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THE RENAISSANCE ADVISOR

Learn why advisors use Renaissance Optimal Income Portfolio to meet real client needs

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A STRONG DEFENSE ISNâ&#x20AC;&#x2122;T BUILT BY THOSE WHO GO HALFWAY.

RISING RATE PROTECTION With rising interest rates on the horizon, clients need a plan to protect portfolios. Renaissance has partnered with the experts at Ares Management to bring demonstrated, institutional floating-rate loan management to individual Canadian investors.

Exclusive Access to Institutional Floating Rate Expertise Help clients prepare for what lies ahead with Renaissance Floating Rate Income Fund.

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ÂŽRenaissance Investments is offered by and is a registered trademark of CIBC Asset Management Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.

PAGE

In this issue

4 14

Tax and Estate New Testamentary Trust Rules May Affect Vulnerable Canadians

Economic Outlook Fed Counts Down While Canada Lifts Off

Back of the Napkin Asset Gathering Secrets of Elite Advisors, Part 2

Real Needs Demand Real Outcomes

Solution Highlight The Global Bond Advantage

Thanks to Our Supporters Be Interested in Clientsâ&#x20AC;&#x2122; Lives

Canadian Comfort Food

Brain Calisthenics

Letter from the Renaissance Sales Team

Meeting Real Client Needs When a client stops by your office, they’re often looking for guidance for their portfolios. Your clients have real investment needs, and they’re seeking your expertise to help meet them. For some, it might be protection on the downside when the stock market starts to turn. Others could be looking for a source of regular income for retirement, or an investment that will grow over time – let’s say they need that money to buy a new house. Renaissance Optimal Income Portfolio has delivered real outcomes to clients for the past seven years, through two major market downturns and an extended low-rate period. You can read more in this edition about how our advisor partners are using this all-in-one solution to meet real client needs. We would also like to extend a thank you to all who attended the Renaissance Investments Roadshow when it came to your town this fall. Once again, we appreciate your continued support in making this event one of the top-rated advisor roadshows in Canada. Our experts who appeared at the roadshow continue to offer their insights in The Renaissance Advisor. In this issue, Jamie Golombek weighs in on how your clients may be impacted by new rules surrounding testamentary trusts, which he sees as being unfair to vulnerable Canadians. In his economic update, Benjamin Tal gives his insights on the Canadian growth story as well as offering suggestions as to what the U.S. Federal Reserve will do next. You can also learn how to leverage intimate client events in the second installment of Grant Shorten’s series on Asset Gathering Secrets of Elite Advisors. At Renaissance, we continue to strive to be your most trusted business advisor. As always, we welcome your feedback.

The Renaissance Sales Team

New Testamentary Trust Rules May Affect Vulnerable Canadians TAX AND ESTATE

In 2013, I wrote about government proposals to eliminate the graduated tax rate system for testamentary trusts and estates. The proposed measures will effectively eliminate a common estate planning technique used by some Canadians to reduce tax on the investment income earned from their assets after their death. In August, the government followed up on the proposals originally announced in the 2014 federal budget, and released draft legislation to come into play starting in 2016. Under the proposed rules, flat top-rate taxation at 29 percent federally will apply to testamentary trusts – trusts arising as a consequence of death – and to estates. There are two notable exceptions to the proposed rules. First, estates are only subject to flat top-rate taxation “after a reasonable period of administration” of 36 months. Consequently, graduated rate taxation will still be available in the first three years of an estate. A second exception applies to a “qualified disability trust,” whose beneficiaries are eligible for the federal disability tax credit (DTC), due to a severe and prolonged impairment to physical or mental functions. Graduated rate taxation will continue to be available for these trusts. Despite these exceptions, the proposed rules have been criticized for being unfair in a number of respects. For example, suppose a testamentary trust has DTC-eligible beneficiaries. Draft legislation to implement the proposed rules will require that the trust be created under a will to benefit from graduated rates. When funds are left in trust for a DTC-eligible individual via a designation on an insurance policy, RRSP, RRIF or TFSA, the trust would be subject to taxation at the top tax rate, rather than at graduated rates. We have drafted a submission to the Department of Finance and hope to have this issue favourably resolved in an upcoming redraft of the legislation. Secondly, for individuals who have a disability but do not qualify for the DTC, no relief will be available and flat top-rate taxation would apply. It has been estimated that over 3.8 million Canadians1 have a mental or physical impairment, yet less than 800,000 DTC certificates are estimated to be outstanding.2

Finally, in cases where a testamentary trust does not have DTC-eligible beneficiaries, the proposed rules may put the trustee in a difficult position. For example, with many trusts, the primary purpose is to allow the trustee to continue to control and manage the deceased’s assets and protect them for the beneficiaries. If flat top-rate taxation applies, the trustee would have to choose between paying more taxes in the trust or paying out the income to beneficiaries, who may be in lower tax brackets but not capable of handling the funds. In addition, having income payable to them may render them ineligible from receiving various provincial income-tested disability benefits, which have less-stringent criteria for qualification than the DTC.

Statistics Canada’s initial findings from the Canadian Survey on Disability reported that an estimated 3.8 million Canadians were limited in their daily activities due to a disability in 2012. The survey population was comprised of Canadians aged 15 or older as of May 10, 2011, who were living in private dwellings.

According to CRA 2013 Preliminary Income Statistics for the 2011 taxation year, the disability amount, which is only available when a DTC has been issued, was claimed either for the taxpayer or a dependant on 756,500 income tax returns.

Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC Private Wealth Management. He works closely with advisors to help them provide integrated financial planning solutions for their high-net-worth clients. Jamie is frequently quoted in the media as an expert on taxation. Follow @JamieGolombek www.advisor.ca/togo Podcast > A Little-Known TFSA Fact www.renaissanceinvestments.ca/en/jamie_golombek/

Granted, U.S. GDP is now above its pre-recession level, but it is still very far from 25 the long-term trend line, which was established decades before that. The key question is to what extent growth can accelerate in the coming years to catch up 20 with that trend line, or maybe the recession’s significant reduction in capacity led to15a notable slowing in the economy’s potential growth. If the latter is the case, then inflation is much closer than perceived by many. 10

If indeed the speed limit of the economy is slower than in the past, then you don’t 5 need much growth to start accelerating inflation. We are not there yet – there is still a positive output gap in the United States. However, with the economy 0 growing at the current disappear by 2016.June Historically, the Fed Two rate, this gap will One Decades Decade 2014 of the actual did not wait until the last day, and started tightening way ahead Ago Ago closing of the gap. Again, by the time you see it, it is too late. If the speed limit is lower, then the neutral interest rate (the rate that produces equilibrium between savings and capital investment in a way that leads to stable inflation) is also lower. This means that the Fed will not have to raise rates by much in order to reach a stable economy. Real Neutral Rates Have Fallen (%) 4.0

2.0 1.0 0 -1.0 -2.0 1981

1985

1989

Source: CIBC World Markets

1993

1997

2001

2005

2009

2013

Sweden

2000

Italy U.K.

The Canadian growth story is looking rosier than previously envisioned. By now, we’re all sick of hearing about the weather, but after slipping in Q1, the economy is set to expand by at least three percent in two consecutive quarters. That in itself should force the Bank of Canada to rethink its forecasts. However, this outperformance vis-à-vis prior expectations was centred on sources of demand that should by now have been flagging, but which were given an extended life by temporary factors. Residential construction, and, to a greater extent, consumer spending have spurred on the recent strength of the Canadian economy. But as we’ve indicated in recent research, the growth in household consumption is not being unlocked by sustainable factors, but rather by a significant fall in savings. While the staying power of this trend is surprising, it is buying even more time for the arrival of the future bulwarks of the Canadian economy: exports and investment.

Specialty Fixed Income

To some extent, Canada is well-positioned with regard to its export markets. Geography always makes the U.S. key to Canada, outperformance High-but America’s FloatingGlobal Yield In fact, Rate vs. other G7 countries is enhancing that dependence. exports destined Bonds Bonds Loans to the U.S. market are already growing at a near 17 percent year-on-year pace, while those destined elsewhere are up by just under 11percent. Government Bonds

Canada U.S.

3.0

0% Canada: Growing Right Before Our Eyes

1995

to the timing of the first move by the U.S. Federal Reserve (Fed). The consensus is that the Fed will move by the middle of 2015, but it is very possible that the initial move will be made by the first quarter. The U.S. economy is surprising on the 30 upside, and many Fed members are getting a bit nervous about inflation.

Japan

0.00 Now that quantitative easing (QE) in the U.S. is almost history, the focus is shifting 10 11 12 13

Of course, there is the risk 20%that the Fed will overshoot, since it is very difficult to stop at this unobservable rate when inflation is accelerating. The practical implication of the above is that rates might overshoot in 2015; the bond market 10% will underperform; policy rates probably will stabilize in 2016 with bonds once again providing short-term opportunities.

1990

U.S.: Focusing on the Fed

1985

0.04

France Japan U.S.

Denmark

30%

Japan

0.08

Belgium

40%

ECONOMIC OUTLOOK

Australia

0.12

U.K. Australia

50%

0.16

France

60%

0.20

Japan U.K.

Fed Counts Down While Canada Lifts Off

Investment-Grade Corporate Bonds

Eme Ma Bo

Provin Bon

“To some extent, Canada is well-positioned Traditionalwith Fixed Income regard to its export markets. Geography always makes the U.S. key to Canada, but America’s outperformance vs. other G7 countries is enhancing that dependence.”

France

0.00 12

0.20

1990

Ratio Outflow of FDI to Domestic Capital Expenditure 0%

1985

Energy Products Share of Total Exports (%)

Italy

10%

2000

1995

France Japan U.S.

Japan

20%

U.K.

0.04

Japan

30%

Belgium

0.08

U.K. Australia

40%

Denmark

0.12

Australia

50%

0.16

Sweden

Japan U.K.

60% 0.20

0.16

20 0.12 15 0.08 10 0.04

5 0

0.00 Two Decades Ago

One Decade Ago

June 2014

Source: CIBC World Markets

Much of the current momentum is, however, coming from a single sector. Canada has been leaning more heavily on energy products, now a quarter of its outbound shipments in dollar value, to support exports, investment and economic growth. Estimates from the Canadian Association of Petroleum Producers suggest that black gold’s shine isn’t likely to fade any time soon. Applying production estimates to their relatively stable historical relationship to exports destined for the U.S. % 4.0 suggests that Canada in 2016 will have exported more thanCanada 230 million of 3.0 U.S. additional barrels to America than it did in 2013.

But a growing proportion of each capital spending dollar is now devoted to Specialty Fixed Income replacements that simply maintain existing levels of production, a trend that 25 is working to widen the gap between investment in productive High-and the change FloatingE Global Yield Rate M capacity in the economy. The practical implication is that capital investment 20 Bonds Bonds Loans must rise much more quickly in order to accommodate both replacement and15expansion investments.

2.0

Statistics Canada’s business intentions survey has been a good predictor of actual 1.0 activity, and the response earlier this year was that CEOs weren’t planning to 0 accelerate domestic capital spending in 2014. Evidently, they were more inclined -1.0 to spend on bricks and mortar or takeovers elsewhere. Foreign direct investment -2.0 by Canadian companies rose 1993 by a record-high nine percent in 2013. The2013 ratio of the 1981 1985 1989 1997 2001 2005 2009 outflow of FDI to capital expenditure is close to 20 percent – again a record high.

“Foreign direct investment by Canadian companies rose by a record-high nine percent in 2013.”

Government Bonds

Benjamin Tal is Deputy Chief Economist for CIBC. 5 Described as one of Canada’s leading experts on the real estate market by the International 0 Monetary Fund,Two he is responsible for One analyzing Decades Decade economic developments and their implications Ago Ago for North American fixed income, equity, foreign exchange and commodities markets.

Investment-Grade Corporate Bonds

Pro B

Traditional Fixed Income June 2014

www.renaissanceinvestments.ca/en/economy/ www.renaissanceinvestments.ca/en/economy/

4.0 3.0 2.0

Canada U.S.

Asset Gathering Secrets of Elite Advisors Part 2 – Leveraging Intimate Client Events

BACK OF THE NAPKIN

In part two of this series, we focus on:

Something magical happens when we venture into the minds of those who consistently excel in a particular area of expertise. We are able to systematically model their excellence by carefully unpacking their personal values, beliefs, methods and approaches.

In this three-part series, we’ll discover how some of the most successful advisors consistently find qualified prospects and gather assets at an above-average rate. What may be most striking is that “elite” advisors often do not engage in shocking, surprising, or even overly creative activities. What separates successful asset gatherers from the average…is mastery of the fundamentals! This group has determined that their time and resources are precious, and that it’s essential to avoid wasting them on low-impact marketing activities. Rather, they focus on 2-3 high-impact prospecting tactics. Elite advisors understand the marketplace has changed. Although they may have built their businesses through traditional methods, they recognize that today’s game is won in the arenas of word-of-mouth marketing, face-to-face contact, and through personal introductions and referrals. Specific tactics may vary, but three methods consistently top the list:

“LEVERAGING INTIMATE CLIENT EVENTS” Leveraging Intimate Client Events Gone are the days of large-scale investment seminars. Today’s elite advisors focus their efforts on the planning and execution of small, intimate client events. These are theme-based gatherings designed around building a social connection with your clients and their invited guests. Let’s take a closer look at some of the most important aspects of these events:

Be Clear on Your Outcome in Advance: Avoid the temptation to hold these events just to create the illusion of “busy-ness.” Know your outcome in advance by clearly visualizing how your function will unfold from start to finish. Determine that you will initiate a meaningful conversation with each invited guest, while staying committed to keeping it social. Your intimate client event shouldn’t become a forum for an aggressive sales pitch or a forced education in finance. Speak briefly about your work – only when asked – and then offer to book a time together to go into more detail. The primary goal of your event is to create an emotional connection with your guests, and to begin the process of building rapport. Tailor Your Events to Your Guests:

The Power of Strategic Alliances

Leveraging Intimate Client Events

Capitalizing on Networking Opportunities

There are countless possible formats, or themes, for your intimate client events. Your imagination is your greatest ally. The most important consideration when contemplating your themes, is to ensure that you invite the right people to the right events. Make notes throughout the year as you meet with your clients, or when you speak with them on the telephone. Ask questions about their hobbies, likes and dislikes, and build a file on the things they enjoy doing in their leisure time.

An Example: If you’re aware of several clients who enjoy classical works of art, consider inviting them (and their guests) to a dinner and personal tour of an upcoming exhibit at your local art gallery. You may have other clients who would take great pleasure from attending a wine-tasting and food-pairings event at a local vineyard. Your automobile enthusiasts would gladly attend a “classic cars” show with a chef-hosted cocktail reception. The options are endless.

Obsess Over Your Pre-event Planning: Spend quality time with your team on the planning of your event in advance. All too often, these functions are thrown together with little regard for the smaller, but critical, moving parts. The details matter and will ultimately determine the success of your event. Carefully consider the following elements in advance:

Repetition is the mother of skill, and mastering the art of conducting intimate client events is no exception. Practice makes perfect…and with frequency will come greater effectiveness in all aspects of your event. You may choose to specialize in just one type of event, and simply repeat the identical format nine to 12 times a year. With this approach, the planning and execution of your client events will take on an unparalleled degree of mastery, as your team continues to refine the process and reap the rewards.

“Repetition is the mother of skill, and mastering the art of conducting intimate client events is no exception. Practice makes perfect…and with frequency will come greater effectiveness in all aspects of your event.”

This Asset Gathering Secrets of Elite Advisors Series continues in future editions of The Renaissance Advisor. Upcoming insights from Grant will include:

• Your client invitee list (suitability to your theme) • The specific “friends” you would like your clients to invite

PART 3 – CAPITALIZING ON NETWORKING OPPORTUNITIES

• The date and time of your event • The sights, sounds and atmosphere of your chosen venue • The agenda and timing of your event – from start to finish • Your specific desired outcome for each client and guest • Your “mingling strategy” • Your team’s roles and responsibilities at the event Follow-up Early and Often: Elite advisors know that timely follow-up is key to capitalizing on their intimate client events. Touch base personally, by telephone, within 24-36 hours to thank your guests for joining you at your event. Pick up where you left off on a particular topic of conversation and casually remind them of what you do for a living. Sometimes, this can be done very effectively by simply relating a story about a client who approached you with a difficult issue – which you were able to quickly and easily resolve. With other attendees, you may have built sufficient rapport during your event, making it feel perfectly natural to offer them a complimentary portfolio review or something similar. Regardless of how it’s done, ensure that you advance the relationship in some way, shape or form. Rinse and Repeat: The advisors who consistently gather assets through intimate client events do so by holding events frequently throughout the year. Most would agree that monthly is best, but certainly no fewer than six to nine social events per year.

Grant Shorten is Director of Strategic Insights at Renaissance Investments. He offers insights and approaches that will work with your clients and have an immediate impact on your practice. www.advisor.ca/togo Podcast > How to Answer Common Fee Questions Video > Fee Transparency & You: Validating Your Trailer www.renaissanceinvestments.ca/en/practicemanagement/

This quarter, we asked our investment advisor partners to discuss how the all-in-one Renaissance Optimal Income Portfolio has met real client needs through an extended period of low rates and two major market downturns since 2007. Cyrilla Saunders Vice President, Investment Advisor, CIBC Wood Gundy

Matt Tolley Investment Advisor Edward Jones Kathy Robertson Associate Investment Advisor, CIBC Wood Gundy

RENAISSANCE

CANADIAN BONDS GLOBAL BONDS HIGH-YIELD BONDS REAL RETURN BONDS FLOATING-RATE LOANS CANADIAN DIVIDENDS GLOBAL INFRASTRUCTURE

OPTIMAL

INCOME

PORTFOLIO

When the financial crisis hit in 2008, it was a surprise to many investors. Few investors, sophisticated or novice, had positioned their portfolios for the upheaval that followed. It’s a much different story in 2014, but there are some similarities. The biggest one – the economic landscape is obviously changing. In times of uncertainty, particular investment needs come to the fore: downside protection in volatile markets, the potential for stable growth and the ability to consistently deliver income despite market conditions. In order to meet these needs, a portfolio typically requires a specific and strategic mix of underlying assets.

REAL NEED #1: DOWNSIDE PROTECTION REAL OUTCOME: A smoother ride with over 70% less volatility through two major market downturns 1

Central banks and governments moved in to support financial markets at the beginning of the credit crisis. The steps they took were important, but the U.S. Federal Reserve (Fed) likely overstayed its welcome and a return to “normal” is now appropriate. That probably means even more volatility for financial markets. “Downside protection and portfolio stability have become more important than ever,” says Patrick O’Toole, Vice-President Global Fixed Income, CIBC Asset Management and co-manager of Renaissance Optimal Income Portfolios. “The importance of diversification can’t be overestimated in volatile markets.”

Robertson points out how easy it is to be positive when everything in a portfolio is performing well. She and Saunders believe the real measure of their success is clients’ comfort level when financial markets decline. “Renaissance Optimal Income Portfolio was launched in late 2007, an ideal time to be put to the true test of volatility. To be able to discuss the negative 2008 return of -12.3 percent, which was almost fully recaptured in 2009 with a positive 13.4 percent, was a tremendous joy to both our clients and our team. We are grateful that we can push greed aside while continuing to have our clients’ best interests at hand.” The portfolio provides downside protection by offering broad diversification across asset classes. In fixed income, diversification comes from exposure to investment-grade bonds, real-return bonds, high-yield bonds, global bonds and floating-rate loans. Within equities, diversification is achieved with dividend stocks and infrastructure stocks. Downside Protection1 ($ Value in 000) 15 14 13

“2011 provided a great example of how Renaissance Optimal Income Portfolio can perform in a declining market. The TSX was down about nine percent, while the portfolio returned over four percent,”says Matt Tolley, an investment advisor with Edward Jones in Osoyoos, BC. “Performance like that is very reassuring to clients and a good reminder of why they are holding this product.”

Global Financial Crisis 12 11 10 9 8 7

2011 Downturn

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Au g20

12 Au g20

11 Au g20

10 Au g20

09 Au g20

08 Au g20

5 No v20

In declining markets, CIBC Wood Gundy Investment Advisor Cyrilla Saunders and Associate Investment Advisor Kathy Robertson in Charlottetown, PEI, try to avoid selling any equity position beaten up by negative market activity. They depend on solutions like Renaissance Optimal Income Portfolio to round out portfolios and be their “steady player,” providing consistent cash flows and sustaining portfolio valuations.

Renaissance Optimal Income Portfolio S&P/TSX Composite Total Return Index

“After significant market corrections and increased geopolitical risk, investors still want growth, but they want stable growth,” says O’Toole, pointing out how investor attitudes have evolved over the last several years. Tolley agrees, but also highlights that clients sometimes forget about risk, especially with the strong equity markets we’ve seen in the past 12 months. He speaks frequently with his clients and sees himself as the buffer between One June clients and their portfolios.2014 “I try to remind clients that if you’re capturing Decade all of Ago the market returns on the upside in a strong bull market, you’re often exposing yourself to much of the market’s downside during a correction. Most clients can’t stomach more than a moderate amount of portfolio volatility,” he emphasizes.

Polan

“The quality and selection of fixed income solutions included in Renaissance Optimal Income Portfolio are not widely available in the retail market,” underlines Robertson. Clients who need consistent income often rely on a fixed income portfolio. But access to products such as emerging market bonds, global bonds, high-yield bonds and floating-rate loans, that can help mitigate the risks of fixed income investing, are not widely available to individual investors. The portfolio makes that diversification possible. Fixed Income Opportunity Universe

Specialty Fixed Income HighYield Bonds

FloatingRate Loans

Government Bonds

Tolley uses Renaissance Optimal Income Portfolio for clients who want consistent returns with lower volatility. For him, the product provides “an all-in-one solution and an excellent foundation for building an investment portfolio.”

Stable Growth 2

2005 3

“I try to remind clients that if you’re capturing all of the market returns on the upside in a strong bull market, you’re often exposing yourself to much of the market’s downside during a Tolley, Investment Advisor, Edward Jones correction.” MattCanada U.S.

The portfolio is structured to provide stable growth in various market environments. Assets such as real-return bonds and infrastructure stocks are 1993 1997 2001 2005 2009 2013 used to protect against rising inflation. Floating-rate loans provide a layer of protection from rising interest rates. Diversified fixed income vehicles and good-quality, dividend-paying stocks also add yield to the portfolio.

2000

REAL NEED #3: CONSISTENT INCOME REAL OUTCOME: 7 years of 4% annual average distribution 1995

Canada

Fr Japan U.S.

U.K.

Japan

10%

REAL NEED #2: STABLE GROWTH REAL OUTCOME: Annualized return of 8% over five years

U.S.

1990

1985

Belgium

Denm

20%

Emerging Market Bonds

Global Bonds

Investment-Grade Corporate Bonds

Provincial Bonds

Traditional Fixed Income

“It is obvious that Renaissance Optimal Portfolio, with its regular monthly distribution of approximately four percent (which allows for capital growth), or its T6 or T8 tax-efficient distributions, suits the client who wants or needs cash. These timely, tax-efficient cash flows provide a great solution for our teams,” says Robertson. Consistent Income 3

16% 14%

12% 3%

10%

6% 1%

4% 2%

Renaissance Optimal Income Portfolio

Category†

Renaissance Optimal Income Portfolio Distribution Yield – Class A units

4 01 Se pt -2

01 Se pt -2

Se pt -2

1 01 Se pt -2

Se pt -2

9 00

Since inception

Se pt -2

5 years

3 years

Se pt -2

2 years

No v20

1 year

“The quality and selection of fixed income solutions included in Renaissance Optimal Income Portfolio are not widely available in the retail market.” Kathy Robertson, Associate Investment Advisor, CIBC Wood Gundy Aside from clients who need a constant income stream, consistent income provides another advantage. Tolley has noticed that, if an asset price is little changed or even declining, some clients find it hard to stay invested. This is true even for investments that may be deeply undervalued “hidden gems.” A portfolio with a regular income stream is an excellent way to help keep clients invested, he points out. In effect, investors are getting “paid to wait.” This helps maintain discipline in volatile markets. “In some ways it can be compared to renting out a property while you’re waiting for it to appreciate in value. The regular income makes it advantageous, and psychologically easier, to stay with the investment and avoid selling it prematurely.” The challenges on the horizon for investors can become advantages by keeping some simple strategies in mind. Portfolios with a steady income stream help keep investors committed in volatile markets. Stable growth and steady portfolio returns during erratic market swings provide reassurance. Downside protection that preserves portfolio value means capital is still available to take advantage of future opportunities. Renaissance Optimal Income Portfolio provides these benefits in one simple solution.

Learn more about the full suite of Renaissance Optimal Income Portfolios at realoutcomes.ca

Compared to the S&P/TSX Composite Total Return Index. Volatility is measured by standard deviation of the daily returns over the periods June 18, 2008 to March 9, 2009 (Fund: 12.50, Index: 56.01) and April 5, 2011 to October 3, 2011 (Fund: 6.10, Index: 23.11).

Performance for the five-year period ending August 31, 2014. The inception date of the fund was November 13, 2007. †Morningstar Canadian Fixed Income Balanced Category. The indicated rates of return are the historical annual compounded total returns for class A units, including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by a security holder that would have reduced returns.

Distribution yield of the Class A units of the fund for the period November 13, 2007 (inception) to September 30, 2014. The distribution yield at a given time is calculated by dividing the distributions made over the 12-month period prior to that time by the market value at that time. The fund intends to distribute monthly. The monthly distribution rate is expected to be 1/12th of approximately 4% per annum for Class A units. Distributions for other classes may vary. The monthly distribution rates may be adjusted from time to time at our discretion. The payment of distributions is not guaranteed and may fluctuate. If the annual amount distributed exceeds the portfolio's net income and net realized capital gains, such excess will constitute a return of capital. The total return of Class A units since inception, assuming that distributions have not been reinvested, is 4.0%.

ADVISOR ToGo Access to the experts when you need them

Access the Experts When You Need Them

Listen to short podcasts from these Renaissance Optimal Income Portfolio experts. www.advisor.ca/togo

Patrick Bradley, Brandywine Global

Podcast > A Closer Look at Emerging Markets

Nick Langley, RARE Infrastructure

Podcast > Power Up Clients’ Portfolios

Stephen Carlin, CIBC Asset Management

Podcast > How Much Volatility is too Much?

Nicholas Leach, CIBC Asset Management

Podcast > How to Handle High-yield Bonds

The Global Bond Advantage SOLUTION HIGHLIGHT: RENAISSANCE GLOBAL BOND FUND

Poland Canada Japan Australia Australia U.K. Ireland Ireland Australia 2010

2005

2000

10%

Global bonds offer exposure to monetary policies, interest-rate profiles, inflation and economic cycles of markets outside North America. 30 A globally diversified bond mix offers benefits from positive factors in 25some countries, potentially offsetting some of the downside in others.

Canada

Switzerland Australia Poland U.K.

U.S.

1995

1990

1985

France Japan U.S.

Sweden Japan

Exposure to a Wide Range of Markets to Lower Risk

Italy

30%

Japan

Australia

40%

20%

0.00Add

Total Return

Belgium

0.04

50%

Denmark

As global central banks tighten monetary policies, there will be upward on interest rates and downward pressure on bond prices. Due to different economic and monetary cycles across the globe, not all 0.12 interest rates follow the same path and not all bond markets feel the 0.08same price impact at the same time. Investors who diversify fixed income globally can benefit from these price differences. 0.16pressure

U.K. Australia

60%

Japan U.K.

Diversify Bonds to Address Rising Rates 0.20

France

Best-performing Countries Differ Every Year

Source: Bloomberg. Returns in USD represented by Citigroup WGBI.

20 15

Access Global Bonds with: Brandywine Global Investment Two One Management June Decades Decade 2014

10 5 0

Ago

â&#x20AC;˘ Pure Play: Renaissance Global Bond Fund â&#x20AC;˘ Diversified Approach: Renaissance Optimal Income Portfolio (10 percent allocation)

4.0

HighYield Bonds

Actively Patiently manages rotates currency among exposures countries Specialty Fixed Income to protect principal & FloatingEmerging Global Rate Market enhance Bonds Loans Bonds returns Investment-Grade Corporate Bonds

Provincial Bonds

Traditional Fixed Income

1.0 0 -1.0 -2.0

1981

1985

1989

1993

1997

2001

2005

2009

Controls risk by purchasing undervalued securities

1 2 3 4

2.0

Invests in bonds with the highest real yields

Government Bonds

Canada U.S.

3.0

Four Pillars of Superior Risk-Adjusted Returns

2013

Be Interested in Clients’ Lives THANKS TO OUR SUPPORTERS

Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians realize their investment goals. Here is one of the outstanding professionals we are so very proud to work with.

Best tips for gaining new clients: Follow up in a timely manner, whether you meet someone at an event, chat with them on the street, or are following a lead from an existing client. Follow up with a phone call, email or handwritten note. Many advisors drop the ball on follow-up and it’s very important. Favourite hobbies:

What do you love about the business? I love building relationships with all different types of people, especially those I wouldn’t necessarily meet if I wasn’t a financial advisor.

My wife and I love curling and soccer. I tried surfing when I was in Hawaii and was surprised how much core strength is needed. Soccer and curling are good exercise, but surfing is a challenge. One item I can’t be without:

What is your personal formula for building strong client relationships? To be interested in clients’ lives. Not all advisors are really interested in those aspects of a client’s life – they’ll complete the KYC form but don’t take it further. I like to delve into their interests and passions. What are the most common client concerns you hear and how do you address them? The biggest concern is the costs associated with investing, and how an advisor gets paid. To make conversations easier, I bring this up myself. I’m happy my firm is taking leadership and disclosing fees plainly on statements and confirmations, even before the industry mandates we disclose this information. This transparency is necessary to build long-term client relationships.

She’s not “an item,” but I couldn’t do without my assistant, Allison. She runs the office and makes sure everything is handled. I couldn’t maintain and grow my business without her.

Matt Tolley Firm: Edward Jones, Osoyoos, BC Years in Business: 5

Are there areas or themes of financial or investment planning that you plan to focus on more in the future?

Team Members: 2

Many advisors are focused on estate planning and the coming inter-generational transfer of wealth. I’m taking a different approach by speaking with younger clients, a typically underserved group. These relationships can form the foundation of your business for many years to come. In addition, starting a financial plan at a young age can be extremely beneficial, as time works in your favour.

comfo fd CANADIAN

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Profiling a few mouth-watering favourites. Sounds good, eh? The delicate crispness of the air and the beautiful colours of turning leaves can mean only one thing – welcome fall.

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It’s the perfect time – and excuse – to give in to our desire for comfort, and to insulate our bodies again. Canadian comfort food has been shaped by our continuous waves of immigration, and by our vast and differing landscape. It’s less about a particular dish, and more about the ingredients themselves, how they are combined, and what they mean to us. So come in from the cold and find a meal that warms you to the core.

What do you “Put In” that? French fries covered in cheese curds and slathered with gravy. Three simple ingredients make up poutine, arguably the epitome of Canadian comfort food. Although it’s difficult to pin down its exact birthplace, the dish originated in Quebec in the late 1950s.¹ Since then, many delightful variations of classic poutine have popped up across the country – some with luxe toppings like pulled pork, bacon, foie gras and lobster. In 2007, the CBC polled viewers on the greatest Canadian inventions of all time – number 10 on the list was poutine. It beat out the electron microscope, the BlackBerry, radio voice transmission and lacrosse.² Poutineries are popping up across Canada and the web is laced with blogs dedicated to finding the perfect poutine.

Potatoes, Potatoes Poutine wouldn’t be complete without the fries, so we must pay homage to the vegetable that brings it all together. Mashed, baked, scalloped or fried, whichever way you prefer them, potatoes are a comfort food staple. And luckily, we don’t have to go far to get them – Prince Edward Island (PEI) is our potato-hub! Trademarked for their unique growing conditions, PEI potatoes thrive on the island’s warm summers, cold winters, natural precipitation and red soil, high in iron oxide. PEI potatoes come in red, white, yellow and blue so you can have a beautiful potato bouquet at your next dinner. Perogies are one of our popular potato favourites. Dauphin, Manitoba has made a name for itself as the host of Canada’s National Ukrainian Festival. Each summer, thousands of Ukrainians from across the country, and around the world, descend upon the city to celebrate music, tradition and the perfect potato perogies. Alongside their cooking possibilities, potatoes are packed with nutritional value. One medium-sized potato contains up to 45 percent of your daily recommended intake of vitamin C, and more potassium than a serving of bananas or broccoli.³

We Y Alberta Beef Meat and potatoes are comfort food’s backbone, especially when pulled from a warm crockpot. Moving west, Canada offers acres of open range and fertile farmland – welcome to cattle country. Beef cattle production is Alberta’s largest agricultural sector, responsible for 44 percent of the nation’s total production. Alberta beef is a powerhouse industry and Canadians fuel it – 65 percent of Alberta beef is consumed domestically.4 The industry is woven right into the western way of life and is celebrated annually at the Calgary Stampede; the Cattle Trail exhibit showcases its emphasis on safe food production standards, environmentally sustainable practices and animal welfare.5 Make the most of Alberta beef this fall in savory casseroles, chilies and stews. And how about the smell of a pot roast on Sunday afternoon? Sublime. The slow cooker is almost a potpourri dish of smells wafting through the home as the hearty goodness inside cooks to perfection. True Canadians also know that while barbeque season may technically be over, we don’t have to wait another year to grill our steaks. Simply shovel a path from door to barbeque and enjoy year-round.

Shake it up at the Sugar Shack A look to our beloved national flag gives lead to a sweet favourite. The roots of the maple tree run deep in Canada’s history, and its iconic leaf has easily become synonymous with our Canadian identity, and along with it, maple syrup. Originally collected by native Canadians, maple syrup soon caught on with European settlers, especially in Quebec. The province’s maple syrup industry is the largest producer in the world and its profits feed the economy.6

The cabane à sucre is ingrained in its culture and an annual tradition in early spring. A visit to a Quebec ‘sugar shack’ is a great event – you’ll enjoy amusements like live music and dancing, and of course, have the opportunity to put maple syrup on everything, right from the jug in the middle of your table.

And at the heart of Canadian culture is the combination of coffee and doughnuts. We know that pairing a fresh cup of coffee with your mapleglazed doughnut makes a delightful combination. This, along with free Wi-Fi, is probably why 57 percent of the prepared coffee we consume is purchased at doughnut or bagel shops.10 Canadians eat more doughnuts per capita and have more doughnut outlets than any other nation.¹¹

Maple syrup does offer some unexpected health benefits and features 54 different antioxidants.7 This significantly differentiates Canada’s maple syrup from its competitors, and it is ranked between bananas, raw broccoli and gala apples in terms of its antioxidant strength.8 So don’t feel so guilty when you pour it over your pancakes!

And let’s not forget about the hockey rink. Whether you bring your coffee, or buy it from the arena’s coin machine, it’s a major part of the rink routine. The warmth and comfort of a coffee-in-hand has made it a Canadian accessory. And it’s no coincidence we’ve got two hands. The other is to hold the doughnut, of course.

Doughnut Forget the Coffee! The Brits have their tea; we have our coffee. If going without your daily dose induces a sense of panic, you’re not alone. Next to tap water, coffee is the favourite beverage of adult Canadians, with the average coffee drinker consuming 2.6 cups of coffee each day.9

Canadian Comfort Food: Cocktail Conversation Starters 1

Potatoes retain heat well (think hot potato!) so the next time you need a warm compress, boil a potato or two, wrap in a clean cloth, and apply to your aching muscles.

Alberta’s cattle industry contributed $12.7 billion to the Canadian economy in 2012.

The idea of dunking a doughnut in coffee caught on from the 1934 Clark Gable film It Happened One Night.12

Japan relies on Canada for 99 percent of its maple sugar and maple syrup supply.13

In 1675, the King of England banned coffee houses, claiming they were places where people met to conspire against him.

Sources: 1 http://en.wikipedia.org/wiki/Poutine. 2 http://www.nytimes.com/2007/05/23/dining/23pout.html?_r=2&. http://www.peipotato.org/why-pei-potatoes/nutrition-facts. 4 http://www.albertabeef.org/page/about-industry. 5 http://ag.calgarystampede.com/upload/press_release/710/01/news-release---calgary-stampede-beef-cattle-highlights.pdf. 6 http://www.siropderable.ca. 7 http://www.purecanadamaple.com/benefits-of-maple-syrup/antioxidants-in-maple-syrup. 8 http://www.purecanadamaple.com/benefits-of-maple-syrup/antioxidants-in-maple-syrup. 9 http://www.cbc.ca/archives/categories/lifestyle/food/my-canada-includes-tour. 10 http://www.coffeeassoc.com/coffeeincanada.htm. 11 http://en.wikipedia.org/wiki/Tim_Hortons 12 http://fb-troublemakers.com/12-interesting-facts-about-doughnuts-17307/ 13 http://www.ats-sea.agr.gc.ca/asi/6164-eng.htm 3

brain calisthenics Word scramble – Unscramble the following letters to spell words from the article on pages 8-11:

1. dewsoind

Sudoku – Complete the Sudoku puzzle so that each and every row, column and 3x3 box contains the numbers one through nine only once.

1 4

2. lyloitativ 3. nvaetige

4. uarrtcdeep

5. tlesab

6. iplictoelaog

7. conentssit 8. miiatetg 9. eelurdvdnau

9 6

3 3

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10. hioznro

4 3 Source: 4puz.com

Spot the difference – Can you spot the five differences between the pictures below?

Check your answers at www.renaissanceinvestments.ca/magazine/answers/

HISTORY ISNâ&#x20AC;&#x2122;T MADE BY THOSE WHO GO HALFWAY.

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