1.31 1.26 1.26.28.64 9.21 5. 5. 8
Class Y Commencement of operations August 29, 3 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $ 9.87.29 9.72 7.26.26.37.39.38..44 (.11) (.11) (.) (.9) (.9).28 (.41).35.39 (.72).29 (.47).42 2.51 (2.56).83 (.6) 1.5 3.21 (2.93) - - (.16) (.4) (.15) (.25) (.24) - (.23) (.51) (.23) (.24) (.32) (.21) (.8) (.48) (.48) (.48) (.48) (.74).55 9.87.29 9.72 7.26 4 7 25 23 25-1 2 2 3 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14.56 9.89. 9.73 7.29.96.95.95.95.95.13..11.5.5 1.9 1.5 1.6 1. 1. 12.4 13. 11.1 5. 5. 9
The Fund s Net Assets per Unit ($) (1) (2) Class Z Commencement of operations August 29, 3 Year ended Year ended Year ended Year ended Year ended March 31, 13 March 31, 12 March 31, 11 March 31, March 31, 9 $ $ $ $ $.26.67.6 7...39...41.44 (.17) (.17) (.16) (.15) (.14).33 (.44).36. (.97).56.17. 2.37 (1.65) 1.11 (.4) 1. 3.3 (2.32) - - (.14) (.4) (.9) (.22) (.21) - (.) (.33) (.) (.21) (.28) (.17) (.7) (.42) (.42) (.42) (.42) (.49).99.26.67.6 7. 98,277 1,721 1,7 127,537 5,373 8,932 9,898 11,248 12,657 13,994 49.85 51.72 49.6 66.48 61.74.12.14.13.16.14 11..28.69.8 7.53 1. 1. 1. 1. 1..16.15.13.8.7 1.66 1.65 1.63 1.58 1.57 9.76 9.92 8.64 5. 5. (1) This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements differs from the net asset value calculated for Fund pricing purposes. An explanation of these differences can be found in the notes to the financial statements or in footnote (7) below. (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) from operations per unit is based on the weighted average number of units outstanding for the relevant class over the fiscal year. (3) Distributions were paid in cash or automatically reinvested in additional units of the Fund. (4) 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 asset value for the period. As of July 1,, Ontario combined the federal goods and services tax ("GST" - 5%) with the provincial retail sales tax ("PST" - 8%). The combination resulted in a Harmonized sales tax ("HST") rate of 13%. The Effective HST tax rate is calculated using the attribution percentage for each province based on unitholder residency and can be different from 13%. For any particular year, the rate shown will be prorated based on the different rates in effect during that year. For the year ended March 31, 11, the rate applied is 5% for the period April 1, to June, and the Fund s Effective HST rate for the period from July 1, to March 31, 11. The rate shown for the year ended March 31, 11 is the time weighted average of these rates. Begining April, 11, the HST rate is based on the residing of the unitholder. (5) 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 year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. 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 year, 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 market value of investments during the year. (6) The trading expense ratio represents total commissions and other portfolio transaction costs disclosed in the Statements of Operations expressed as an annualized percentage of daily average net asset value of the Fund during the year. (7) Section 14.2 of National Instrument 81-6 requires the net assets of an investment fund to be calculated using the fair value of the Fund s assets and liabilities. Canadian GAAP requires a different valuation method for calculating net assets. For the purpose of processing unitholder transactions, net assets are calculated based on the closing market price (referred to as Net Asset Value ), while for financial statement purposes net assets are calculated based on bid/ask price (referred to as Net Assets ).
PAST PERFORMANCE This section describes how the Fund has performed in the past. 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 years 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 annual performance for each of the years shown and illustrate how the Fund s performance has changed from year to year. In percentage terms, the charts show how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year, except where noted. - - - - - - - - - 12.9 9.6 15.8 7.9-8.3-22.9 39.7.4 This figure is for the period from January 1, 5 to March 31, 6. *This figure is for the period from October 4, 11 to March 31, 12 13.5.2 16.6 8.5-7.8-22.5.4.9 - - - *This figure is for the period from October 4, 11 to March 31, 12. **This figure is for the period from August 29, 3 to December 31, 3. This figure is for the period from January 1, 5 to March 31, 6.. 11.3 Dec. 3 Dec. 4 Mar. 6 Mar. 7 Mar. 8 Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Dec. 3 Dec. 4 Mar. 6 Mar. 7 Mar. 8 Mar. 9 Mar. Mar. 11 12.7* 13.1 Mar. 12 Mar. 13.5 11.9 Mar. 12 Mar. 13 - - - 11.4* 7.6*.6 Mar. 12 Mar. 13 This figure is for the period from January 1, 5 to March 31, 6. *This figure is for the period from August 29, 3 to December 31, 3. - - - 11.5 18.4. -6.6-21.5 42.2 12.4 1.9 Dec. 3 Dec. 4 Mar. 6 Mar. 7 Mar. 8 Mar. 9 Mar. Mar. 11 Mar. 12 7.1**.2 16.6 Dec. 3 Dec. 4 Mar. 6 8.5 Mar. 7-7.8 Mar. 8-22.5 Mar. 9.4 Mar..9.5 Mar. 11 Mar. 12 Class A Class E 13.4 Mar. 13 Class F Class I 11.9 Mar. 13 Class O Class X - - -.*.4 16.8 8.8-7.6-22.4.7 - - - *This figure is for the period from August 29, 3 to December 31, 3. This figure is for the period from January 1, 5 to March 31, 6. 11.2.9 12.1 Dec. 3 Dec. 4 Mar. 6 Mar. 7 Mar. 8 Mar. 9 Mar. Mar. 11 Mar. 12 Mar. 13 Class Y Class Z Annual Compound Returns The following table shows the Fund s annual compound returns for each period indicated, compared to the BMO Capital Markets Preferred Total Return Index, the Total Return Index and the Blended Index composed of: 6% - Total Return Index, and % - BMO Capital Markets Preferred Total Return Index. The BMO Capital Markets Preferred Total Return Index is a market capitalization weighted index that includes the most liquid preferred issues with a P3 rating by Standard & Poor's. The Total Return Index is a float adjusted market capitalization weighted index which is the principal broad measure of the Canadian equity market. It includes common stocks and income trust units of companies incorporated in Canada which are listed on the Toronto Stock Exchange. A discussion of the performance of the Fund as compared to the benchmark is found in the Results of Operations section of this report. One Three Five Ten Since Year Years Years Years Inception Class A (%) 11.3 7.1 5.7 6.6 n/a Blended Index (%) 6.1 6.3 3.7 7.8 n/a BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 4.7 n/a Total Return Index (%) 6.1 4.9 2.. n/a Class E (%).6 n/a n/a n/a 15.1 Blended Index (%) 6.1 n/a n/a n/a 6.3 BMO Capital Markets Preferred Total Return Index (%) 6. n/a n/a n/a 6.6 Total Return Index (%) 6.1 n/a n/a n/a 6. Class F (%) 11.9 7.6 6.3 7.2 n/a Blended Index (%) 6.1 6.3 3.7 7.8 n/a BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 4.7 n/a Total Return Index (%) 6.1 4.9 2.. n/a. Dec. 3.* Dec. 4 9.8 Mar. 6 16.1 Mar. 7 8.1 Mar. 8-8.1 Mar. 9-22.8 Mar. Mar. 11.6 Mar. 12.2 Mar. 13 11.4 11
One Three Five Ten Since Year Years Years Years Inception Class I (%) 13.4 9.1 7.7 n/a 8.1 Blended Index (%) 6.1 6.3 3.7 n/a 6.8 BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 n/a 4.5 Total Return Index (%) 6.1 4.9 2. n/a 8.4 Class O (%) 13.1 n/a n/a n/a 17.7 Blended Index (%) 6.1 n/a n/a n/a 6.3 BMO Capital Markets Preferred Total Return Index (%) 6. n/a n/a n/a 6.6 Total Return Index (%) 6.1 n/a n/a n/a 6. Class X (%) 11.9 7.7 6.3 n/a 6.7 Blended Index (%) 6.1 6.3 3.7 n/a 6.8 BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 n/a 4.5 Total Return Index (%) 6.1 4.9 2. n/a 8.4 Class Y (%) 12.1 7.9 6.6 n/a 7. Blended Index (%) 6.1 6.3 3.7 n/a 6.8 BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 n/a 4.5 Total Return Index (%) 6.1 4.9 2. n/a 8.4 Class Z (%) 11.4 7.3 6. n/a 6.4 Blended Index (%) 6.1 6.3 3.7 n/a 6.8 BMO Capital Markets Preferred Total Return Index (%) 6. 8.2 6.6 n/a 4.5 Total Return Index (%) 6.1 4.9 2. n/a 8.4 12
Summary of Investment Portfolio as at March 31, 13 Portfolio Breakdown Percentage of Category Net Asset Value (%) Portfolio Breakdown (cont d) Percentage of Category Net Asset Value (%) Top 25 Holdings Percentage of Security Name Net Asset Value (%) Country allocation Canada......................................... 53.7 U.S.A............................................ U.K............................................. 4.8 Switzerland...................................... 4.3 Short-Term Investments............................ 2.6 Germany........................................ 2.4 Australia........................................ 1.5 Netherlands...................................... 1.5 France.......................................... 1.5 Singapore........................................9 Thailand..........................................8 Japan............................................6 Belgium..........................................5 Cash & Equivalents.................................5 Brazil............................................5 Denmark.........................................5 Netherlands Antilles................................4 Turkey...........................................4 Bermuda.........................................4 Foreign Currency Forward Contracts...................4 Indonesia.........................................4 Jersey Island......................................3 Russia...........................................3 Sweden..........................................2 Ireland...........................................2 Poland...........................................2 Hong Kong........................................2 Spain............................................1 Other Net Assets (Liabilities)........................ (.1) Sector allocation Financials....................................... 41.2 Telecommunication Services........................ 9.8 Consumer Staples................................. 9.5 Energy.......................................... 9.4 Health Care...................................... 6. Industrials....................................... 5. Warrants........................................ 4.6 Materials........................................ 3.4 Utilities......................................... 3.4 Consumer Discretionary............................ 2.7 Short-Term Investments............................ 2.6 Information Technology..............................9 Corporate Bonds...................................6 Cash & Equivalents.................................5 Foreign Currency Forward Contracts...................4 Private Placements.................................1 Other Net Assets (Liabilities)........................ (.1) Toronto-Dominion Bank............................. 5.3 Canadian Imperial Bank of Commerce................. 3.5 Short-Term Investments............................. 2.6 PNC Financial Services Group Inc., Warrants (31Dec18)... 1.7 JPMorgan Chase & Co., Warrants (28Oct18)............ 1.7 BCE Inc., Preferred 4.4%, Series AF 16................. 1.5 Roche Holding AG................................. 1.5 BCE Inc., Preferred, Series AB........................ 1.4 Baxter International Inc.............................. 1.3 BHP Billiton PLC................................... 1.3 BCE Inc., Preferred, Series AJ........................ 1.3 Novartis AG, Registered Shares...................... 1.2 Fortis Inc., Preferred 4.9%, Series E, Callable/Convertible. 1.1 Canadian National Railway Co........................ 1.1 Philip Morris International Inc........................ 1.1 Brookfield Asset Management Inc., Preferred, Series 2.... 1. Crescent Point Energy Corp........................... 1. Bayer AG........................................ 1. HSBC Bank Canada, Preferred 5.1%, Series 5............9 Bank of Montreal, Preferred 5.25%, Series 14............9 Wells Fargo & Co., Warrants (28Oct18).................9 The Bank of Nova Scotia, Preferred 4.5%, Series 14......9 Singapore Telecommunications Ltd.....................9 Royal Bank of Canada, Preferred 4.7%, Series AB.........9 Manulife Financial Corp., Preferred 4.65%, Series 2, Class A.........................................8 Total Net Asset Value (in $ s) $1,251,959 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. 13