Q2

Portfolio Series Balanced FundPortfolio Review – Second Quarter 2015

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Portfolio Review – Second Quarter 2015 as at June 30, 2015Portfolio Series Balanced Fund

Catégories d’actif Régions géographiques

Capitalisation boursière Actions par secteur

Asset Class Geographic Regions

Equity Market Cap Equity Industry Sector

27.7%12.6%11.4%11.3%9.3%9.1%8.1%4.7%2.9%2.5%0.4%

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83.4%14.6%2.0%

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35.4%28.1%18.3%4.0%3.7%3.6%2.4%1.9%1.5%1.1%

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26.8%15.7%14.1%14.0%10.0%9.9%4.6%3.1%1.8%

27,7 %12,6 %11,4 %11,3 %9,3 %9,1 %8,1 %4,7 %2,9 %2,5 %0,4 %

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83,4 %14,6 %2,0 %

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35,4 %28,1 %18,3 %4,0 %3,7 %3,6 %2,4 %1,9 %1,5 %1,1 %

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26,8 %15,7 %14,1 %14,0 %10,0 %9,9 %4,6 %3,1 %1,8 %

Portfolio Performance (Class A)

1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (November 1988)

-1.6% -1.8% 4.5% 7.9% 11.4% 9.3% 5.3% 7.1%

Asset Allocation Overview and Activity

Different types of investments will respond differently to the markets, reinforcing the importance of a multi-level diversification strategy. A balanced asset mix ensures that investors are not dependent on any one asset class or security type to provide returns. CI Investment Consulting combines its portfolio construction expertise with ongoing comprehensive research and recommendations from State Street Global Advisors, a world leader in asset allocation, to create portfolios designed to capture evolving opportunities in the various asset classes.

This report is designed to provide you with an up-to-date portfolio overview of the Portfolio Series Balanced Fund, including the allocations across asset class, geographic region, equity sector and market capitalization. The arrows indicate whether the allocation for each category has increased or decreased since the previous quarter-end.

▼ U.S. equity▲ Foreign bond▲ Canadian equity▼ Canadian bond▼ Cash▼ European equity▲ Asian equity▲ Emerging markets equity▼ Other equity

▼ U.S.▲ Canada▼ Cash and other countries▲ Japan▲ U.K.▲ Emerging markets■ Switzerland▼ France■ Germany▲ Ireland

▼ Large-cap▲ Mid-cap▼ Small-cap

▲ Financial services■ Industrials▼ Information technology▼ Consumer discretionary▲ Health care▼ Energy■ Consumer staples▼ Materials▼ Utilities▼ Telecommunication services▲ Other

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Portfolio Review – Second Quarter 2015 as at June 30, 2015Portfolio Series Balanced Fund

▼ U.S.▲ Canada▼ Cash and other countries▲ Japan▲ U.K.▲ Emerging markets■ Switzerland▼ France■ Germany▲ Ireland

▲ Financial services■ Industrials▼ Information technology▼ Consumer discretionary▲ Health care▼ Energy■ Consumer staples▼ Materials▼ Utilities▼ Telecommunication services▲ Other

Underlying Fund Allocations

Signature Canadian Bond Fund 11.2%Signature Global Bond Fund 7.9%Signature Diversified Yield II Fund 6.4%Signature Select Canadian Corporate Class 5.7%Signature Corporate Bond Fund 5.7%Cambridge Canadian Equity Corporate Class 5.5%CI International Value Corporate Class 5.1%CI American Managers Corporate Class 5.1%Cambridge Global Equity Corporate Class 5.0%Signature International Corporate Class 4.9%Synergy Canadian Corporate Class 4.3%CI Canadian Investment Fund 4.2%Cash 4.2%CI American Value Corporate Class 3.8%Signature High Income Fund 3.5%Cambridge Income Corporate Class 3.4%CI American Small Companies Fund 3.4%Harbour Corporate Class 3.2%Signature Emerging Markets Corporate Class 3.0%Cambridge American Equity Corporate Class 2.4%Synergy American Corporate Class 2.2%

Top Ten Holdings

Royal Bank of Canada 0.8%Apple Inc. 0.7%Province of Quebec 4.5% 01Dec19 0.7%Toronto-Dominion Bank 0.7%Bank of Nova Scotia 0.6%Citigroup Inc. 0.6%U.S. Treasury Note 1.75% 28Feb22 0.5%UBS Group 0.5%U.S. Treasury Note 3.125% 15May21 0.5%Tourmaline Oil Corp. 0.5%

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Portfolio Review – Second Quarter 2015 as at June 30, 2015Portfolio Series Balanced Fund

Portfolio Commentary

The portfolio declined 1.8% during the quarter, underperforming its benchmark (25% S&P/TSX Composite Index, 40% FTSE TMX Canada Universe Bond Index, 35% MSCI World Index, C$), which fell 1.4%. Exposure to dividend-paying equities and global bonds contributed to underperformance, which was offset somewhat by our positions in cash and high-yield bonds.

Overall, bond markets sold off during the quarter on improving economic data while stock markets took a breather despite the positive news. While enhanced diversification relative to the broad-based indexes reduced portfolio volatility as intended, it did not make strong contributions to the portfolio’s returns. We have been holding higher than normal cash levels, which helped to dampen volatility and mitigate declines. Despite recent short-term volatility, it is important to preserve a longer-term view. We continue to take advantage of the opportunities market corrections typically create and maintain our discipline of allocating assets to both preserve capital and grow investor account balances in a prudent manner.

Bond yields in Europe rose from record lows, elevating yields elsewhere, as the European Central Bank’s monetary policy began to support expectations for economic growth and higher inflation. Stock markets in North America and Europe declined, while stocks in Japan gained. Japanese equities were boosted by the Bank of Japan’s quantitative easing program and stock purchases by quasi-government organizations. In Canada, shares of commodities producers slid with base metals prices amid worries that demand will weaken in China, the largest user of industrial metals. Although crude oil prices recovered somewhat after last year’s sharp decline, their reduced level continued to have a negative impact on energy producers.

In the portfolio’s income portion, Signature Corporate Bond Fund added relative value, benefiting from its exposure to high-yield corporate bonds. Signature Global Bond Fund’s exposure to foreign-denominated government bonds contributed to underperformance, as yields rose during the quarter. Income-generating equities held within Cambridge Income Corporate Class detracted from relative performance.

We continued to hold cash and U.S. dollars as we wait for opportunities in the market. U.S. currency offers reasonable value and has a unique effect of being a hedge against rising interest rates.

The government debt market in Canada continues to offer very low yields across all maturities, including longer-term issues. Meanwhile, interest rate risk, as measured by duration, has increased in recent years. It will be challenging to earn a return in excess of inflation during the next three to five years. We favour securities that offer more attractive returns than those offered by government bonds, including foreign-denominated issues, short-duration investment-grade bonds and high-yield corporate bonds and high-quality dividend-paying equities.

Having a diversified and flexible framework allows us to take advantage of changes in market valuations and provide steady income returns. We continue to adjust our bond weightings to manage downside risk and volatility. Our portfolio is positioned with less interest rate sensitivity and enhanced diversification relative to the benchmark.

In the portfolio’s equity portion, holdings in all global regions detracted from performance.

The sector allocation of the portfolio is more diversified than that of the Canadian economy and the S&P/TSX Composite Index. We continued to have underweight exposure to the resource sectors, and overweight positions in information technology and the consumer sectors. Our exposure to international equity was reduced, as economies in Europe and Japan are struggling to achieve meaningful growth. We believe emerging market equities are attractively valued, and modestly increased this weighting in the portfolio. These adjustments allowed us to enhance return potential while adhering to the portfolio’s risk profile.

The Canadian equity portion is positioned quite differently from its benchmark, the S&P/TSX Composite Index. It has underweight allocations to the resources and financials sectors, and overweight positions in other areas such as information technology, consumer staples and consumer discretionary – positioning that we believe enhances risk-adjusted return potential. Signature Select Canadian Corporate Class underperformed the benchmark due in part to its health care and consumer discretionary holdings.

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Portfolio Review – Second Quarter 2015 as at June 30, 2015Portfolio Series Balanced Fund

In our U.S. equity component, Synergy American Equity Corporate underperformed due to its holdings in information technology and consumer discretionary. Hedging a holdings in portion of our U.S.-dollar exposure added value, as the currency weakened against the Canadian dollar. The U.S. equity portion favours areas of the market that are tied to economic growth, while maintaining underweight positions in defensive sectors.

Among our international funds, Signature International Corporate Class underperformed, due to its underweight position in Japan and its U.S.-dollar exposure. The international equity portion had overweight allocations to information technology and consumer discretionary, with underweight positions in materials and industrials. Geographically, it had overweight positions in emerging markets, mainly in Asia and Latin America, and underweight allocations to the U.K., Australia, and Europe.

Emerging markets produced mixed performance during the quarter. China’s Shanghai Composite Index ended the three-month period with a 14.1% gain in local currency terms, but began a sharp decline in late June and continued to lose ground early in the third quarter, prompting government intervention to support prices. The portfolio has minimal direct exposure to China. Our long-term outlook for emerging markets remains favourable, particularly in the Asia-Pacific region, where economic fundamentals are relatively robust and equity market valuations appear attractive. We continue to have a modest allocation to emerging market equities to balance our objectives of reducing risk while increasing potential returns for investors.

Alfred Lam, CFA, Senior Vice-President and Portfolio Manager

Yoonjai Shin, CFA, Vice-President and Associate Portfolio Manager

Marchello Holditch, CFA, Senior Analyst

Lewis Harkes, CFA, Senior Analyst

Andrew Ashworth, Analyst

Desta Tadesse, Analyst

Portfolio Series Portfolio Management Teams

Altrinsic Global Advisors, LLC follows a fundamental value approach in which the team seeks out high-quality undervalued companies worldwide. Founded by John Hock and associates, Altrinsic is based in Greenwich, Connecticut.

Black Creek Investment Management Inc. is led by award-winning money managers Bill Kanko and Richard Jenkins. Black Creek pursues an equity mandate with no restrictions on finding the best businesses in the world. They are driven by identifying proprietary ideas and global businesses that will do well for investors over the long term.

Cambridge Global Asset Management is led by Co-Chief Investment Officers Alan Radlo and Brandon Snow and Chief Market Strategist Robert Swanson. They invest in companies building long-term economic value. Cambridge is a division of CI Investments and has offices in Boston and Toronto.

CI Investment Consulting is the portfolio management team responsible for over $25 billion of assets in CI’s managed solutions and oversight of all CI funds. Led by Portfolio Manager Alfred Lam, the team’s mandate is centred on asset allocation, manager oversight and selection, and risk management.

Epoch Investment Partners, Inc. is a New York-based investment management firm founded by Wall Street veteran William Priest and associates. Epoch uses a value-based approach that focuses on companies with superior shareholder yield.

Harbour Advisors, a division of CI Investments, is led by Portfolio Managers Stephen Jenkins and Roger Mortimer. Harbour’s approach entails buying high-quality businesses at a sensible price, and following a patient, long-term outlook.

Marret Asset Management Inc. focuses on fixed-income investing and alternative strategies on behalf of institutional, high net worth and retail clients. The firm is led by Chief Investment Officer Barry Allan.

Signature Global Asset Management is among the largest portfolio management teams in Canada, managing a full range of global and Canadian income, equity and balanced mandates. Chief Investment Officer Eric Bushell was named Morningstar Fund Manager of the Decade in 2010.

Lawrence Park Capital Partners Ltd. is a Toronto-based independent investment management firm dedicated to creating alternative fixed income and credit products. The Lawrence Park team, led by Andrew Torres, offers a unique approach to fixed-income investing aimed at enhancing yield and reducing volatility.

Picton Mahoney Asset Management is led by David Picton and Michael Mahoney and uses quantitative analysis as the foundation of its approach.

Tetrem Capital Management, led by Chief Investment Officer Daniel Bubis, is based in Winnipeg and has an office in Boston. Tetrem uses a disciplined approach to invest in undervalued Canadian and U.S. companies.

All commentaries are published by CI Investments Inc., the manager of all the funds described herein. They are provided as a general source of information and should not be considered personal investment advice or an offer or solicitation to buy or sell securities. Every effort has been made to ensure that the material contained in the commentaries is accurate at the time of publication. However, CI Investments Inc. cannot guarantee their accuracy or completeness and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.

This report may contain forward-looking statements about the fund, its future performance, strategies or prospects, and possible future fund action. These statements reflect the portfolio managers’ current beliefs and are based on information currently available to them. Forward-looking statements are not guarantees of future performance. We caution you not to place undue reliance on these statements as a number of factors could cause actual events or results to differ materially from those expressed in any forward-looking statement, including economic, political and market changes and other developments.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer and there can be no assurances that the CI Money Market Funds will maintain its net asset value per security at a constant amount or that the full amount of your investment in these funds will be returned to you. ®CI Investments, the CI Investments design, Synergy Mutual Funds, Harbour Advisors, Harbour Funds, Cambridge and American Managers are registered trademarks of CI Investments Inc. ™Portfolio Select Series, Portfolio Series, Signature Funds and Signature Global Asset Management are trademarks of CI Investments Inc. Cambridge Global Asset Management is a business name of CI Investments Inc. used in connection with its subsidiary, CI Global Investments Inc.Certain portfolio managers of Cambridge Global Asset Management are registered with CI Investments Inc. Morningstar Awards© Morningstar Inc. All Rights Reserved. Published July 2015.

1507-1058_E (07/15)

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