The Renaissance
Volume V Issue I
Advisor
Q1 MARCH 31, 2011 QUARTERLY FUND PROFILES / PRACTICE MANAGEMENT / OUTLOOK / OPINION
Live Better
Vacation with heart Invest Well
Transcendent growth Aletheia’s Peter J. Eichler, Jr. shares five of his top stock picks Back of the Napkin
Capturing the whole nine yards Three things you can do to capture more assets
Exploring the world of “voluntourism”
Letter from the National Sales Manager
You We are responsible for your our own success Did you accomplish your goals this RRSP season? Meet sales targets, contact the clients you wanted and manage the paperwork? I didn’t. I got close. But I still had loose ends. That’s why it’s important to remind ourselves that we are responsible for our own success. There is no app for success. And it’s too easy to say life got in the way. Here’s a list of strategies I’ve pulled together over the years. Some of it comes from reading, some from training sessions and some from you. I take it out every once in a while when I feel my success has been hindered by my actions or inactions. See if there’s anything that can help you. Be precise When you have an overwhelming number of clients to contact it’s important to be precise as to how many you’ll contact each day. Just promising to call clients today isn’t enough. Contacting “10 clients today” is much better than “I must get on the phone today.” Keep track Knowing how far you’ve come to meeting your goals is important. It’s impossible to accelerate your efforts or adjust your behaviours if you don’t know where you stand. Athletes record their training progress daily, weekly and monthly. If your goal was to segment your practice, how far have you come? How far do you have to go? Stay determined Getting to the professional ranks of any profession involves more than just talent. It takes determination. Others call it “grit.” The people who “make it” are not always the most gifted or skilled but the most determined. When it comes to your practice – especially in the early years – you’ve got to stick with it, especially when the chips are down. Get better Sidney Crosby, Tom Brady and Tiger Woods often say they have “plenty left to learn.” If the best in the business believe they have room for improvement we should take note. There’s always a better way to do things, whether it’s managing a book of business, communicating with clients or prospecting. Instead of being good, get better. Take action Did you really have no time to answer an email, return a phone call or attend a training session? Success is realized through actions. It doesn’t matter who you are or where you hope to be. It’s what you do that counts. Have I missed something? Is there anything I can add to the list? Let me know.
Dave Wahl National Sales Manager Renaissance Investments 416 943 6959
133 8
Table of Contents Tax and Estate Family tax cut not for all
p 2
Economic Outlook Manufacturing a revival
p 3
Back of the Napkin Capturing the whole nine yards
p 5
Thanks to Our Supporters Setting the pace
p 7
Invest Well Transcendent growth
p 8
Solution Highlight Portfolio staples
p 13
Axiom Portfolios Profiles Portfolio Essentials Performance Essentials
p 14 p 32 p 33
Renaissance Investments Fund Profiles Money Market Funds Fixed Income Funds Balanced Funds Equity Income Funds Canadian Equity Funds U.S. Equity Funds Global Equity Funds Specialty Funds Fund Essentials Performance Essentials
p 34 p 36 p 44 p 58 p 62 p 70 p 76 p 84 p 116 p 130 p 132
Live Better Vacation with heart
p 133
Brain Calisthenics
p 136
Tax and Estate
Managing Director, Tax & Estate Planning Jamie Golombek
Family tax cut not for all If you have clients that are families with young kids in which one partner has a significantly higher income than the other, chances are they were at least somewhat intrigued by the Tories’ income-splitting proposal. The Conservatives’ plan, dubbed the “family tax cut,” would allow income sharing of up to $50,000 for couples with dependent children under 18. The Tories claim that nearly 1.8 million families would benefit, saving an average of $1,300 in taxes annually. The savings come as a direct result of our progressive tax system, which, at the federal level, taxes the first $41,544 of taxable income at 15%, the next $41,544 (i.e., the portion of taxable income between $41,544 and $ 83,088) at 22%, the third tranche between $ 83,088 and $128,800 at 26% and anything above that at 29%. So, who exactly would benefit and how much could a family actually save in federal taxes? Let’s take a look at four couples and see how their tax savings could stack up, using 2011 federal brackets and rates.
John and Jane, who have one child, each earn $37,000 for a total family income of $74,000. They would not benefit at all from income splitting since their family income is already equally divided between each spouse, both of them paying tax at the lowest federal rate. Our second couple, Michael and Andrew, have no kids and therefore would also not benefit from the income-splitting measure. This is one of the criticisms of the Tories’ tax cut, in that couples with no kids or with kids over the age of 18 will save nothing under the proposed plan. Single people, with or without kids, also wouldn’t benefit. Tim and Anne, on the other hand, have two kids. Anne earns $ 80,000 annually and Tim works part-time pulling in about $10,000. Ideally, using 2011 tax brackets and rates, Anne would elect to split $31,544 ($41,544 – $10,000) with Tim and the couple would save $2,208 of tax, equal to the split amount multiplied by the tax rate differential of 7% (i.e., 22% – 15%). Our final couple, Rob and Nicola, with three kids under 18, would reap the most benefit since Rob earns $180,000 annually and Nicola has zero income. In this scenario, which represents the maximum potential benefit under the proposed income-splitting plan, Rob would elect to split the maximum $50,000 of income with Nicola.
This would produce a savings of $ 6,408 in federal taxes, which is made up of Rob’s tax savings at the high rate, $14,500 ($50,000 x 29%), less Nicola’s tax owing of $ 8,092 [15% x $41,544] + 22% x [$50,000 – $41,544]. These examples illustrate federal tax savings. Whether the provinces could ultimately afford to tag along and provide provincial tax savings, as they did with pension income splitting, is another matter, which, luckily for the provinces, could be years away.
If your clients are using tax planning strategies to save money, help them take it a step further with ideas to reinvest their tax savings. The Renaissance Optimal Income Portfolio is a great way to participate in the economic recovery with a broadly diversified portfolio designed for income and inflation protection. In addition, the Renaissance Corporate Bond Capital Yield Fund offers the potential for high fixed income yields with the preferential tax treatment of capital gains — an ideal solution for clients who are looking for higher-yielding income beyond traditional vehicles.
Jamie Golombek is Managing Director, Tax & 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 Jamie on Twitter @JamieGolombek.
Adapted with permission from an article that first appeared in the National Post, April 4, 2011. This information is provided for informational purposes only and is not intended to provide specific financial, investment, tax, legal or accounting advice for you, and should not be relied upon in that regard. The views expressed in the article are the personal views of Jamie Golombek and should not be taken as the views of CIBC Asset Management Inc. 2 renaissance investments
Economic Outlook
Deputy Chief Economist, CIBC Benjamin Tal
Manufacturing a revival Years from now, when the fog clears, it will become apparent that the big recession gave birth to a profound change in the structure of the U.S. manufacturing sector. New sources of U.S. economic growth and new investment opportunities are opening up as manufacturing firms reformat themselves to meet strong demand from emerging markets. Amidst a generally disappointing expansion, the U.S. manufacturing sector continues to surprise on the upside. And with the U.S. consumer still in the bunker, American manufacturers are pursuing more enthusiastic overseas consumers. Merchandise exports rose by an annual rate of more than 10% during 2010. All of the ground lost during the recession has been recouped — making it, by far, the fastest export recovery in the post-war era. The traditional pattern, in which American consumers are the drivers of global growth, has been turned on its head. This time around, emerging markets were the first to
Reversal of fortune — total U.S. exports from 2008 to 2010 2008 Goods Exports Services Exports Total Exports
2009
1,304,896 1,068,499
% Change -18%
2009
2010
1,068,499 1,289,059
534,116
502,298
-6%
502,298
542,776
1,839,012
1,570,797
-15%
1,570,797 1,831,835
% Change +21% +8% +17%
Source: U.S. International Trade in Goods and Services, Foreign Trade Division, U.S. Census Bureau and U.S. Bureau of Economic Analysis Value in millions of US$
International Monetary Fund projected real GDP growth 2011
9.6% China
8.4% India
2.7% Canada
2.3% U.S.
2.0% U.K.
Source: World Economic Outlook 2010
rebound. And the impact of that growth spurt was magnified because emerging markets had become much bigger players in the world economy than ever before. In the early 1990s, the combined value of emerging markets’ GDP was a mere 40% of the U.S. economy. Today, they are almost 80% of the U.S. economy, and nearly a quarter of global GDP. Emerging markets are now large enough to fuel a global economic recovery, as demand from their own consumers is replacing the function traditionally performed by American consumers in recoveries.
“Total U.S. exports to emerging markets have risen by an impressive 45% since the beginning of 2009...” Emerging importance In addition to taking a greater share of GDP in the U.S., emerging markets are also making strong gains on advanced economies. According to the European Central Bank, average GDP per capita in
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Share of world GDP converging 65 60
%
55
Advanced economies’ GDP as % of world GDP (in PPPs*)
50 45
Emerging market economies’ GDP as % of world GDP (in PPPs*)
40 FORECAST
35
Source: FactSet International Monetary Fund *Purchasing Power Parity
Jan ’80 Jan ’83 Jan ’86 Jan ’89 Jan ’92 Jan ’95 Jan ’98 Jan ’01 Jan ’04 Jan ’07 Jan ’10 Jan ’13
U.S. top 10 trading partners
1
Canada
2
3
4
5
6
7
8
9
10
China
Mexico
Japan
Germany
U.K.
South Korea
Taiwan
Brazil
France
Exports
110.2
8.1
14.8
5.0
3.6
4.1
3.2
2.3
3.2
2.2
Imports
166.3
31.3
19.7
10.0
6.8
3.6
4.2
3.2
2.2
2.8
% of Total
16.3%
14.3%
12.5%
5.4%
3.8%
2.8%
2.7%
2.0%
2.0%
1.8%
All data as at January 31, 2011. Source: U.S. Census Bureau, Foreign Trade Statistics. Exports and imports in billions of US$ (goods only).
emerging economies rose more than 30% between 1995 and 2005, and China now has more millionaires than either Canada or Australia.
markets have risen by an impressive 45% since the beginning of 2009 — more than twice the increase seen in exports to the developed world.
tightening abroad. But behind the scenes, we are witnessing a substantial and lasting realignment in the composition of growth in the American economy.
“Granted, the U.S. manufacturing sector is not large enough to snap its fingers and turn a subdued economy into a thriving one overnight.”
The ability of U.S. manufacturers to penetrate emerging markets reflects much more than increased demand. Being fully aware of the limited opportunities at home, manufacturers are restructuring their operations with relentless focus on cost, quality, design, engineering and new products.
The resurrection of U.S. exports is not just a temporary deviation from past trends, but the result of rapidly shifting global economic dynamics and a more competitive American manufacturing sector.
Evidently, American exports have been able to elbow their way into these growing markets. Total U.S. exports to emerging
Granted, the U.S. manufacturing sector is not large enough to snap its fingers and turn a subdued economy into a thriving one overnight. Indeed, exports could be a bit slower in the near term in the wake of policy
A strong export cycle, along with the attendant rise in capital spending, will provide ample growth opportunities to U.S. firms operating in this space as well as those Canadian firms that successfully integrate into the supply chain momentum that this trend will generate.
This article is provided for informational purposes only and is not intended to provide specific financial, investment, tax, legal or accounting advice for you, and should not be relied upon in that regard. The views expressed in the article are the views of Benjamin Tal and should not be taken as the views of CIBC Asset Management Inc. 4 renaissance investments
Back of the Napkin
Director, Strategic Insights Grant Shorten
Capturing the whole nine yards Three things you can do to capture more assets
Your clients admire you, respect you and have selected you as their single go-to resource for all things financial. They have entrusted you with all of their hard-earned wealth and will remain utterly faithful to you alone, as their wise and omniscient advisor! Wait a minute — the real world doesn’t quite work that way… Despite our illusions as trusted investment advisors and dedicated financial planners, the reality is, we simply do not manage all of our clients’ money and we are seldom retained as their one and only advice-giver. I doubt this comes as a big surprise, as most of us just reluctantly accept the fact that investors will consistently employ an average of two to four professionals to help manage their financial affairs.
Now, I’m certainly not about to suggest that every one of your clients should blindly hand over their last penny, but I do believe that there are potent strategies you can implement immediately that will empower you to capture the majority (if not all) of your clients’ investable assets. I’m talking about “the whole nine yards.” If you’ve read any of my previous articles or attended any of my sessions, you will know that I’m a big believer in modelling excellence — anywhere we find it. So, why is it that some advisors are able to make the connection, land the prospect and retain the client — while consistently capturing most (or all) of the investors’ assets? In other words, what are these individuals doing differently than many advisors who are willing to settle for a smaller piece of the proverbial pie? In order to understand how these advisors do what they do, we need to objectively evaluate their mindset, their procedures, their habits and their rituals, and carefully extract the most resourceful components for personal application.
Over the years, I have discovered that there are essentially three critical factors that determine what I call an advisor’s AssetCapture Ratio (ACR), and it seems to all come down to how an advisor does these things:
1. Pre-frame their advisory identity 2. Address the emotional needs of the investor
3. P ackage and deliver brilliant client service
How to pre-frame your advisory identity At the risk of over-simplification, when an advisor consistently captures the bulk of a client’s wealth, it’s primarily because they are perceived in a specific way by the client. It’s rare to see an affluent investor transfer all of their wealth to a single advisor when that advisor’s perceived identity is one of stock broker, trader, speculator or even a broader “investment person.” People take their hard-earned wealth very seriously — and this is especially true of high-net-worth and ultra-highnet-worth families. renaissance investments 5
So, when it comes to matters of such great complexity, it’s inherently counterintuitive for them to entrust all of that responsibility to just one individual or even one area of expertise.
Therefore, it will be the advisor who most effectively identifies and addresses the emotional needs of the prospect that will command their undivided attention, and captivate their heart and soul.
The advisor who consistently achieves an above-average ACR — capturing the lion’s share of a household’s investable assets — does so by expertly and uniquely pre-framing their advisory identity in the presence of the investor. Remember, our words change brain chemistry and they create definitive pictures and feelings in the mind of the listener. Therefore, the words that we utter as we define ourselves, during initial contact discussions, will dramatically affect how we are perceived for a very long time to come.
While the “average” advisor endlessly addresses things like portfolio construction, asset allocation, diversification and product features, the high ACR advisor empathetically uncovers the investor’s fears, challenges, needs, goals and dreams. They address each emotion-based issue head-on, and then (and only then) will offer a comprehensive set of logical solutions.
The “average” advisor will typically define their role, their function and their offering using generic terms like Financial Advisor, Investment Executive and Financial Planner. In contrast, the high ACR advisor will conjure up an abundance of rich context and layered meaning, by using semantic loops, like… “Our clients view us as responsible guardians of their wealth…” “We are protectors of our clients’ hardearned assets…”
Here are just a few examples of real investor emotions: Fear of losing their wealth Fear of not having enough to retire on Fear of losing their job, their current income, their status Fear of getting sick or becoming disabled Desire for a lot more money The need to understand their investment statements Desire for more education The need to be taken care of
“My team is the single go-to resource for all of our clients’ financial needs…”
Fear of being taken advantage of
“We will create for you a comprehensive, integrated financial plan that will serve as the roadmap to achieve your goals and lifestyle dreams…”
Uncertainty about the future
“We understand the complexity of your needs, and will act as your personal CFO — providing access to other key specialists in the areas of legal, insurance and accounting…” You can see how the investor leaves this type of discussion with the clear understanding that the advisor is more than just an “investment person.” The high ACR advisor is firmly positioned as a defender, a protector and a highly capable integrated wealth manager.
How to address the emotional needs of the investor It’s now widely accepted, even beyond marketing circles, that virtually all buying decisions are driven by emotional factors. As the well-known saying goes, “People buy for emotional reasons and then justify their decision with logic.” In my experience, this is equally applicable to the hiring of investment professionals. 6 renaissance investments
Anger over taxes
extroversion, independence versus reliance, privacy versus openness and the level of financial complexity that a client brings to the table. However, there is undeniably a single critical thread that runs through this whole discussion on Client Service. Virtually all key industry studies tell us that the number one reason an investor leaves an advisor is essentially because…drum roll… they can’t get in touch with you! The “average” advisor has a tendency to shy away from making contact with clients, especially during challenging market cycles. Our all-too-human nature often proves that we would rather avoid the probability of pain than gain the possibility of a rewarding interaction. In contrast, the high ACR advisor delivers top notch Client Service by engaging in the following behaviours with consistency and discipline:
1. T he advisor or a member of the team is always available to the client.
2. The advisor structures a tailored Client
Service Agreement based on the unique needs and preferences of the client.
3. T he advisor meets systematically with
the client to conduct wealth management reviews and to update the emotional map.
The emotional makeup of an investor is complicated, but can be easily unlocked and accessed with the right strategy in place. Regardless of the method employed, something wonderful happens when a person feels like they’ve been understood at a deeper level. All of a sudden, the idea of releasing their wealth for “tender care” becomes almost instinctual.
4. The advisor delivers confident opinions
To learn more about the Rapid Rapport Method and how to tap into the Five Explicit Needs of Investors, contact your Renaissance Investments representative, who will be happy to provide more information.
Pre-frame your advisory identity in a powerful way by choosing your words carefully. Instill layers of meaning while you convey the holistic breadth of your business practice. Move directly to unlocking the emotional needs of your clients, and discuss solutions in terms of how it will make them “feel.” Solidify the relationship, and capture even more assets, by delivering a customdesigned service model that will leave your clients breathless.
How to package and deliver brilliant client service We all know about the importance of providing quality service to our clients. But what does that really mean? The truth is there are as many definitions of “good service” as there are clients in your contact management system. Service level preferences and expectations are generally a function of client personality — introversion versus
and avoids laying out a wide range of options.
Whether your goal is to increase your Asset-Capture Ratio, or to be perceived as the “guardian” of wealth by your clients, you will find these simple concepts of tremendous value.
To learn more about the concepts in this article and to get more ideas and support to help you capture the whole nine yards, contact your Renaissance Investments representative.
Thanks to Our Supporters
Setting the pace What I love about the business The people — both my clients and my team. The majority of my clients are either in business or retired business people. I like the fact that no day in this business ever repeats itself, which makes it enjoyable. Best tip for gaining new clients I typically run two events per quarter to gain new clients. The events include wine and cheese evenings, golf tournaments, charity events and presentations to different communities in the region. I ask existing clients to bring along a friend or colleague. The book I’m currently reading I tend to dip in and out of a range of books, but find a lot of value in the books Good to Great by Jim Collins and The Intelligent Investor by the legendary Benjamin Graham. Favourite vacation spot I love to travel and my favourite place to vacation is the California coast. I have visited the area a number of times and enjoy spending time in areas such as Pebble Beach and San Diego.
Name: Pierre Delisle Firm: Delisle Financial Group/ CIBC Wood Gundy Years in business: 25 Team members: 3
Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians invest well and live better. Here is one of the outstanding professionals we are so very proud to work with.
Favourite hobby when I’m not at work I am an active cyclist and take part in the annual Tour CIBC. I cycle around 3,000 km per year. I also play hockey and golf and enjoy running. I enjoy music and play the guitar, however I tend to keep this to myself, and don’t ask me to sing! What I offer to the local marketplace and to my clients At the moment, I am positioning my clients towards the U.S. and recommending the Aletheia-managed products as I like their unique process and, being mainly a follower of value investing, Aletheia allows me to introduce a growth slant to my clients’ portfolios. The support of the Renaissance Investments team makes my job easier as they are always there when I need them, have great ideas that I can translate into my practice and make superb tools and materials available to me and my clients.
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Invest Well
Aletheia Research and Management’s Peter J. Eichler, Jr. shares his insights and top stock picks Peter J. Eichler, Jr. sees a bipolar market. “Ten years ago, Cisco was almost $80 a share and Caterpillar was under $20. Today, Cisco is $17 and Caterpillar is at $113.” The manager of the Renaissance Global Focus Fund and Renaissance U.S. Equity Growth Fund says what most investors missed along the way was the value of traditional growth companies.
“What’s remarkable and in some ways almost frightening is that the bulk of professional investors have brought us nowhere in the last 10 years. The most popular growth index in the U.S. still has a 30-plus percent weighting in technology and there’s still disdain for things that don’t sound like dot com, even where there’s true value.” It’s not that Eichler is opposed to high-tech businesses — he loves eBay and IBM and believes IBM deserves a better valuation than Apple — it’s just that he’s in search of what he calls “transcendent growth,” and in today’s world, much of that growth is being generated by rather traditional companies, such as Adidas, Louis Vuitton, McDonald’s, Coke, John Deere and Boeing. “Our stock in trade is to find companies where the earnings are growing rapidly and will become so large on an absolute basis that it tends to transcend and trump the day-to-day 8 renaissance investments
stuff on television or the worries about how fast this or that economy is growing.” Eichler says the polarization he sees is not only between new and old business, or businesses that are growing and those that are not. It is also between the debt-laden
you need to understand how consumers in the U.S. are doing. Nothing could be further from the truth. You actually have people looking at a company like Las Vegas Sands and trying to understand the U.S. consumer when 80% of their business comes from China and Singapore.
“The great companies that we invest in have the best of both worlds: western political stability and the global reach to benefit from emerging markets.” economies of the West and the emerging markets of “Brazil, India, China, Singapore and parts of Africa” that are fueling much of the growth he is after. “People make the mistake of viewing the U.S. market as a reflection of GDP growth in the U.S. itself. They think that if you want to understand why to buy shares of Coca-Cola,
“When you talk about the U.S. market, you are in fact talking about the global market. The great companies that we invest in have the best of both worlds: western political stability and the global reach to benefit from emerging markets.” Outside the U.S., Eichler says Volkswagen is a shining example of a company from the
developed world with attractive emerging market exposure. “VW has a tremendous product line all the way from base model VWs and Skodas, to their premium brand Audi up to their ultimate luxury cars Bugatti, Bentley and Lamborghini, and huge growth opportunities in China and Brazil, where VW is the 1st and 2nd largest automaker by market share, respectively.” Eichler is passionate about the companies in his portfolio, and continually returns to the theme of a bipolar world, where some businesses, sectors and markets thrive — while other fall by the wayside. “This economic recovery is certainly uneven. If you focus on the U.S., there are big swaths of the economy, whether it be housing or other consumer-oriented areas, that don’t seem to be doing that well. And yet, you have companies that are domiciled in the U.S. and doing enormously well. It’s a two-tiered world, and I think it’s important for all investors to focus on the healthy companies that are producing earnings and in a position to benefit from the way the world is working right now. “Many of the investments we’re gravitating towards are things that may seem a bit prosaic. By that I mean eating, having a home, having roads and infrastructure — a lot of these basics are driving growth as maybe two or three billion people rapidly enter the middle class. We don’t necessarily invest based upon this kind of big picture view, but because of our organic research process, a lot of the companies we have are going to benefit from it. There’s a direct correlation between these trends and people drinking more Coca-Cola, going to McDonald’s or, for that matter, occasionally getting to go to Louis Vuitton.
“We see an opportunity to protect investors, but also to dramatically grow their income...”
In general, Eichler believes matters in the corporate realm are much more straightforward than in the world of public finance — and there are investment implications to this.
“We see an opportunity to protect investors but also to dramatically grow their income as people realize that the global growth mining companies are the only producers of true money in the world. To give you an idea of how dramatic the opportunity really is, I’m pretty certain that if you took all the gold and silver mining companies in the world, their combined market cap might be about 50% greater than Apple’s by itself. So, at the present time, there is a severe undervaluing of these companies.”
“Globally, you’ve got very healthy corporations, you’ve got dynamic and growing emerging markets, and very opportunistic markets in the U.S., but you also have some
Eichler does not mince words when asked how investors should integrate his “transcendent growth” strategy into their personal financial plans.
“In volatile times like these, investors need to make sure they’re investing in companies that are substantial and strong enough to weather both good times and bad. I think it’s important to understand what’s going to drive the earnings at those companies, and it ought to be pretty straightforward.”
“Buying Microsoft when it first went public was good for babies, retired people, professionals and college students.” very troublesome financial situations — whether it’s the countries that maybe ought to be raising rates but can’t because they’ve tied their monetary policy to the U.S., or the U.S. deficit itself or the sovereign crisis in Europe. So you’ve got good corporate health, and yet you’ve got these fiscal problems in a lot of places. “One solution we have to this situation is that our research process has led us to areas — whether it be food, whether it be gold and silver or whether it be politically stable oil production — that afford us the opportunity to actually benefit from some of these dislocations and protect investors from the predations of central bankers who have decided that the best way to deal with these problems is to essentially paper over them.” Eichler believes one of the developments that may help rein in central bankers is a return to the gold standard — either through formal government policy, or informally, as investors around the world increasingly decide to exchange their paper money for hard, shiny assets.
“I believe our funds should be the largest weighting in anyone’s portfolio. The stocks we buy are must-haves for everybody. A lot of people believe that what’s good for a client depends on the client’s situation. As if it’s relative, and their feelings and preferences dictate which investments are good for them and which are bad. I disagree with that. “Buying Microsoft when it first went public was good for babies, retired people, professionals and college students. It was good for everybody. Buying Apple Computer was good for everybody. Buying U.S. government bonds when they were 16% and non-callable in 1980 was good for everybody. In that way, we’re trying to find companies that are just so dramatic, so high quality and one-of-a-kind that everybody needs to be there.” For more information about the Renaissance Global Focus Fund and the Renaissance U.S. Equity Growth Fund and how to effectively position them in your clients’ portfolios, please speak to your Renaissance Investments representative.
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Eichler’s
picks
Trying to limit Peter J. Eichler, Jr. to just five stock picks is not easy. There’s no room to explore his belief in agriculture growth (he mentions names such as Agrium, Mosaic and Archer Daniels Midland) or why Wal-Mart, with $36 billion in free cash flow over the last three years, is so misunderstood by most stock analysts. Nonetheless, we proudly present five of his best ideas.
STOCK: Canadian Natural Resources (TSX:CNQ) | BUSINESS: Oil producer RATIONALE: “It is public knowledge that over the next six or seven years, through the Horizon project and several other oil sands projects, Canadian Natural Resources will add 650,000 barrels of daily production. If the company’s realized oil prices are at $135 in six years, you’re talking about $ 87 million a day, which would imply $ 32 billion of incremental revenue. If you think about the impact of that amount of incremental revenue to a company that did $12 billion in revenue in 2010, you can see how significant it really is. This is not as speculative as going to explore in the Arctic, this is a quantifiable resource that exists today. As the company goes to almost $45 billion in revenues as these resources are brought online, and if you get a strong multiple based on massive oil production with essentially no decline rate over the next 50 years, the stock could trade in excess of $400. Again, I can’t overstate the fact that these assets are in a safe, politically stable country.”
10 renaissance investments
STOCK: NovaGold Resources (NYSE:NG) | BUSINESS: Gold producer RATIONALE: “NovaGold is Canadian-domiciled, but by virtue of the Donlin Creek mine in Alaska, could practically be considered a U.S. company. The shares are currently trading at around $13, but we believe the company will eventually be acquired at $ 50 or more per share. Based on today’s prices, NovaGold’s two largest assets, the Donlin Creek mine and the Galore Creek mine, are worth multiples of where the stock currently trades. You’re seeing acquisitions lately of mines with five million ounces that they’re hoping to grow to 10 million ounces, yet Donlin is already one of the largest mines in the world with almost 40 million ounces of gold — and it’s on U.S. soil. NovaGold is also 50% owner of Galore Creek, which is one of the largest undeveloped copper and gold deposits in the Americas with close to nine billion pounds of copper and about seven million ounces of gold, both on Canadian soil. And all of these reserve estimates have the potential to increase substantially as further studies are done.”
STOCK: IBM (NYSE: IBM) | BUSINESS: High tech RATIONALE: “IBM was thought of by many as
yesterday’s technology, but it is probably one of the most high-tech companies in the world, and also the most innovative with the most patents. A recent example was IBM’s Watson supercomputer’s Jeopardy win over human competitors. It provided the opportunity to showcase IBM’s cutting-edge technological leadership, and is emblematic of IBM’s exciting future. Roughly 85% of IBM’s revenue comes from enterprise software and global services. This is a giant cash machine with the global reach and scale to solve big problems. Earnings have grown from around $ 8 a couple of years ago to about $12 per share in 2010. We expect IBM to earn around $14 to $15 per share in 2012 and the company itself says it expects to earn $20 per share by 2015. That’s the same rate of growth that caused Apple to go from $100 to $ 350, and we expect that IBM will have a slightly higher multiple than Apple, because IBM is not susceptible to the vicissitudes of consumers’ tastes and preferences.”
renaissance investments 11
STOCK: Coca-Cola (NYSE: KO) | BUSINESS: Soft drinks RATIONALE: “Coca-Cola is a stock that is lower
today than it was 12 years ago, and only recently began recovering a couple of years ago. The company has great management now, and you are finally beginning to realize the emerging market opportunity. In the U.S., we drink approximately 400 sodas per person each year — more Coke consumed in the U.S. than water. But in China and India — clearly places where having a nice cold Coke would be a good thing — consumption is more like 34 and 11 sodas per person per year, respectively. You’ve got this huge move to the middle class happening, and there is a direct correlation between industrialization and beverage/soda consumption. Even at small incremental increases in per capita consumption in these markets, you could be looking at a CocaCola share price in the range of $125 to $150.”
STOCK: DirecTV (NYSE: DTV) | BUSINESS: Video on demand RATIONALE: “Investors have reacted with wild enthusiasm and a valuation of 80x earnings for Netflix’s still relatively small library of streaming video titles. We have just identified an opportunity in DirecTV based on the fact that they have 28 million customers using their satellite TV and video on demand service right now. We bought it at what amounts to 11x earnings and they are aggressively buying their own shares. When Wall Street figures out that DirecTV already has today many of the streaming and video on demand attributes and potential that excites everyone about Netflix, you could see a multiple of 25x earnings of $4 per share, and the stock go to $100 from $44.”
Turn to pages 78 and 102 for performance and commentary on the Renaissance U.S. Equity Growth Fund and Renaissance Global Focus Fund, respectively.
The views expressed in this article are the personal views of Peter J. Eichler, Jr., Aletheia Research and Management Inc., and should not be taken as the views of CIBC Asset Management Inc. The commentaries provided are for general informational purposes only and do not constitute investment advice nor do they constitute an offer or solicitation to buy or sell any securities referred to. The information contained in this document has been obtained from sources believed to be reliable and is believed to be accurate at the time of publishing, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions and estimates expressed in this document are as of the date of publication unless otherwise indicated, and are subject to change. The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc. 12 renaissance investments
Solution Highlight
ALL DATA TO MARCH 31, 2011
Portfolio staples PORTFOLIO STAPLES 1 Mo. (%)
3 Mos. (%)
6 Mos. (%)
YTD (%)
1 Yr. (%)
3 Yrs. (%)
5 Yrs. (%)
10 Yrs. (%)
Since incep. (%)
Inception date
(0.2)
0.6
0.2
0.6
4.4
n/a
n/a
n/a
4.1
11/18/09
Renaissance Optimal Income Portfolio
0.7
2.5
4.1
2.5
10.1
3.8
n/a
n/a
3.3
11/13/07
Renaissance Optimal Global Equity Portfolio
(0.1)
1.0
7.0
1.0
11.6
2.8
(1.0)
(1.3)
(3.3)
02/16/00
1.9
4.5
6.3
4.5
12.9
0.5
n/a
n/a
(0.5)
11/13/07
Class A units
Renaissance Corporate Bond Capital Yield Fund
Renaissance Global Infrastructure Fund
Why should these funds be staples in your clients’ portfolios? Renaissance Corporate Bond Capital Yield Fund
Renaissance Optimal Global Equity Portfolio
Enjoy the consistency and security of high-quality bonds with the tax-efficiency of capital gains.
Tap into a world of opportunities, asset classes and investment styles through five global money managers.
Renaissance Optimal Income Portfolio
Renaissance Global Infrastructure Fund
Generate steady cash flow by accessing six institutionalstyle income asset classes in a single portfolio solution.
Add diversification, growth potential and reliable income with built-in inflation protection to your clients’ portfolios.
From current income to long-term growth, Renaissance Investments has you covered. For more information, contact your Renaissance Investments representative at 1 888 888 FUND (3863) or visit www.renaissanceinvestments.ca
renaissance investments 13
Axiom Portfolios
Axiom Portfolios
Axiom Portfolios provide the benefits and peace-of-mind of sophisticated portfolio management, while simplifying the administration, management and reporting of a portfolio.
With eight portfolios to choose from, investing in Axiom Portfolios provides: • Access to the accumulated knowledge and expertise of independent investment managers from across Canada and around the world • Risk management, through rigorous due diligence and built-in rebalancing • Multiple levels of diversification • T-Class options available on all Axiom Portfolios, offering tax-efficient cash flow
Axiom Portfolios offer even more value at higher balances through the following three classes: Class A - $25,000 minimum investment ($5,000 minimum investment for TFSA only) elect Class - $250,000 minimum S investment lite Class - $500,000 minimum E investment
14 renaissance investments
Axiom Portfolio Managers
Axiom Portfolios have access to the accumulated knowledge and expertise of independent investment managers from across Canada and around the world.
anso Investment Counsel Ltd.
Multiple Levels of Diversification
Axiom Portfolios have been designed to manage risk and solidify the potential for returns by ensuring portfolios are broadly diversified across multiple levels. Each portfolio is diversified across asset classes, investment styles, geographic regions and market capitalizations. There are eight portfolios available designed to meet the needs of various types of investors.
Axiom Balanced Income Portfolio* Equities 10.0% U.S. Equity 8.8% Canadian Equity 6.0% International Equity 3.0% Emerging Markets Equity Income Generation 12.2% Canadian Monthly Income Fixed Income 60.0% Canadian Fixed Income
Axiom Balanced Growth Portfolio* Equities 32.0% Canadian Equity 12.0% U.S. Equity 8.0% International Equity 5.0% Emerging Markets Equity Income Generation 8.0% Canadian Monthly Income Fixed Income 30.0% Canadian Fixed Income 5.0% Global Bond
Axiom Long-Term Growth Portfolio* Equities 40.0% Canadian Equity 10.0% U.S. Equity 8.0% International Equity 7.0% Emerging Markets Equity Income Generation 15.0% Canadian Monthly Income Fixed Income 15.0% Canadian Fixed Income 5.0% Global Bond
Axiom Foreign Growth Portfolio* Equities 43.0% U.S. Equity 33.0% International Equity 10.0% Emerging Markets Equity Fixed Income 14.0% Global Bond
Axiom Diversified Monthly Income Portfolio* Equities 18.4% Canadian Equity 5.0% U.S. Equity Income Generation 36.6% Canadian Monthly Income Fixed Income 40.0% Canadian Fixed Income
Axiom Canadian Growth Portfolio* Equities 56.0% Canadian Equity Income Generation 24.0% Canadian Monthly Income Fixed Income 20.0% Canadian Fixed Income
Axiom Global Growth Portfolio* Equities 29.0% U.S. Equity 21.0% International Equity 16.0% Canadian Equity 10.0% Emerging Markets Equity Income Generation 4.0% Canadian Monthly Income Fixed Income 10.0% Canadian Fixed Income 10.0% Global Bond
Axiom All Equity Portfolio* Equities 38.0% U.S. Equity 24.0% International Equity 18.0% Emerging Markets Equity 16.0% Canadian Equity Income Generation 4.0% Canadian Monthly Income
*Target asset class allocations renaissance investments 15
Renaissance Investments
Renaissance Investments family of funds Renaissance Investments’ comprehensive line-up of mutual funds can provide your clients with exposure to equity and fixed-income securities from markets around the world. These funds are ideal to build a portfolio or to add greater diversification and performance potential to your clients’ existing portfolios.
Fund Profiles Table of Contents M O N E Y M A R K E T F U N D S .. . ....................... p 36
Renaissance Money Market Fund..............p 36 Renaissance Money Market Fund – Premium Class.................................................p 38 Renaissance Canadian T-Bill Fund..............p 40 Renaissance U.S. Money Market Fund...... p 42 F I X E D I N C O M E F U N D S.. . . . . ....................... p 44
Renaissance Short-Term Income Fund .....p 44 Renaissance Canadian Bond Fund .............p 46 Renaissance Real Return Bond Fund.........p 48 Renaissance Corporate Bond Capital Yield Fund...........................................p 50 Renaissance Corporate Bond Capital Yield Fund – Premium Class........... p 52 Renaissance High-Yield Bond Fund............p 54 Renaissance Global Bond Fund ..................p 56 B A L A N C E D F U N D S .. . . . . . . . . . . ....................... p 58
Renaissance Canadian Balanced Fund......p 58 Renaissance Optimal Income Portfolio.....p 60 E Q U I T Y I N C O M E F U N D S . . . . ....................... p 62
Renaissance Canadian Dividend Fund....... p 62 Renaissance Canadian Monthly Income Fund.....................................................p 64
34 renaissance investments
Renaissance Diversified Income Fund.......p 66 Renaissance Millennium High Income Fund.....................................................p 68 C A N A D I A N E Q U I T Y F U N D S . ..................... p 70
Renaissance Canadian Core Value Fund.............................................. p 70 Renaissance Canadian Growth Fund......... p 72 Renaissance Canadian Small-Cap Fund.... p 74 U . S . E Q U I T Y F U N D S . ................................ p 76
Renaissance U.S. Equity Value Fund.......... p 76 Renaissance U.S. Equity Growth Fund...... p 78 Renaissance U.S. Equity Growth Currency Neutral Fund..................................p 80 Renaissance U.S. Equity Fund.....................p 82 G L O B A L E Q U I T Y F U N D S . .......................... p 84
Renaissance International Dividend Fund..................................................p 84 Renaissance International Equity Fund.....p 86 Renaissance International Equity Currency Neutral Fund..................................p 88 Renaissance Global Markets Fund.............p 90 Renaissance Optimal Global Equity Portfolio...................................p 92 Renaissance Optimal Global Equity Currency Neutral Portfolio...........................p 94
Renaissance Global Value Fund...................p 96 Renaissance Global Growth Fund...............p 98 Renaissance Global Growth Currency Neutral Fund................................p 100 Renaissance Global Focus Fund................p 102 Renaissance Global Focus Currency Neutral Fund................................p 104 Renaissance Global Small-Cap Fund........p 106 Renaissance European Fund......................p 108 Renaissance Asian Fund............................. p 110 Renaissance China Plus Fund.................... p 112 Renaissance Emerging Markets Fund...... p 114 S P E C I A LT Y F U N D S . .................... . . . . . . . . . . . . . p 116
Renaissance Global Infrastructure Fund...................................... p 116 Renaissance Global Infrastructure Currency Neutral Fund................................ p 118 Renaissance Global Real Estate Fund......p 120 Renaissance Global Real Estate Currency Neutral Fund................................p 122 Renaissance Global Health Care Fund..... p 124 Renaissance Global Resource Fund.........p 126 Renaissance Global Science & Technology Fund...........................................p 128
Invest with Confidence When your clients invest with Renaissance Investments, they’re in good hands. We search the world for independent investment managers and put them to work on their behalf. We begin with a universe of thousands of potential investment managers, and then
Universe of Investment Managers
Quantitative Filters
apply in-depth quantitative and qualitative filters to identify those with a proven ability to successfully manage the mandates within our investment solutions. Our exacting approach to due diligence helps us optimize performance and manage risk for our clients.
Manager Candidates
Qualitative Six Step Process
Once selected for Renaissance Investments, managers undergo continuous monitoring and assessment. In order to remain part of our clients’ portfolios, they must demonstrate consistency with their investment disciplines and the rigorous standards of our products.
Managers Selected for Renaissance Investments
Strength Behind Your Clients Renaissance Investments’ family of funds has access to the accumulated knowledge and expertise of independent investment managers from across Canada and around the world.
renaissance investments 35
Live Better
Vacation
with heart
Exploring the world of “voluntourism�
Imagine basking in the sun at a five-star resort, sipping cocktails next to the pool or strolling down the beach in an exotic location. Been there, done that? More and more travellers are choosing to devote their vacation time, energy and budget to making a difference, and finding they get back more than they give.
renaissance investments 133
With the traditional mindset that vacation equals rest and relaxation, it’s a wonder that the “working vacation” — now called “voluntourism” — has become a fast-growing segment of the travel industry.
“We have seen a 30% increase in mature travellers in the past year alone. Mid-life travellers are looking to break out of their daily routines.“ Whether teaching English to eager students in Cambodia, tracking endangered cheetahs in the Amazon rainforest, building concrete block houses in impoverished regions of Jamaica or conducting marine mammal research while scuba diving in Thailand, an increasing number of people have caught the voluntourism bug. The concept of the service vacation was spawned 20 years ago by college and university graduates looking to add work and life experience to their resumés. And while young people still make up a majority of voluntourists, today, mid-life travellers make up one of the fastestgrowing segments. A survey showed that 24% of travellers are interested in taking a volunteer vacation, with nearly half of them in the baby boom generation.
134 renaissance investments
Rob Levine, Director of the Canadian branch of Projects Abroad, an organization that placed 4,500 volunteers last year, says, “We have seen a 30% increase in mature travellers in the past year alone. Mid-life travellers are looking to break out of their daily routines. When it comes to traditional vacations, they have ‘been there, done that.’ They are looking to challenge themselves and add some meaning to their travels.” Volunteer vacations offer the chance for a truly unique experience — to immerse yourself in a culture, living and working alongside locals and other international volunteers for a worthwhile cause. “In return for a commitment of time, energy, enthusiasm and financial support, volunteers not only have the satisfaction of helping those less fortunate, but they also receive an amazing gift of personal growth in their own lives,” says Levine, an Ottawa native who has travelled to 24 countries including Cambodia, Ghana, India, Morocco, Nepal, Peru, Romania and Thailand. There are an estimated 2,000 organizations supporting the work of local communities around the world through the placement of international volunteers. “At Projects Abroad, we run 200 year-round projects in 27 countries with something that will appeal to just about everyone,” says Levine. Here is a small taste of the types of projects that need your help:
Building projects In Ghana, thousands of families have inadequate housing and children attend school in crumbling buildings. Through Projects Abroad’s construction project, families move into new, better quality homes and children are educated in secure, new classrooms. Volunteers assist in making mud bricks, building walls, plastering and painting. Each house takes an average of one month to construct.
Archeological projects At Projects Abroad’s newly discovered Cochapata site near Machu Picchu, volunteers work alongside Peruvian experts unearthing archeological treasures from the Incan empire. Volunteers take part in clearing ancient Incan walls and an original Incan road, as well as helping to map the ruins. In your spare time, there are opportunities to explore ruins that are well off the beaten track as well as remote communities.
Environmental projects One of Project Abroad’s landmark projects is the Taricaya Reserve in the Amazon rainforest in Peru. In the first six years, the project received nearly 600 volunteers who created 40 km of trail, built 13 buildings and seven platforms (including the highest canopy walkway in South America), identified hundreds of wildlife species and rescued and released 130 animals and 2,000 turtles back into the wild.
Levine describes as “absolutely incredible” his time working on the project. “A typical day would start with feeding the animals in the sanctuary. Then, my next task was to trek through the jungle collecting infrared cameras that tracked animal movements during the night. Then, I climbed up onto a 100-metre-high canopy and recorded bird sightings. In the evening, there was a lecture on crocodiles.”
Teaching programs Teaching conversational English is something just about all Canadians are qualified for, and this contribution is highly valued in developing countries. Projects can also involve teaching business skills to developing world entrepreneurs, teaching farmers better farming techniques, teaching dance, drama and music and even coaching sports. Projects Abroad volunteer Jeff Hurst took a vacation from managing a computer support team in a typical office environment to teach English to children in the little-known country of Togo. “Life had become too routine. I was looking for a genuine experience that would allow me to learn, contribute and engage with the community. The only thing I would have done differently would have been to stay a little longer.”
Social support programs Volunteers are always needed in orphanages and kindergartens as well as care centres for people with special needs in countries as diverse as Romania, Fiji and Nepal. Another Projects Abroad volunteer, Alyssa Jones, spent time at a daycare in Ghana and found that “Not only did I grow as an individual, but I feel more motivated to make the best of my life. The whole trip was a personal stretch for me, which is why I wanted to participate in it in the first place.” Most travel volunteers are motivated by the prospect of making the world a better place by giving a hand up to those less fortunate. But, you may just find when you arrive home, that you are the one who has truly benefitted. Rob Levine is an employee of Projects Abroad. The views expressed in this article are those of Rob Levine and should not be taken as the views of CIBC Asset Management.
How to plan your ideal volunteer vacation 1. Define your interests Think about the type of work you would like to do and where you would like to go. Is there a cause or subject area that is close to your heart? Do you have an affinity to a specific country or culture? 2. Do the research On the Internet, look up some of the wellestablished organizations such as Projects Abroad, EarthWatch, Global Volunteers, CrossCultural Solutions and Habitat for Humanity. Also, check out www.transitionsabroad.com and www.projects-abroad.ca. If you prefer a book, amazon.com will suggest 460 titles, including Frommer’s 500 Places Where You Can Make a Difference. 3. Talk to people with experience When you have a short list of projects, contact the organizers and talk to staff as well as past volunteers on the projects you are considering. Ask questions — Would they go back? What was the best part and the most challenging? What are the accommodations like? Is there electricity and air-conditioning? 4. Plan your budget The fee for a volunteer vacation usually covers your food and accommodation as well as a built-in contribution to the project. Travellers pay their own airfare. Talk to your accountant as some of the costs for a volunteer vacation may be tax-deductible as a charitable donation. renaissance investments 135
Brain Calisthenics
Word scramble
Sudoku
Unscramble the following letters to spell words from the Invest Well article on page 8:
Complete the Sudoku puzzle so that each and every row, column and 3x3 box contains the numbers one through nine only once.
1. nandeernttcs
6
2. iiooraaztnlp
9
3. laalrrepcti 4. cnosuesmr
4
5. nwesgkalov
8
6. fostrwratahrdgi
5
3
8
6
2
9
3
8 1 6 9
1
5
4
7. arnfmooti
7
8. taetnps
5
2 7
9. sepveicault 10. doseitu
7
9
5 1
7
5
8
3
2
4
3 9
3 5 Source: 4puz.com
Spot the difference: Peru Can you spot the five differences between the pictures below?
Check your answers at www.renaissanceinvestments.ca/braincalisthenics 136 renaissance investments
To learn more about how Renaissance Investments can help you and your clients invest well and live better, visit www.renaissanceinvestments.ca or call 1 888 888 FUND (3863). FOR DEALER USE ONLY Renaissance Investments and the Axiom Portfolios are offered by CIBC Asset Management Inc. This material was prepared for investment professionals only and is not for public distribution. It is for informational purposes only and is not intended to convey investment, legal or tax advice. The material and/or its contents may not be reproduced or distributed without the express written consent of CIBC Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The indicated rates of return are the historical annual compounded total returns for the class A units unless otherwise noted, including changes in unit value and reinvestment of all distributions, but do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. For money market funds, the performance data provided assumes reinvestment of distributions only but does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer, nor are they guaranteed. There can be no assurance that a money market fund will be able to maintain its net asset value per unit at a constant amount or that the full amount of your investment will be returned to you. The values of many mutual funds change frequently. Past performance may not be repeated. †Current yield is an annualized historical yield based on the seven-day period ended on March 31, 2011 and does not represent an actual one-year return. ™ Axiom, Axiom Portfolios, Renaissance Investments and “invest well. live better.” are registered trademarks of CIBC Asset Management Inc. Printed in Canada on 25% Post Consumer Recycled Paper
Looking for an income fund that offers more than just income? Look no further than the Renaissance Optimal Income Portfolio. 1st Quartile Performance
1 year
2 years
3 years
Since Inception5
Renaissance Optimal Income Portfolio Performance1
10.1%
13.0%
3.8%
3.3%
1
1
Quartile
2
st
st
2
nd
n/a
Pension-style portfolio builds wealth while generating income
1% Annual Trailer Fee4 to recognize your valuable service
Inflation Protection from infrastructure and real-return bond components
Enhanced income potential through three T-Class payout options: 4%, 6% and 8%
Competitive MERs across Class A, Select and Elite Class options, from as low as 1.29%3
Visit www.renaissanceinvestments.ca/oip for more. 1
Performance as at March 31, 2011. 2Source: Morningstar, for the periods specified ending March 31, 2011 for Class A units of the Renaissance Optimal Income Portfolio. ©2011 Morningstar Research Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 3MER for Elite Class units of the Renaissance Optimal Income Portfolio as at August 31, 2010. The Class A MER is 1.87% and the Select Class MER is 1.63%, both as at August 31, 2010 (as disclosed in each fund or portfolio’s annual management report of fund performance). Renaissance Investments may have waived fees or absorbed expenses otherwise payable by a fund or portfolio, with the exception of any taxes or new fees introduced by regulators or governments. At the discretion of Renaissance Investments, this practice may continue indefinitely and can be terminated at any time. 4Class A front-end load units. 5Inception date: November 13, 2007. Please read the Renaissance Investments family of funds Simplified Prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Renaissance Investments is offered by CIBC Asset Management Inc. ™Renaissance Investments and “invest well. live better.” are registered trademarks of CIBC Asset Management Inc. 02440E(201104)