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Jonathan W. Arrington | Bonds remain challenged but volatility offers opportunities

Jonathan W. Arrington is telling the Bonds to remain challenged but volatility offers opportunities.

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Jonathan W. Arrington | Bonds remain challenged but volatility offers opportunities

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  1. Bonds remain challenged but volatility offers opportunities Jonathan W. Arrington

  2. Agenda • Team, philosophy and process • Performance drivers • Investment outlook • Q & A

  3. Investment Consulting team Alfred Lam, CFA VP & Portfolio Manager Investment strategy / Asset allocations Fund selection/ Currency strategy Communications Lewis Harkes, CFA Senior Analyst Yoonjai Shin, CFA Director Andrew Ashworth Analyst Fund/manager analysis Performance reporting Fund/manager analysis Asset allocations Currency strategy Fund selection Project management Fund/manager analysis Cash flow management Performance reporting Marchello Holditch, CFA Senior Analyst Fund/manager analysis

  4. Total return equation Manage/ reduce Optimize Minimize Total return = Asset mix + Alpha + Market beta + Currency – Tax – Fees Maximize Manage Reduce

  5. Depth and quality of portfolio management teams

  6. Multiple sources of added value Attribution analysis of Evolution models 80i20e 7.6% 1.8% 5.8% 70i30e 10.2% 4.3% 5.9% 60i40e 13.4% 6.9% 6.5% 50i50e 15.8% 9.4% 6.3% 40i60e 19.2% 12.0% 7.2% 30i70e 22.1% 14.6% 7.6% 20i80e 25.1% 17.1% 7.9% 100e 31.2% 22.3% 8.9% Total Return (net MER) Blended Index (net MER)* Added Value Total Return Market Return (Beta) Active Management Asset mix Currency (Total) Currency model Currency tactics Security Selection 4.1% -0.1% -0.6% 0.5% 1.8% 3.9% -0.1% -0.7% 0.6% 2.2% 4.0% -0.2% -0.9% 0.8% 2.6% 3.0% -0.2% -1.1% 0.9% 3.6% 3.1% -0.2% -1.3% 1.0% 4.4% 2.7% -0.3% -1.5% 1.2% 5.1% 2.3% -0.3% -1.6% 1.3% 5.9% 1.9% -0.3% -1.8% 1.5% 7.3% *Blended benchmark is a blended performance of the DEX Universe Bond Index for the income portion and a blend of 50% S&P/TSX Composite Index and 50% MSCI World Index C$ for the equity portion; the same MER charged to our portfolio was deducted from the index performance. Please refer to the next page for full performance history

  7. Multiple sources of added value Performance of Evolution models As of September 30, 2013 Evolution 100i Evolution 80i20e Evolution 70i30e Evolution 60i40e Evolution 50i50e Evolution 40i60e Evolution 30i70e Evolution 20i80e Evolution 100e 3m 0.7 1.2 1.6 2.1 2.6 3.2 3.7 4.1 5.1 6m -0.8 0.9 1.9 3.0 3.8 5.1 6.0 7.1 9.2 YTD 0.7 4.5 6.3 8.4 10.0 12.3 14.2 16.1 19.9 1y 2.2 6.5 8.6 11.1 13.2 15.8 18.0 20.3 24.6 2y 4.6 7.3 8.6 10.2 11.7 13.5 15.0 16.5 18.8 3y 3.6 5.2 5.9 6.6 7.3 8.3 8.9 9.5 10.6 5y 5.2 5.4 5.6 5.8 6.1 6.5 6.7 6.8 7.2 As of December 31, 2013 Evolution 100i Evolution 80i20e Evolution 70i30e Evolution 60i40e Evolution 50i50e Evolution 40i60e Evolution 30i70e Evolution 20i80e Evolution 100e 3m 1.8 3.0 3.7 4.6 5.3 6.2 7.0 7.7 9.4 6m 2.4 4.2 5.4 6.8 8.0 9.5 10.9 12.1 15.0 YTD 2.5 7.6 10.2 13.4 15.8 19.2 22.1 25.1 31.2 1y 2.5 7.6 10.2 13.4 15.8 19.2 22.1 25.1 31.2 2y 4.4 7.5 9.2 11.0 12.7 14.7 16.5 18.2 21.3 3y 4.4 5.7 6.3 7.1 7.7 8.6 9.2 9.9 11.0 5y 5.3 6.9 7.5 8.0 8.9 10.1 10.8 11.4 12.5 Standard models represent mix of pools and mutual funds recommended by CI Investment Consulting. Returns are net of fees.

  8. 14 out of 18 pools outperformed their benchmarks 2013 Performance (Class W) Out-performance Portfolio Advisor Out-performers: United Canadian Equity Growth Pool United Canadian Equity Small Cap Pool United Canadian Equity Alpha Corporate Class United Canadian Equity Value Pool United International Equity Growth Pool United US Equity Alpha Corporate Class United U.S. Equity Growth Pool United Canadian Fixed Income Pool United International Equity Alpha Corporate Class United U.S. Equity Value Pool United Emerging Markets Pool United Real Estate Investment Pool United Enhanced Income Pool United Cash Management Pool Under-performers: United Short Term Income Pool United International Equity Value Pool United Global Fixed Income Pool United U.S. Equity Small Cap Pool Cambridge QV Investors QV Investors Tetrem Cambridge & PMAM Tetrem Wellington Signature & Lawrence Park PMAM Epoch Signature Cohen & Steers Signature Signature 48.6 36.6 30.0 29.9 38.1 46.6 46.1 0.7 33.5 43.0 5.5 12.6 10.2 1.2 35.6 28.8 17.0 16.9 6.2 4.9 4.4 1.9 1.6 1.3 1.0 0.9 0.8 0.2 Signature Altrinsic Signature Epoch 1.5 31.3 1.2 46.4 -0.3 -0.6 -1.0 -2.1

  9. Alpha funds have added alpha As of December 31, 2013 1-Year 2-Year 3-Year 4-Year (Annualized) 14.6% 6.8% 13.7% 16.2% 11.0% 8.8% 5-Year Inception** (Annualized) 11.4% 2.8% 10.8% 9.5% 6.7% 4.5% (Annualized) 22.8% 10.1% 26.0% 26.6% 25.7% 23.1% (Annualized) 14.2% 3.4% 14.9% 18.7% 10.4% 11.0% (Annualized) 17.3% 11.9% 16.9% 14.7% 11.9% 9.9% Cdn Alpha S&P/TSX Composite Index US Alpha S&P 500 Index (C$) Intl Alpha MSCI EAFE Index (C$) 30.3% 13.0% 46.8% 41.7% 33.9% 31.9% Alpha: 1/3 Canada, 1/3 US, 1/3 Intl Index: 1/3 TSX, 1/3 S&P 500, 1/3 EAFE Added Value 37.0% 28.9% 8.1% 24.8% 19.9% 4.9% 13.2% 11.0% 2.1% 13.1% 10.6% 2.5% 15.4% 12.2% 3.2% 9.6% 5.6% 4.0% *Note performances reported above are gross-of-fees **Inception date was August 31, 2008 Source: Investment Consulting, Dexia, Bloomberg

  10. Currency management also sets us apart Canadian dollar (US$) 12% cumulative return $120 million added value 1.10 10% hedged 1.00 30% hedged 30% hedged 0.90 50% hedged 0.80 70% hedged 0.70 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Dynamic hedging introduced Dynamic hedging introduced Source: Bloomberg, CI Investments Source: Bloomberg, CI Investments

  11. Industry recognition Portfolio Series - Best Fund of Funds Award - 2011 Portfolio Series - Best Fund of Funds Award - 2012 Portfolio Select Series - Best Fund of Funds Award - 2013 Portfolio Series Income Fund - Best Global Fixed Income Balanced Award - 2012 Portfolio Series Income Fund - Best Global Fixed Income Balanced Award - 2013

  12. To sum it up… ✓Sound and proven philosophy ✓Solid track record ✓Industry recognition ✓Strong net flows

  13. Outlook: Return expectations 50 Equity Funds 6-8% 40 Balanced Funds 5-7% 30 20 Select Income 3-4% Bond Funds 0-1% 10 0 2013 -10 -20 -30 expected range of returns actual returns in 2013 For illustration purposes only; there is no guarantee on results

  14. Outlook: Equity market Broad markets are reasonably priced; stock selection to matter more Forward Price to Earnings Multiples 26 26 TSX S&P 500 24 24 22 22 20 20 18 18 16 16 14 14 12 12 10 10 8 8 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Source: TD Securities, CPMS, I/B/E/S

  15. Outlook: Bond market Bonds remain challenged but volatility offers opportunities 5-Year Government of Canada bond yields 2.25 2.00 1.75 1.50 1.25 1.00 Jun-12 Jun-13 Dec-11 Feb-12 Apr-12 Aug-12 Dec-12 Feb-13 Apr-13 Aug-13 Dec-13 Oct-12 Oct-13 Source: Bank of Canada

  16. Dynamic income asset mix to achieve superior risk-adjusted returns Weighting (%) 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 Target Cash 12 15 21 21 27 34 24 21 22 0% Government & IG corporate 49 44 41 41 36 31 44 48 44 60% High yield bonds 21 22 19 18 15 13 12 11 14 20% High-dividend Stocks 18 19 19 20 22 22 20 20 20 20% Duration (yrs) 5.1 4.5 4.2 4.1 4.1 3.3 3.7 4.0 3.7 Represented by Select Income Managed Corporate Class Source: CI Investments

  17. Performance has met expectations Select Income Managed Corporate Class Performance as of December 31, 2013 Since Inception* % 3Mth 6Mth YTD 1Yr 3Yr 5Yr Risk 1.7 2.6 4.0 4.0 4.4 6.1 3.9 2.3 Select Income Managed Corporate Class (Class A) 0.4 0.5 -1.2 -1.2 3.9 4.8 n/a 3.1 DEX Universe Bond Index *November 2005 FOR INTERNAL USE ONLY

  18. Controlled volatility Select Income Managed Corporate Class Monthly Return Distribution 70% 57% 60% 50% Frequency 40% 30% 18% 16% 20% 6% 10% 3% 0% <-1% -1% to 0% 0% to 1% 1% to 2% >2% Monthly Return Ranges Total: 97 observations (months)

  19. Thank you.

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