Managed risk investing Joe Jugovic, CFA President

QV Investors History Founded in 1996 on the principles of Quality & Value Employee-owned, independent investment counsel Repeatable, proven value-based processes All employees of QV are personally invested in the funds they manage

Equity investing Investment philosophy We buy a portfolio of enduring businesses run by capable, committed, and candid people. We select equities on good value, that is the price we pay for a company’s assets and their return on equity. We hold our good business positions for an indefinite period. Our goal is to provide consistent growth with below average risk

Equity investing Company analysis & security selection Share ownership, years of leadership, succession planning, compensation, board & operational team, corporate governance. Innovation, service, product or resource development. Competitive position. Business outlook. Demonstrated record of growth in equity, earnings, sales and cash flow or demonstrated management of asset base. Equity financed balance sheet versus debt. Sensible allocation of capital. P/E’s, P/CF’s, P/B’s and NAV’s below market. Reasonable relative to ROE’s and ROIC’s above market. Assessment of downside risk. Dividends & capital allocation Valuation Balance sheet strength Franchise & outlook Financial record Management Free cash flow to increase dividends. Culture of dividends. Sensible capital allocation. Portfolio enhancement New selections enhance portfolio characteristics, quality, diversification and growth.

Book Value per ShareReturn on Equity (%)Dividends / Share Consistent long-term appreciation in firm value with a commitment to shareholders Source: CPMS Equity investing Buy discipline – Canadian equity example – Canadian utilities

Source: Capital IQ CFPS Price CFPS Equity investing Buy discipline – Canadian equity example – Canadian utilities

Dividend/share $0.90 $0.94 $0.98 $1.02 $1.06 $1.10 $1.40 $1.25 $1.33 $1.41 $1.51 $1.61 Source: Capital IQ Cumulative Dividends from 100K Investment $100K + Dividends + Capital Gains = $390K Equity investing Buy discipline – Canadian equity example – Canadian Utilities

Consistent long-term appreciation in firm value with a commitment to shareholders Book Value per Share Return on Equity (%) Dividends / Share Source: CPMS Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd.

Source: CPMS EPS Price EPS Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd.

Dividend/share $0.10 $0.10 $0.25 $0.13 $0.19 $0.20 $0.38 $0.28 $0.38 $0.48 $0.32 Source: Capital IQ Cumulative Dividends from 100K Investment $100K + Dividends + Capital Gains = $285K Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd.

Equity investing Sales discipline Failure of our buying tests or attractive alternative: Management turnover / material change in firm direction Breakdown in profit/ cash flow consistency Erosion of competitive position / negative future outlook Increasing financial leverage Excessive valuation / dividend failure

Source: Capital IQ Price to Book Equity investing Company analysis & security selection – Canadian equity Sale candidate – Canadian Oil Sands Trust – P/B

Source: Capital IQ Price to Book Equity investing Company analysis & security selection – Canadian equity Sale candidate – Research In Motion P/B

Equity investing Risk management philosophy Risk is the permanent loss of our clients’ capital. We manage the valuation, growth, balance sheet, and diversification risks of the portfolio. Our process keeps us consistent over time

Price to earnings 4-year average ROE QV Cdn Small Cap Equities BMO Small Cap Index Source: Capital IQ Equity risk management Canadian small cap equity

Debt to equityDividend yield QV Cdn Small Cap Equities BMO Small Cap Index Source: Capital IQ Equity risk management Canadian small cap equity

Equity risk management Sector allocation – all cap Cdn. Equity As of March 31, 2012 Diversification measures Industry 25% maximum Portfolio Positioning 25 holdings 1% minimum - limit 6% maximum - limit

Equity risk management Top 10 holdings – all cap Cdn. Equity As of March 31, 2012

All Cap Cdn. Equity Annualized returns as at March 31, 2012 All Cap Cdn. Equity Performance review Annualized returns as at March 31, 2012

Equity risk management Sector allocation – CI Can Am Fund As of March 31, 2012 Diversification measures Industry 25% maximum Portfolio Positioning 29 holdings 1% minimum - limit 6% maximum - limit ^ S&P Citigroup EMI 50:50: 50% S&P Citigroup EMI (CDA); 50% S&P Citigroup EMI (US)

Equity risk management Top 10 holdings – CI Can Am Fund As of March 31, 2012

CI Can-Am Small Cap Corporate Class YTD 1 Year 3 Year 5 Year 10 Year CI Can-Am Small Cap Corporate Class7.2%0.1%8.1%3.9%10.8% Quartile21311 At March 31, 2012

Current environment & outlook

What’s next? Artificially low rates = artificial growth = high volatility Government austerity = slow growth/private sector healing Dividend yields = support in tough markets…to a degree Value & strong balance sheets = positive risk management

“There is no such thing as a free lunch”

Source: John Aitkens, TD Securities, March 2012 Equities better valued

Source: RBC Capital Markets, Haver Analytics Diversification will matter

Source: Ed Yardeni, The Gloom, Boom & Doom Report, October 2010 Economics vs. company analysis After-tax profit margin from current production,

Source: Barry Bannister, Stifel Nicolaus Equities…the lost decade

Source: IFIC & BMO Psychology Bond Funds Equity Funds Money Market Funds (5) (10) (15) (20) Net Sales for Canadian Mutual Funds

Bonds the favored asset class “For the first time in at least 12 years, reports the 2012 Milliman Pension Funding Study, a canvass of corporate America’s 100 largest defined benefit plans, pension managers have ear-marked more funds for fixed income (41.4%) than equities (38.1%). Just five years ago, stocks got twice the allocation of bonds (60.3% vs. 29.3%)…” – GRANT’S Interest Rate Observer, Vol. 30, No. 7, April 6, 2012

Source: RBC Capital Markets Quantitative Research Opportunity – dividends matter

Source: Capital IQ Dividend/share $0.23 $0.15 $0.15 $0.15 $0.08 $0.20 $0.30 $0.40 $0.50 $0.50 $0.50 $0.75 $0.75 $100K + Dividends + Capital Gains = $400K Cumulative Dividends from 100K Investment Power of dividends: dividends + asset Canadian equity example – Astral Media Inc.

Conclusion Strong companies provide more stability Great businesses provide growing income Risk management protects capital

Thank you Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. ® CI Investments and the CI Investments design are registered trademarks of CI Investments Inc.