This semiannual management report of fund performance contains financial highlights but does not contain the complete semiannual or annual financial statements of the investment fund. You can get a copy of the semiannual or annual financial statements at your request, and at no cost, by calling 18886644784, by writing to us at United Financial, 2 Queen Street East, Twentieth Floor, Toronto, ON, M5C 3G7 or by visiting our website at www.assante.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. RESULTS OF OPERATIONS The Fund s net assets increased by 15.8 million to 244.8 million from December 31, 2016 to June 30, 2017. The Fund had net sales of 23.8 million for the period. The portfolio s performance decreased assets by 8.0 million. The Fund s sixmonth return for Class A units was 4.2%, Class E units was 3.8%, Class OF units was 3.7%, Class I units was 2.8% and Class W units was 2.8%, compared to the return of the benchmark of 1.1% for the same period. The benchmark is the BMO Small Cap Total Return Index. It has been eight years since the bottom of the last major bear market and economic recession. This marks the second longest bull market in Wall Street history, as well as the third longest economic expansion over that timeframe. This statistic has very little practical value in telling us when the cycle will turn again. As the old stock market saying goes, bull markets do not die of old age. With old age, though, excesses are typically found in the market, increasing the need to focus on risk management. Global equity markets continued their upward march, against a backdrop of moderate growth and low inflation that has allowed for a continuation of marketfriendly monetary policy. An improving economy does not necessarily mean an improving investment environment. Valuations, which were already high prior to the advance, continue to edge upwards. With elevated valuation levels, there is less margin of safety on the downside and the upside return potential remains subdued. While the base case may be for modest economic growth in Canada, the risks for the economy have arguably increased. Debt loads in Canada are very high at the government and household level. Canada s key housing markets are expensive with price gains being fuelled by excessive leverage. Oil prices have corrected significantly yeartodate, suppressing returns for the Canadian marketplace. We must also remember that the Canadian market was one of the best performers in 2016, so a more muted return this year should be expected. While there will certainly be ongoing price volatility in our energy holdings, it is one of the few sectors offering attractive valuations relative to the overall market. In terms of investment bias, value stocks continue to underperform growth stocks yeartodate in both the Canadian and U.S. markets. and defensive energy holdings. Strong relative performance in the energy and utilities sectors was the most significant driver of outperformance, partially offset by underperformance in materials and real estate. The portfolio s position in Home Capital Group Inc. negatively impacted absolute performance. The largest individual contributors to performance were ATCO Ltd., Algonquin Power & Utilities Corp. and EL Financial Corp. The largest individual detractors were Home Capital Group Inc., Secure Energy Services Inc. and AltaGas Ltd. Investments in Algonquin Power & Utilities Corp., Aritzia Inc., EnerCare Inc., Linamar Corp. and Stantec Inc. were made during the reporting period. Algonquin Power & Utilities is a growing renewable energy and regulated utility company with assets across North America. The business provides a combination of cash flow stability and dividend income, while adding to the Fund s growth characteristics. Aritzia is a retailer of women s apparel and accessories designed under exclusive internal brands. Aritzia has an impressive record of sales growth while achieving topdecile revenue per square foot metrics. The company is methodically growing sales internationally and online. EnerCare is a leading provider of water heaters, furnaces and other HVAC products in Ontario, with a growing presence across North America. Over time, EnerCare has increased the proportion of rentals in its sales mix. While more capital intensive, the total value of a longterm rental is up to two and a half times the value of an upfront sale. EnerCare maintains a stable business, which enhances the portfolio s dividend yield while providing moderate prospects for growth. Linamar is a diversified global manufacturer of highly engineered vehicle parts and industrial equipment. The company has a long track record of doubledigit return on invested capital and book value per share growth. Linamar generates strong cash flow, supporting deleveraging and dividend growth. The valuation is reasonable today, and growth from new business wins provides protection as we move deeper into the auto sales cycle. Stantec provides professional consulting, engineering and project management services in North America and internationally. Prudent expense management and diversity in its services and endmarket exposures have historically allowed it to adapt to changing market conditions. The recent impact of the energy cycle on operating results has provided an opportunity to invest in a company that has achieved a strong record of capital deployment over time. The decline in the benchmark was driven by the energy sector, with the price of oil down 14% since the start of the year. Weakness in energy stocks also affected the pool, but to a lesser degree than the benchmark due to more diverse The Fund sold out of investments in Manitoba Telecom Services Inc., CI Financial Corp., DH Corp. and Home Capital Group Inc. Manitoba Telecom was sold as the value of BCE s acquisition offer became increasingly CIG 9609
reflected in the share price. CI Financial Corp. is a leading independent mutual fund franchise in Canada. While CI maintains a strong balance sheet and attractive free cash flow yield, we believe the more diversified operating models of other financial institutions may be less affected by industry trends including fee compression and competition from ETFs. Shares of DH Corp. had risen significantly since November 2016 when execution challenges and disappointing operating results provided an opportunity to own the transitioning financial technology firm at attractive value. The position was exited as rapid share price appreciation made the riskreward profile less compelling. Home Capital is a lending business with a large presence in the Canadian mortgage market. For years, the company maintained a resilient record of strong credit performance, stable funding access and attractive returns on equity. In late April, Ontario s securities regulator released allegations that the company misled investors about an internal mortgage investigation several years ago. Investor and depositor confidence quickly began to erode. The outflow of deposits that ensued was far worse than any stress test we or the company had anticipated. Home Capital was forced to reach an agreement for emergency liquidity at exorbitant rates, wiping out a large portion of its earnings power. In a disappointing outcome, the investment was exited. Overall, the Fund underperformed its benchmark for the period. RECENT DEVELOPMENTS Changing oil price dynamics affect the earnings environment for Canada s resourceheavy businesses, particularly in the more leveraged smallcap space. Across the Canadian market in general, consensus expectations imply optimistic earnings growth in 2017. As premiums for stable noncyclical businesses continue to expand in this low interest rate environment, it is increasingly challenging to find value without sacrificing quality. Moving further into the cycle, we remain focused on risk management by ensuring the balance sheet and profitability advantages of the portfolio over the benchmark. Effective January 3, 2017, James Werry became a member of the Independent Review Committee of the Fund. Effective March 13, 2017, units initially issued as Class F units were renamed as Class OF units. RELATED PARTY TRANSACTIONS Manager and Trustee CI Investments Inc. is the Manager and Trustee of the Fund. CI Investments Inc. is a subsidiary of CI Financial Corp. The Manager, in consideration of management fees, provided management services required in the daytoday 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 June 30, 2017, for each of the classes are shown below: Annual management fee rate (%) Annual fixed administration fee rate (%) Class A 2.50 0.20 Class E 1.90 0.20 Class E3 1.88 0.19 Class E4 1.80 0.15 Class E5 1.72 0. Class F 0.90 0.20 Class F3 0.88 0.19 Class F4 0.80 0.15 Class F5 0.72 0. Class I Paid directly by investor Class OF 1.50 0.20 Class W Paid directly by investor 0.20 The Manager received 1.2 million in management fees and 0.2 million in fixed administration fees for the period. Management Fees Approximately 21% of total management fees were used to pay for sales and trailing commissions and other services required. The remaining 79% of management fees were used to pay for investment management and other general administration. Principal Distributor The Manager has the exclusive right to arrange for the distribution of units of the Fund. Pursuant to a series of agreements, the right to distribute such units has been granted, on a collective basis, to the following dealers, each of which is an affiliate of the Manager. Assante Capital Management Ltd. Assante Financial Management Ltd. 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.; b) purchases or sales of securities of an issuer from or to another investment fund managed by the Manager (referred to as InterFund Trades ); c) purchases or sales of other investment funds managed by the Manager or their affiliates; and d) mergers of funds with another fund that is subject to National Instrument 812 ( 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 IRC of any material breach of a condition of the standing instructions. The standing instructions require, among other things, that the investment decisions 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 IRC on a quarterly basis to monitor compliance. The Fund relied on the IRC s standing instructions regarding Related Party Transactions during this reporting period. 3
FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past six periods, as applicable. Net Assets per Unit () (1) (2) (8) * Class A Commencement of operations December 28, 2006 Six Months Ended r Ended r Ended r Ended r Ended r Ended 31, 2016 31, 2015 31, 2014 31, 2013 31, 2012^ 18.37 14.70 16.56 15.79 11.88.40 0.29 0.50 0.43 0.41 0.58 0.32 (0.26) (0.47) (0.46) (0.49) (0.40) (0.33) 0.05 1.35 0.51 1.05 1.23 0.31 (0.84) 2.27 (2.27) (0.07) 2.50 1.12 (0.76) 3.65 (1.79) 0.90 3.91 1.42 17.60 18.37 14.70 16.56 15.79 11.82 3,494 4,054 4,514 5,878 7,691 9,443 198 221 307 355 487 795 27.16 11.68 15.40 20.63 13.42 0.06 0.04 0.05 0.04 2.70 2.70 2.70 2.70 2.70 2.70 0.23 0.23 0.23 0.24 0.26 0.27 2.93 2.93 2.93 2.94 2.96 2.97 8.37 8.52 8.56 8.79 9.47.01 Class E Commencement of operations September, 2008 Six Months Ended r Ended r Ended r Ended r Ended r Ended 31, 2016 31, 2015 31, 2014 31, 2013 31, 2012^ 20.56 16.36 18.31 17.36 12.98 11.28 0.32 0.58 0.49 0.47 0.71 0.36 (0.23) (0.42) (0.41) (0.43) (0.35) (0.28) 0.02 1.45 0.56 1.12 1.30 0.38 (0.92) 2.65 (2.61) (0.28) 2.74 1.17 (0.81) 4.26 (1.97) 0.88 4.40 1.63 19.77 20.56 16.36 18.31 17.36 12.91 0,775 122,394 81,451 68,151 55,199 32,308 5,098 5,952 4,979 3,722 3,180 2,490 27.16 11.68 15.40 20.63 13.42 0.06 0.04 0.05 0.04 2. 2. 2. 2. 2. 2. 0.23 0.23 0.23 0.23 0.23 0.22 2.33 2.33 2.33 2.33 2.33 2.32 11.04.90.82.83 11.09.41 *Footnotes for the tables are found at the end of the Financial Highlights section. ^Historical figures are based on Canadian GAAP, for more details refer to footnote 7.
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit () (1) (2) (8) * Class E3.00 0.08 (0.04) 0.07 (0.19) (0.08) 9.86 20,380 2,066 2.07 0.27 2.34 Class E4.00 (0.04) 0.07 (0.13) (0.01) 9.87 2,128 216 1.95 0.25 2.20 *Footnotes for the tables are found at the end of the Financial Highlights section. 5
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit () (1) (2) (8) * Class E5.00 0.11 (0.03) 0.07 (0.05) 0. 9.87 775 79 1.82 0.24 2.06 Class F.00 (0.02) 0.07 (0.08) 0.06 9.88 294 30 1. 0.14 1.24 *Footnotes for the tables are found at the end of the Financial Highlights section. 6
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit () (1) (2) (8) * Class F3.00 0. (0.02) 0.06 () 0.05 9.88 158 16 1.07 0.14 1.21 Class F4.00 0.07 (0.02) 0.08 (0.24) (0.11) 9.88 32 3 0.95 0.14 1.09 *Footnotes for the tables are found at the end of the Financial Highlights section. 7
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit () (1) (2) (8) * Class F5.00 0.07 (0.01) 0.08 (0.24) (0.) 9.89 1 0.83 0. 0.93 Class I Commencement of operations September 18, 2008 Six Months Ended r Ended r Ended r Ended r Ended r Ended 31, 2016 31, 2015 31, 2014 31, 2013 31, 2012^ 25.66 19.94 21.80 20.19 14.75 12.53 0.43 0.73 0.60 0.56 0.81 0.40 0.04 1.74 0.67 1.32 1.49 0.42 (1.15) 3.37 (3.22) (0.65) 3.16 1.31 (0.68) 5.84 (1.95) 1.23 5.46 2.13 24.95 25.66 19.94 21.80 20.19 14.68 71,123 57,472 27,978 18,453 12,881 7,832 2,850 2,240 1,403 846 638 531 27.16 11.68 15.40 20.63 13.42 0.06 0.04 0.05 0.04 *Footnotes for the tables are found at the end of the Financial Highlights section. ^Historical figures are based on Canadian GAAP, for more details refer to footnote 7. 8
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit () (1) (2) (8) * Class OF Commencement of operations December 12, 2007 Six Months Ended r Ended r Ended r Ended r Ended r Ended 31, 2016 31, 2015 31, 2014 31, 2013 31, 2012^ 19.50 15.44 17.18 16.21 12.07.44 0.25 0.56 0.45 0.47 0.55 0.33 (0.19) (0.32) (0.30) (0.32) (0.26) (0.21) 0.28 1.42 0.52 0.85 1.33 0.35 (0.90) 2.37 (2.40) (1.20) 2.25 1.07 (0.56) 4.03 (1.73) (0.20) 3.87 1.54 18.78 19.50 15.44 17.18 16.21 12.00 75 198 8 120 27 40 4 7 7 2 3 27.16 11.68 15.40 20.63 13.42 0.06 0.04 0.05 0.04 1.70 1.70 1.70 1.70 1.70 1.70 0.23 0.11 0. 0.18 0.20 0.20 1.93 1.81 1.80 1.88 1.90 1.90 14.22 6.49 5.89.45 11.43 11.44 Class W Commencement of operations January 31, 2000 Six Months Ended r Ended r Ended r Ended r Ended r Ended 31, 2016 31, 2015 31, 2014 31, 2013 31, 2012^ 51. 39.81 43.62 40.49 29.64 25.23 0.83 1.43 1.16 1.08 1.53 0.79 (0.06) (0.) () (0.) (0.08) (0.06) 0. 3.62 1.35 2.69 3.05 0.76 (2.32) 6.15 (6.) (0.28) 6.29 2.77 (1.45) 11. (3.68) 3.39.79 4.26 49.65 51. 39.81 43.62 40.49 29.49 45,596 44,904 30,767 32,171 36,375 34,118 918 879 773 738 898 1,151 27.16 11.68 15.40 20.63 13.42 0.06 0.04 0.05 0.04 0.20 0.20 0.20 0.20 0.20 0.20 0.02 0.02 0.02 0.02 0.02 0.02 0.22 0.22 0.22 0.22 0.22 0.22.46.30.13.11.23 9.93 *Footnotes for the tables are found at the end of the Financial Highlights section. ^Historical figures are based on Canadian GAAP, for more details refer to footnote 7. 9
FINANCIAL HIGHLIGHTS (cont d) (1) This information is derived from the Fund s semiannual and annual financial statements. (2) Net assets per unit and distributions per unit are based on the actual number of units outstanding for the relevant class at the relevant time. The increase (decrease) in net assets from operations per unit is based on the weighted average number of units outstanding for the relevant class over the fiscal period. (3) Distributions are automatically reinvested in additional units of the Fund. (4) Management expense ratio is calculated based on expenses charged to the Fund (excluding commissions and other portfolio transaction costs) and is expressed as an annualized percentage of daily average net assets for the period. The Effective HST tax rate is calculated using the attribution percentage for each province based on unitholder residency and can be different from 13%. (5) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 0% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the fiscal period. The higher a Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a higher turnover rate and the performance of a Fund. Portfolio turnover rate is calculated by dividing the lesser of the cost of purchases and the proceeds of sales of portfolio securities for the period, and excluding cash and shortterm investments maturing in less than one year, and before assets acquired from a merger, if applicable, by the average of the monthly fair value of investments during the period. (6) The trading expense ratio represents total commissions and other portfolio transaction costs disclosed in the statements of comprehensive income expressed as an annualized percentage of daily average net assets of the Fund during the period. (7) For financial years beginning on or after January 1, 2013 the financial highlights are derived from the financial statements prepared in accordance with International Financial Reporting Standards (IFRS). IFRS allows net assets to be calculated based on the last traded market price for financial assets and financial liabilities where the last traded price falls within the day s bidask spread. There are no differences between the net assets calculated for purpose of processing unitholders transactions and the net assets attributable to holders of redeemable units used for financial statement reporting purposes. For financial years before April 1, 2013, the financial highlights are derived from the financial statements prepared in accordance with Canadian GAAP. Under Canadian GAAP net assets for financial statement purposes were calculated based on bid/ask price while for purpose of processing unitholder transactions net assets were calculated based on the closing market price. (8) This information is provided for the period ended June 30, 2017 and the years ended December 31.
PAST PERFORMANCE This section describes how the Fund has performed in the past. Remember, past returns do not indicate how the Fund will perform in the future. The information shown assumes that distributions made by the Fund in the periods shown were reinvested in additional units of the relevant classes of the Fund. In addition, the information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. rbyr Returns The following charts show the Fund s semiannual and annual performance for each of the periods shown and illustrate how the Fund s performance has changed from period to period. In percentage terms, the charts show how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period, except where noted. Class A Class E Class I Class OF 50 40 30 20 0 20 30 4.7 2007 25.7 25.0 2008 2009 11.9 20 4.5 2011 13.9 2012 32.9 2013 4.9 2014 11.2 2015 25.0 2016 Jun. 2017 4.2 50 40 30 20 0 20 30 17.0 2 2008 25.9 2009 12.6 20 3.8 2011 14.7 2012 33.7 2013 5.5 2014.6 2015 25.7 2016 Jun. 2017 3.8 50 40 30 20 0 20 30 13.7 3 2008 28.5 2009 15.1 20 1.6 2011 17.3 2012 36.9 2013 8.0 2014 8.5 2015 2016 28.7 Jun. 2017 2.8 50 40 30 20 0 20 30 1.3 1 2007 24.9 2008 26.1 2009 13.0 20 3.4 2011 15.2 2012 34.3 2013 6.0 2014.1 2015 26.3 2016 Jun. 2017 3.7 Class W 50 40 30 20 0 20 30 7.5 2007 23.7 2008 28.2 2009 14.9 20 1.8 2011 17.1 2012 36.6 2013 7.7 2014 8.7 2015 28.4 2016 Jun. 2017 2.8 1 For the period from December 12, 2007 to December 31, 2007. 2 For the period from September, 2008 to December 31, 2008. 3 For the period from September 18, 2008 to December 31, 2008.
Summary of Investment Portfolio as at June 30, 2017 Portfolio Breakdown Percentage of Portfolio Breakdown (cont d) Percentage of Top 25 Holdings Percentage of Category Net Assets (%) Category Net Assets (%) Security Name Net Assets (%) Country allocation Canada... 87.0 ShortTerm Investments... 9.2 U.S.A.... 2.4 Cash & Equivalents... 0.9 Other Net Assets (Liabilities)... 0.5 Sector allocation Energy... 22.1 Industrials... 19.2 Financials... 17.7 Consumer Discretionary....8 ShortTerm Investments... 9.2 Utilities... 9.0 Materials... 6.5 Health Care... 2.1 Cash & Equivalents... 0.9 Consumer Staples... 0.9 Information Technology... 0.6 Private Placements... 0.5 Other Net Assets (Liabilities)... 0.5 Telecommunication Services... 0.0 ShortTerm Investments... 9.2 Atco Ltd., Class I... 5.8 Canadian Western Bank... 5.5 Industrial Alliance Insurance and Financial Services Inc.... 5.2 AltaGas Ltd.... 4.7 Parkland Fuel Corp.... 4.1 Superior Plus Corp.... 3.9 SNCLavalin Group Inc.... 3.7 Laurentian Bank of Canada... 3.5 EL Financial Corp., Ltd.... 3.5 Algonquin Power & Utilities Corp.... 3.2 Ritchie Bros. Auctioneers Inc.... 3.0 Secure Energy Services Inc.... 2.8 Leon s Furniture Ltd.... 2.5 Domtar Corp.... 2.4 Toromont Industries Ltd.... 2.4 Richelieu Hardware Ltd.... 2.4 Labrador Iron Ore Royalty Corp.... 2.3 Mullen Group Ltd.... 2.3 MacDonald Dettwiler & Associates Ltd.... 2.2 Cineplex Inc.... 2.2 Linamar Corp.... 2.2 Knight Therapeutics Inc.... 2.1 Gibson Energy Inc.... 2.0 Enercare Inc.... 2.0 Total Net Assets (in 000 s) 244,840 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 FORWARDLOOKING STATEMENTS This report may contain forwardlooking 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 forwardlooking statements. Forwardlooking statements are not guarantees of future performance. Forwardlooking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forwardlooking 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 forwardlooking 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 forwardlooking statements are subject to change without notice and are provided in good faith but without legal responsibility.