Dividend Growth Investing Cambridge Style

Stephen GroffPrincipal & Portfolio Manager

Bob SwansonPrincipal & Chief Market Strategist

Manager checklist

ETF Manager 1 Manager 2

Manager alignment Net worth and compensation aligned

Active share 88-98%

Upside / downside capture See upcoming slide

The Cambridge philosophy

Active management• Conviction in what we own and why we own it• Not index focused• Nearly 100 years of diversified investment experience on the team

Absolute return, downside focused• Primary focus is understanding what can go wrong• If you invest in good companies the upside takes care of itself• Avoiding big losses is the best way to grow wealth over time

We are personally aligned• Significant holders of our funds• We lose money, our pay goes down• Focus on absolute returns

The Cambridge suite of products

Diversified income & balanced

Dividend income

Equity

Small/mid-cap equity

• Cambridge High Income• Cambridge Canadian Asset

Allocation

• Cambridge Canadian Dividend

• Cambridge U.S. Dividend• Cambridge Global Dividend

• Cambridge Canadian Equity• Cambridge American Equity• Cambridge Global Equity

• Cambridge Canadian Growth Companies

• Cambridge Growth Companies

• Cambridge Pure Canadian Equity

Potential return

Pote

ntial

risk

Macro outlook and insights

Summary• Continued appetite for income and safety• Equities are your new yield investment• We favour U.S. equity and U.S.-dollar exposure

U.S. 10-year bond yields

Source: FactSet

TSX dividend yields and Canadian 10-year bond yields

Source: FactSet

S&P 500 dividend yields and U.S. five-year bond yields

Source: FactSet

Dividend Yield

Bond Yield

Fund flows: stocks vs. bonds

Equity Funds

Bond & Income

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000 (RUNTOT) Ici Mutual Funds, Net New Cash Flow, All Equity Funds, Mil l ions Of Usd - United States (RUNTOT) Ici Mutual Funds, Net New Cash Flow, All Bond & Income Funds, Mil l ions Of Usd - United States Recession Periods - United States

Source: FactSet

People have been chasing yield

High-dividend stocks are the same value as the index for the first time in history

High yield vs. a better company

AGF CI Financial9.1% Dividend yield 3.5%

118% 5-year average payout ratio

70%

1% 5-year average dividend growth

8%

-0.2% 5-year average change in share count

-2.7%

5% 5-year total return 111%

4% Dividend Aristocrats Index weighting

Not in the index

Source: Bloomberg, September 2014

Not just about ‘high yield’

Source: ISI Group

Where to find quality dividend candidates

0

50

100

150

200

250

300

350

400

5 years 10 years 25 years

U.S. Europe Canada

Number of companies with consecutive years of dividend growthN

um

be

r o

f co

mp

an

ies

Source: FactSet, August 2014

USD index long-run waves: get long the $

17 years 16 years

U.S. Federal Reserve’s broad real trade-weighted dollar index since Bretton Woods

• The USD has had about 2.5 cycles in 40 years of floating rates• The apparent bottom of the last cycle was 32 months ago and since then the USD has risen a mild 6%• The index spending two to four years ‘bumping along the bottom’ before accelerating higher is consistent with

previous dollar cycles

Source: Federal Reserve, Bloomberg, BMO FX Strategy

Yield today’s reality

Past Future

Yield investing was “easy” It won’t be as easy going forward Falling interesting rates Rising interest rates

Compressing spreads Spreads / defaults at historical lows

Rising payout ratios Elevated payout ratios

Rising valuation High valuations

But your clients still need income … so what is the solution?

Cambridge investment philosophy

Core holdings Management aligned with shareholders

Strong capital allocationCompetitive advantage

Allison TransmissionFirst Republic

GraingerHome Depot

Norfolk SouthernThomson Reuters

US Bancorp

Non-core holdingsInformation edgeCyclical recovery

Emerging profitabilityThematic investing

Swift TransportationFluorCash

Attractive risk/reward

How we think about a business

Know your business

Reinvest in the business Buybacks Dividends

“Total shareholder yield”Supports future growth

Different geographies + same philosophy = consistent results

Gross returns of Canadian and U.S. underlying holdings in Cambridge Canadian Equity Corporate Class relative to index returns

Source: CI Investments, February 2014

23.4%

30.9%

14.4%

29.4%

50.0%

63.0%

10.3%

65.3%

Downside protection

Rolling one-year returns of underlying holdings in Cambridge Canadian Equity Corporate Class vs. TSX, April 2011 to March 2014

Source: CI Investments

Managing the downside is criticalF

req

ue

ncy

(a

s p

erc

en

t o

f to

tal)

Find

ScreensConferences

Company meetingsSell side discussions

Analyze

Public filings (10Ks, Proxies etc.)Transcripts and presentations

Site visitsIn-house management meetings

Conferences Financial modelling and analysis

Competitor / supplier discussions

It is a time-intensive process to vet business models and build relationships with management teams.

Our relationships and consistent investment process is a competitive advantage.

How we find and analyze potential investments

Cambridge is not benchmark focused

Source: Bloomberg, September 2014

Sector

CambridgeCanadianDividend

iShares S&P/TSX

High Dividend Difference

Cambridge U.S.

Dividend

iShares High Dividend

ETF Difference

Cash 10 - 10 11 - 11

Bonds - - - -

Financials 21 31 -10 20 7 13

Energy 13 31 -18 5 14 -9

Materials 7 6 1 - 2 -2

Consumerdiscretionary 13

5 8 18 4 14

Consumerstaples

12 1 11 6 25 -19

Information technology

2 1 1 4 7 -3

Telecomservices

- 12 -12 - 10 -10

Industrials 13 2 11 27 1 26

Health care - - 3 19 -16

Utilities 9 11 -2 6 11 -5

Dividend investing Cambridge style

*3 or 5 years depending on history, adjusted for M+ASource: Bloomberg

Cambridge Global Dividend Fund characteristics

August 2014

Number of holdings 52

Average dividend yield 2.5%

3-year dividend growth 11.2%

Change in shares* 0.0%

Payout ratio 42.8%

Cambridge U.S. Dividend Fund characteristics

August 2014

Number of holdings 28

Average dividend yield 2.0%

3-year dividend growth 16.0%

Change in shares* -0.01%

Payout ratio 37.7%

Cambridge Canadian Dividend Fund characteristics

August 2014

Number of holdings 32

Average dividend yield 2.5%

3-year dividend growth 17.8%

Change in shares* -0.02%

Payout ratio 51.0%

Cambridge is not benchmark focused

Cambridge Canadian DividendTop holdings

as at August 31, 2014

Intact Financial 5.3%

Loblaw 4.7%

PrairieSky Royalty 4.4%

US Bancorp 4.4%

Granite REIT 3.9%

TransForce 3.6%

Thomson Reuters 3.3%

ITC Holdings 3.2%

Microsoft 3.1%

Agrium 3.0%

Total 38.9%

Source: CI Investments

Cambridge U.S. Dividend Top holdings

as at August 31, 2014

Norfolk Southern 5.3%

US Bancorp 5.3%

First Republic Bank 5.2%

Thomson Reuters 5.1%

Home Depot 4.5%

Adecco 4.4%

Allison Transmission Holdings 4.0%

Microsoft 3.9%

United Parcel Service 3.9%

Anheuser-Busch InBev 3.9%

Total 45.3%

The Cambridge suite of products

Diversified income & balanced

Dividend income

Equity

Small/mid-cap equity

• Cambridge High Income• Cambridge Canadian Asset

Allocation

• Cambridge Canadian Dividend

• Cambridge U.S. Dividend• Cambridge Global Dividend

• Cambridge Canadian Equity• Cambridge American Equity• Cambridge Global Equity

• Cambridge Canadian Growth Companies

• Cambridge Growth Companies

• Cambridge Pure Canadian Equity

Potential return

Pote

ntial

risk

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http://blogs.ci.com/cambridge

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Commissions, trailing commissions, management fees and expenses 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. ®CI Investments, the CI Investments design and

Cambridge are registered 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. This communication is published by CI as a general source of information and is not intended to provide personal legal, accounting, investment or tax advice. Facts and data provided by CI and other sources are believed to be reliable when posted; however, CI cannot guarantee that they are accurate or complete or that they will be current at all times. CI and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages howsoever caused, arising out of the use of this presentation.

Thank you

FOR ADVISOR USE ONLY – NOT FOR DISTRIBUTION TO CLIENTS

Appendix – Cambridge performance

Performance as at August 31, 2014 1 year 3 year 5 yearSince

inception

Cambridge Canadian Equity Corporate Class 23.0% 18.9% 15.1% 8.9%*

Cambridge Canadian Asset Allocation Corporate Class 15.9% 9.6% 10.1% 6.2%*

Cambridge Canadian Dividend Fund 27.3% 10.4% 11.4% 8.1%

Cambridge Canadian Growth Companies Fund 30.5% 32.8% n/a 28.0%**

Cambridge Pure Canadian Equity Fund 39.3% 33.7% n/a 28.3%**

Cambridge Global Dividend Fund 18.0% n/a n/a 16.4%

Cambridge Global Equity Corporate Class 20.3% 17.4% 11.5% 7.1%*

Cambridge High Income Fund 16.8% 10.3% 12.4% 10.7%

Cambridge U.S. Dividend Fund 23.0% 20.3% 13.1% 6.1%

Cambridge American Equity Fund 26.6% 18.5% 12.2% 7.1%

*Dec. 31, 2007; **Feb. 15, 2011; Jul. 31, 2013; Jul. 2, 2004; May 25, 1989; Feb. 1, 2005; June 14, 2006

Source: RBC Investor & Treasury Services, August 31, 2014