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CI AsianDynasty Fund
2002 Annual Report as at December 31
The past three years have been the most challenging on global
markets in 50 years. What makes this more unsettling is that these
conditions follow a decade of unprecedented market growth.
So, for many investors, these markets may be a new experience.
In times like these, it is tough to stay focused on the long term.
However, history tells us that the markets will turn around and
resume their long-term upward trend, reflecting the ongoing
growth of companies and the overall economy.
In spite of the current market conditions, CI has taken steps to
ensure we continue to provide you with the investment options
you need. Here is what CI offers:
• Experience – CI has been providing investment products and
services since 1965. We manage over $30 billion on behalf of
more than 1.4 million Canadians.
• Choice – Whether you’re looking for Canadian or global equity
funds, fixed-income or balanced funds, they are all available
from CI. Our varied investment options include mutual funds,
segregated funds, tax-advantaged funds, RSP-eligible foreign
funds and the CI Portfolio Series.
• Expertise – Our wide range of investment funds is combined
with world-class portfolio managers like Gerry Coleman (named
Fund Manager of the Year at the 2001 Canadian Mutual Fund
Awards and manager of Harbour Fund, named Best Canadian
Equity Fund in 2002), Eric Bushell (manager of Signature
Dividend Fund, which was selected Best Dividend Fund in
2001 and 2002, and of Signature Select Canadian Fund, named
Best Canadian Equity Fund in 2001), and Bill Miller (named
Fund Manager of the Decade for the 1990s by Morningstar).
• Service – CI’s Client Services team can be reached toll-free at
1-800-563-5181 or by e-mail at service@cifunds.com. You can
also access your account through CI’s state-of-the-art website at
www.cifunds.com by clicking on My Account. In addition, our
site has a great deal of information about our funds and about
investing in general.
We know the markets are challenging, but our goals have never
changed – to provide you, through your adviser, with the products
and services you need to meet your financial goals.
Thank you for investing with CI Funds. We realize that it is a
privilege to manage your money. If you have any questions, please
contact your adviser or our Client Services Department.
Yours truly,
Peter W. Anderson
President,
CI Mutual Funds Inc.
February 1, 2003
A Message from the President
Most global equity markets ended 2002 down significantly: the
S&P 500 Index declined 23% (its worst loss since 1974), the DAX
in Germany fell a staggering 44% and Japan’s Nikkei closed at a
20-year low.
At face value, economic fundamentals do not justify the market
action of 2002. Overall global economic growth has been robust
and monetary policy has been relatively loose. We feel that the
turbulence indicates that a structural shift in the equity investment
climate is taking place with new longer-term trends about to be
established. This year may well be a watershed year in which
exciting opportunities abound.
The 1990s were a period of U.S. economic and political
domination, with its stocks trading at significant premiums. When
we look at the situation the country faces today, the U.S. premium
is baffling. The government’s fiscal situation, which looked
strong even in early 2002, has weakened further and faster than
anyone thought possible. The productivity gains that justified
continued investment by foreigners appear increasingly to be a
statistical myth.
Despite our bleak overall outlook, we continue to find a host
of exciting opportunities in the United States. The defence, energy
and health-care areas in particular offer compelling value. When
seeking short-sale positions for our hedge fund, we continue
to see considerable overvaluation in technology, finance and
consumer products.
Paradoxically, conditions in the rest of the world are hardly as grim
as the global equity markets would suggest. The Japanese market is
at 20-year lows despite new policies from the Bank of Japan. While
the country continues to have significant macroeconomic problems,
the clamour for action is growing. Compelling opportunities exist
in several of the larger, financially strong Japanese companies.
Remarkably, many of these stocks trade at multi-year lows with
lower valuations than distressed U.S. companies.
Europe is equally interesting. Continental Europe is challenged
by slowing growth, but has a trade surplus rather than a deficit. We
expect domestic growth to become a policy priority for the region
in 2003 and there is ample room for interest rate cuts. The region
presents excellent opportunities in domestic-oriented companies
such as banks and consumer goods.
With regard to the emerging markets, conditions are especially
attractive in Asia, where countries have worked through their
problems of the 1997 financial crisis and accumulated significant
trade surpluses. Here, too, domestic growth will be a policy priority
with the best opportunities in domestic-oriented companies.
Latin America, especially Brazil, continues to face significant
challenges. However, President Lula’s proposed steps for Brazil
give us some reason for optimism.
We believe 2003 will provide excellent opportunities for profitable
investments. It is likely that the European and Japanese equity
markets will decouple from the U.S., signalling a definitive end to
the reign of the global bear.
TRIDENT INVESTMENT MANAGEMENT, LLC
Nandu Narayanan
February 1, 2003
A Message from Trident Investment Management, LLC
P E R F O R M A N C EFund Objective:To achieve long-term capital growth by investing primarily in equitysecurities of companies based in the Asia-Pacific region.
Lead Manager:Nandu Narayanan
Adviser:Trident Investment Management, LLC†
(since October 2002)
Management Style:Top-down analysis of global macro-economic trends; bottom-up selectionof companies with the greatest growthpotential.
Fund Assets: $15.1 million
NAV per Unit:Class A Cdn $8.66Class F Cdn $8.39Class I Cdn $10.34
Inception: November 1993
RSP/RIF Eligible: 30%
Distribution: Capital gains and incomepaid annually
Management Expense Ratio:Class A 3.10%Class F 2.30%Class I 0.66%
Fund Code: CIGFront End DSC
Class A Cdn 7650 Cdn 7655Class F Cdn 7656 Cdn –Class I Cdn 7973 Cdn –
C I A s i a n D y n a s t y F u n d 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
$15,000
$10,000
$5,000
$8,907
Dec. '02Nov. '93 '97'96'94 '98 '99 '00 '01'95
Current Value of $10,000 Investment in Class A units
Class A Class F Class I1 year 2.2 3.1 5.43 years -10.9 N/A -8.65 years 4.7 N/A 7.3Since Inception -1.3 -7.9 -0.3
Class A Class F Class I2002 $ - $ - $ -
C$ NAV at December 31 each year:
Class A Class F Class I2002 $ x.xx $ x.xx $ x.xx
AT
A G
LAN
CE
H O L D I N G S & A L L O C AT I O N
Total Annual Distribution:Compound Annual Returns [%]
CI Asian Dynasty Fund(Formerly Spectrum Asian Dynasty Fund)
† Nothing herein should be read to constitute an offeror solicitation by Trident or its principal to provideinvestment advisory services to any person or entity.
New Zealand 1.6, India 0.8
Top 10 Equity Holdings [%]Nissan Motor Company Ltd.. . . . . . . . . . . . . . . . . . . [Japan, Consumer Discretionary] . . . . . . . . . . . . . . . . . . . . . . . . . 5.7Telekomunikasi Indonesia . . . . . . . . . . . . . . . . . . . . [Indonesia, Telecommunication Services] . . . . . . . . . . . . . . . . . 5.6Uni-Charm Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Japan, Consumer Staples] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9Shiseido Company Ltd. . . . . . . . . . . . . . . . . . . . . . . . [Japan, Consumer Staples] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7Tokyo Gas Company Ltd. . . . . . . . . . . . . . . . . . . . . . . [Japan, Utilities] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6Honda Motor Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . [Japan, Consumer Discretionary] . . . . . . . . . . . . . . . . . . . . . . . . . 3.5Huaneng Power International Inc. . . . . . . . . . . . . . [China, Utilities] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3United Overseas Bank Ltd. . . . . . . . . . . . . . . . . . . . . [Singapore, Financials] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0SmarTone Telecommunications Holding Ltd. . . . . [HongKong, Telecommunication Services] . . . . . . . . . . . . . . . . . 2.4TCL International Holdings Ltd. . . . . . . . . . . . . . . . . [HongKong, Consumer Discretionary] . . . . . . . . . . . . . . . . . . . . . 2.3
Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.7Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3Repub. of China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9Cash & Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Country Allocation [%]
The accompanying notes are an integral part of these financial statements.
CI Asian Dynasty FundStatements of Financial Highlights (for the periods ended December 31 and September 30 (Note 1))
C I A s i a n D y n a s t y F u n d 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
Net asset value per unit, beginning of period
Distribution per unit:
From net income
From net realized gain
Net income (loss) per unit
Net realized and unrealized appreciation
(depreciation) of investments per unit
Surplus (deficiency) of capital transactions
over original cost per unit (f)
Net asset value per unit, end of period
Ratios & Supplemental Data
Total return (%) (a)
Average net assets ($000’s) (b)
Management expense information (c)
Management expense ratio before absorption
of operating expenses (%)
Management and operating expenses (%)
Goods and services tax expenses (%)
Total management expense ratio (%)
Portfolio turnover rate (d)
Units Issued and Outstanding
Balance beginning of period
Units issued for cash including
re-invested distributions
Units redeemed
Balance end of period
Additional Fund Notes (in $000’s)
Brokerage Commissions
Net capital loss carried forward
Non-capital loss carried forward (e)
(a) Total return is the historical annualized rate of return of an investment for the period, assuming reinvestment of all distributions at net asset value.(b) Average net assets are calculated based on the daily net assets outstanding.(c) Management expense information is calculated based on expenses charged directly to the fund plus, if applicable, expenses of the underlying funds,
calculated on a weighted average basis based on the percentage weighting of each underlying fund, and is expressed as annualized percentage of average net assets for the period.(d) Portfolio turnover rate equals the lesser of purchases or sales divided by the average net assets of the fund.(e) Losses will expire within seven years.(f) For the years prior to 2002, the amount is included in Net realized and unrealized appreciation (depreciation) of investments per unit.
Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.
Class A Class F Class IPeriod ended Years ended Period ended Year ended Period ended Years ended
Dec. 31 Sept. 30 Dec. 31 Sept. 30 Dec. 31 Sept. 30
2002 $ 2001 $ 2000 $ 1999 $ 1998 $ 2002 $ 2001 $ 2002 $ 2001 $ 2000 $ 1999 $ 1998 $
7.86 10.55 8.84 5.40 9.41 7.53 10.00 9.33 12.23 10.00 5.97 10.14
- - - - - - - - - - - -
- - - - - - - - - - - -
- - - - - - - - - - - -
(0.15) 0.06 (0.28) (0.09) (0.04) (0.05) 0.06 0.12 0.06 - 0.10 0.06
1.08 (2.75) 1.99 3.53 (3.97) 1.13 (2.53) 1.18 (2.96) 2.23 3.93 (4.23)
0.93 (2.69) 1.71 3.44 (4.01) 1.08 (2.47) 1.30 (2.90) 2.23 4.03 (4.17)
(0.13) - - - - (0.22) - (0.29) - - - -
8.66 7.86 10.55 8.84 5.40 8.39 7.53 10.34 9.33 12.23 10.00 5.97
8.05 (25.50) 19.34 63.70 (42.61) 9.02 - 11.07 (23.71) 22.30 67.50 (41.12)
13,743 18,811 27,099 10,644 9,263 1,609 8 4,180 7,326 7,000 4,000 4,000
3.10 3.18 3.13 3.56 5.72 2.30 2.15 0.66 0.67 0.69 1.12 2.04
2.90 2.83 2.93 2.65 2.67 2.15 1.83 0.62 0.53 0.64 0.40 0.36
0.20 0.20 0.20 0.19 0.19 0.15 0.13 0.04 0.04 0.05 0.03 0.03
3.10 3.03 3.13 2.84 2.86 2.30 1.96 0.66 0.57 0.69 0.43 0.39
1.20 1.24 1.01 1.40 0.76 1.20 1.24 1.20 1.24 1.01 1.40 0.76
1,821,854 2,310,520 1,000 - 691,575 635,497
1,302,375 399,380 297,897 1,000 52,168 453,637
(1,703,100) (888,046) (2,926) - (712,443) (397,559)
1,421,129 1,821,854 295,971 1,000 31,300 691,575
172 161
6,892
-
JAPAN (48.7%)3,000 Canon Inc. 141,179 177,524
5,600 Canon Inc., ADR 350,563 324,460
11,200 Credit Saison Company Ltd. 383,045 300,243
14 East Japan Railway Co. 101,011 109,162
2,000 Fanuc Ltd. 165,746 139,001
4,100 Fast Retailing Company Ltd. 173,127 226,876
9,000 Fujisawa Pharmaceutical Company Ltd. 344,520 323,476
6,600 Hitachi Maxell 160,476 126,165
3,000 Honda Motor Co. Ltd. 94,220 85,187
9,000 Honda Motor Company Ltd. 504,687 523,042
39 KDDI Corp. 194,132 198,772
24,000 Mitsui Sumitomo Insurance Co. Ltd. 187,940 173,474
7,000 Namco Ltd. 209,347 184,223
8,500 Nichicon Corp. 159,160 154,497
70,200 Nissan Motor Company Ltd. 795,346 860,553
16,800 Nissin Co 183,041 183,482
900 Orix Corp. 98,032 91,145
5,400 Right On Co. Ltd. 92,676 87,213
91 Saizeriya Co., Ltd. 3,997 2,118
9,900 Sega Corp. 356,596 153,338
35,000 Shiseido Company Ltd. 563,149 714,930
26,000 Sompo Japan Insurance Inc. 242,199 238,526
2,600 Sumitomo Real Estate Sales Company Ltd. 93,417 74,862
4,700 Takeda Chemical Industries Ltd. 322,125 308,609
141,000 Tokyo Gas Company Ltd. 545,841 694,371
11,800 Uni-Charm Corp. 532,760 735,753
4,200 United Arrows Ltd. 179,497 172,362
7,177,829 7,363,364HONG KONG (11.4%)
63,000 Citic Pacific Ltd. 221,588 182,906
81,500 CNOOC Ltd. 146,018 166,782
27,600 Dah Sing Financial Group 189,065 219,802
45,000 Hong Kong Electric Holdings Ltd. 270,531 267,645
210,500 SmarTone Telecommunications Holding Ltd. 369,323 369,230
737,500 TCL International Holdings Ltd. 320,158 353,143
32,000 YueYuen Industrial Hldgs 146,361 163,228
1,663,044 1,722,736AUSTRALIA (10.3%)
5,641 Amcor Ltd. 36,541 42,255
38,000 APN News & Media Ltd. 127,635 102,259
22,860 Australia & New Zealand Banking Group Ltd. 411,508 349,939
6,500 Commonwealth Bank of Australia 198,875 154,844
37,280 John Fairfax Holdings Ltd. 116,208 105,913
26,600 News Corporation Ltd. 296,671 269,426
12,746 News Corporation Ltd., Pfd. 137,793 107,397
89,100 TAB Ltd. 213,489 238,197
19,400 TABCORP Holdings Ltd. 165,163 182,292
1,703,883 1,552,522
No. of Shares/ Average MarketFace Amount Cost ($) Value ($)
CHINA (6.6%)688,000 Beijing Datang Power Generation Company Ltd. 386,689 350,248
400,000 China Oilfield Services Ltd. 158,991 153,228
392,000 Huaneng Power International Inc. 416,756 493,960
962,436 997,436
INDONESIA (5.6%)1,244,500 Telekomunikasi Indonesia 741,494 841,722
SINGAPORE (4.7%)26,000 DBS Group Holdings Ltd. 292,051 259,241
1,145 Haw Par Corporation Ltd. 3,637 3,383
42,000 United Overseas Bank Ltd. 485,986 449,230
781,674 711,854TAIWAN (3.6%)
326,100 China Steel Corp. 255,311 287,068
112,000 Chinatrust Financial Holding Company Ltd. 150,034 143,826
9,200 Fubon Financial Holding Co. Ltd. 123,956 118,614
529,301 549,508SOUTH KOREA (2.9%)
1,000 Hyundai Department Store Co., New Shares 38,291 25,320
250 Hyundai Department Store Company Ltd. 64,077 3,245
830 Pohang Iron & Steel Co. Ltd. 123,088 129,835
2,500 Posco 107,690 97,208
2,160 Samsung Fire & Marine INS 122,908 185,550
456,054 441,158THAILAND (1.9%)
22,300 BEC World PLC 200,071 165,841
22,800 PTT Expolration and Production Co. 91,893 118,027
291,964 283,868NEW ZEALAND (1.6%)
65,563 Telecom Corporation Of New Zealand Ltd. 228,389 244,787
INDIA (0.8%)11,275 ICICI Bank Ltd. 116,020 115,230
Total Investments (98.1%) 14,652,088 14,824,185
Other Assets (net) (1.9%) 291,548
Total Net Assets (100.0%) 15,115,733
No. of Shares/ Average MarketFace Amount Cost ($) Value ($)
C I A s i a n D y n a s t y F u n d 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
CI Asian Dynasty FundInvestment Portfolio (as at December 31, 2002)
The accompanying notes are an integral part of these financial statements. All common shares unless otherwise noted. Percentages shown in brackets relate investmentsat market value to total net assets of the fund.
Assets
Investments at market value (Note 2)
Cash
Receivable for unit subscriptions
Receivable for securities sold
Dividends and accrued interest receivable
Liabilities
Payable for unit redemptions
Accrued expenses
Net assets and unitholders’ equity
Net asset value per unit:
Class A
Class F
Class I
Number of units outstanding
Class A
Class F
Class I
Securities Lending (Note 5)
Loaned
Collateral
Income
Approved on behalf of the Board of Directors:
G. Raymond ChangDirector
William T. HollandDirector
C I A s i a n D y n a s t y F u n d 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
CI Asian Dynasty FundFinancial Statements
The accompanying notes are an integral part of these financial statements.
Income
Dividends
Interest
Less foreign withholding taxes
Expenses
Management fees (Note 4)
Administrative (Note 4)
Custody
Legal
Audit
Goods and services tax
Expenses borne by management company
Net income (loss) for the period
Realized and unrealized
gain (loss) on investments
Realized gain (loss) on investments (a)
Change in unrealized appreciation
(depreciation) of investments
Net gain (loss) on investments
Increase (decrease) in net assets
from operations
(a) Realized gain (loss) on investments
Proceeds from sale of investments including
foreign exchange gain (loss) (b) (c)
Investments at cost, beginning of period
Investments purchased
Change in cost of short-term notes held
Investments at cost, end of year
Cost of investments sold
Realized gain (loss) on investments
(b) Proceeds on sales of short-term
notes sold during the period
not included above
(c) Foreign exchange gain (loss)
included above
Statements of Operations for the periods ended December 31 andSeptember 30 (000’s)
Statements of Net Assets as at December 31 and September 30 (in 000’sexcept for per unit amounts and units outstanding)
Net assets, beginning of period
Capital Transactions
Proceeds from units issued
(including reinvested distributions)
Amounts paid for units redeemed
Distributions to investors
Distribution from net realized gains
Distribution from net income
Increase (decrease) in net assets
from operations
Net assets, end of period
Statements of Changes in Net Assets for the periods ended December 31 andSeptember 30 (000’s)
Dec. 31 Sept. 30
2002 $ 2001 $
14,824 19,657
300 998
2 -
- 83
5 85
15,131 20,823
15 17
- 37
15 54
15,116 20,769
8.66 7.86
8.39 7.53
10.34 9.33
1,421,129 1,821,854
295,971 1,000
31,300 691,575
766 -
820 -
- -
Dec. 31 Sept. 30
2002 $ 2001 $
459 799
22 22
(66) (53)
415 768
414 422
58 104
102 58
- 9
- 13
39 39
613 645
- (31)
613 614
(198) 154
1,219 (4,589)
1,168 (3,196)
2,387 (7,785)
2,189 (7,631)
36,497 37,037
20,653 29,734
29,277 32,545
- -
49,930 62,279
14,652 20,653
35,278 41,626
1,219 (4,589)
- -
(170) (125)
Dec. 31 Sept. 30
2002 $ 2001 $
20,769 32,146
14,232 7,841
(22,074) (11,587)
(7,842) (3,746)
- -
- -
- -
2,189 (7,631)
15,116 20,769
N o t e s t o t h e F i n a n c i a l S t a t e m e n t 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
Notes to the Financial Statement
1. THE FUNDS
The following CI Funds are open-ended mutual fund trusts created under the
laws of Ontario by declarations of trust:
Fund Names Dated
CI American Growth Fund September 1, 1967
CI American Growth RSP Fund December 2, 1999
CI American Value Fund May 27, 1957
CI Asian Dynasty Fund November 16, 1993
CI Canadian Asset Allocation Fund September 1, 1992
CI Canadian Equity Fund November 30, 1971
CI Canadian Investment Fund November 16, 1932
CI Canadian Small Cap Fund November 30, 1971
CI Canadian Stock Fund June 19, 1987
CI Diversified Fund June 19, 1987
CI Dividend Fund June 19, 1987
CI European Growth Fund February 28, 1995
CI European Growth RSP Fund September 11, 2000
CI International Bond RSP Fund January 22, 1993
CI Long-Term Bond Fund June 15, 1989
CI Mid-Term Bond Fund June 19, 1987
CI Short-Term Bond Fund May 31, 1976
CI TACTONICS Fund April 4, 2001
CI TACTONICS RSP Fund April 4, 2001
CI World Equity Fund September 6, 1990
CI Canadian Balanced Portfolio November 9, 1988
CI Canadian Conservative Portfolio December 1, 1997
CI Canadian Growth Portfolio December 1, 1997
CI Canadian Income Portfolio December 1, 1997
CI Canadian Maximum Growth Portfolio December 1, 1997
Sometimes referred to herein individually as “Fund”, and collectively as the “Funds”.
Each fund offers Class A, Class F and Class I units. Class A units were offered
to investors on the date of the formation of the Funds.
Class F units were offered to investors commencing on November 17, 2000
except for the following Funds:
Fund Names Inception Date of
Class F Units
CI TACTONICS Fund April 4, 2001
CI TACTONICS RSP Fund April 4, 2001
Class I units were offered to investors commencing on November 1, 1996
except for the following Funds:
Fund Names Inception Date of
Class I Units
CI Canadian Conservative Portfolio December 1, 1997
CI Growth Portfolio December 1, 1997
CI Canadian Income Portfolio December 1, 1997
CI Canadian Maximum Growth Portfolio December 1, 1997
CI American Growth RSP Fund December 13, 1999
CI European Growth RSP Fund September 11, 2000
CI TACTONICS Fund May 1, 2001
CI TACTONICS RSP Fund May 1, 2001
CI American Growth RSP Fund and CI European Growth RSP Fund current-
ly do not have any Class I units issued.
Class A units are available to all investors.
Class F units are available to certain investors including those who participate
in fee-based programs through their financial advisers or who are members of cer-
tain groups.
Class I units are available to institutional clients and investors who have entered
into a Class I Account Agreement with CI Mutual Fund Inc.
In 2002 the Funds’ fiscal year end was changed to December 31. As a result,
the financial statements as presented for the fiscal year 2002 are for the fifteen-
month period ended or as at December 31, 2002. All comparative information is
for the year ended or as at September 30, 2001 except for the statement of
financial highlights, which is for each of the years or periods (since inception) in
the four-year period ended September 30.
Comparative financial statement information for the year ended or as at
September 30, 2001 has been reclassified in accordance with the current
year basis.
Effective as of the close of business on October 11, 2002 the following funds
were merged.
Non-taxable Mergers
Terminated Fund Continuing Fund
Spectrum RRSP World Equity Fund CI TACTONICS RSP Fund
Taxable Mergers
Terminated Funds Continuing Funds
Spectrum Canadian Small-Mid Cap Fund CI Canadian Small Cap Fund
Spectrum Optimax USA Fund CI Amercian Value Fund
N o t e s t o t h e F i n a n c i a l S t a t e m e n t 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
Notes to the Financial Statement
The merger was effected by transferring the net assets of the terminated funds
in exchange for units of the continuing funds. The value of the units of the
continuing funds issued in connection with this merger was equal to the mar-
ket value of the net assets transferred from the terminated funds.
With respect to the non-taxable merger, the terminated and continuing fund
was deemed to have a taxation year end as at October 11, 2002. In accordance
with the Income Tax Act, all unrealized losses and certain unrealized gains of that
fund’s investment portfolio were deemed to be realized at October 11, 2002. All
tax losses available to that fund as at October 11, 2002 expired on that date.
These financial statements do not include the operating results of the terminated
funds prior to the merger date.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the Fund:
(a) Valuation of Investments
Mutual Funds are valued on each business day at their closing net asset
value. Listed securities are valued on each business day at their latest avail-
able sale price. In the absence of recorded sales on that day, they are valued
at the average of the last recorded bid and ask prices where appropriate.
Unlisted securities are valued on each business day based on price quota-
tions from recognized investment dealers, or failing that, management’s best
estimate. Short-term fixed income securities are valued at cost which,
together with accrued interest, approximates market value.
(b) Foreign Exchange
Foreign currency amounts are translated into Canadian dollars as follows:
market value of investments, forward currency contracts, other assets and
liabilities at the closing rate of exchange on each business day; income,
expenses and, purchases, sales and settlements of investments at the rate
of exchange prevailing on the respective dates of such transactions.
(c) Investment Transactions and Income Recognition
Investment transactions are accounted for on trade date and any realized
gains and losses from such transactions are calculated on an average cost
basis. Dividend income is recognized on the ex-dividend date and interest
income on the accrual basis. Stock dividends are recorded as dividend
income determined by reference to market value.
(d) Net Asset Value Per Unit
Net asset value per unit for each class is calculated at the end of each day
on which the Fund’s manager is open for business by dividing the net
assets of each class by its outstanding units.
The net asset value of each class is computed by calculating the value of
that class’s proportionate share of the Fund’s assets less that class’s
proportionate share of the Fund’s common liabilities and less class specific
liabilities. Expenses directly attributable to a class are charged to that class.
Other income and expenses are allocated to each class proportionately
based upon the relative net asset value of each class.
(e) Futures, Forward, Swap and Option Contracts
Futures, forward, swap and option contracts are valued on each business day
according to the gain or loss that would be realized if the contracts were
closed out, unless daily limits are in effect in which case they are valued
based on the current market value of the underlying interest. Any payments
made to satisfy initial and variation margin are reflected as a receivable
balance in daily variation margin on the Statement of Net Assets. Margin
consisting of assets other than cash is noted in the Statement of Investment
Portfolio. Gains or losses arising from futures, forward, swap and option con-
tracts which are held as hedges for capital investments are recorded as unre-
alized gains (losses) on investments until the contracts are closed or expire.
Gains or losses arising from futures, forward, swap and option contracts not
held as hedges for capital investments are recorded as income (loss) on a
daily basis.
3. INCOME TAXES
The Funds qualify as mutual fund trusts under the provisions of the Income Tax
Act (Canada) and, accordingly, are not subject to tax on net income, including
net realized capital gains for the taxation year, which is paid or payable to
unitholders at the end of the taxation year. However, such part of each Funds’
taxable income and net realized capital gains that is not so paid or payable will be
taxable to that Fund. Income tax on net realized capital gains not paid or payable
will be generally recoverable by virtue of refunding provisions contained in the
Income Tax Act (Canada) and provincial income tax legislation, as redemptions
occur. It is the intention of each Fund to pay all net taxable income and suffi-
cient net realized capital gains so that the Fund will not be subject to income tax.
Occasionally, a Fund may distribute more than it earns. This excess distribution
is a return of capital and is not taxable to unitholders. Derivative investments are
recorded in the same manner for tax purposes as for accounting purposes.
Net capital losses may be carried forward indefinitely to reduce future net realized
capital gains. Net capital loss amounts appear under “Additional Fund Notes” on
the Statements of Financial Highlights.
4. MANAGEMENT FEES AND OTHER EXPENSES
CI Mutual Funds Inc. is the manager of each Fund and, in consideration of
management fees received, provides management services required in the
day-to-day operations of the Funds including management of the investment
portfolio of the Funds.
The management fee is calculated on the net assets of each Fund at the end of
each business day and is paid daily.
Each Fund also bears all operating and administrative expenses including audit
and legal fees, registry and transfer agency fees, custody fees, expenses relating to
reporting and making distributions to unitholders, all other costs and fees imposed
by statute or regulation and expenses of all communications with unitholders.
To encourage large purchases in the Funds, the manager may reduce the
management fee that it would otherwise be entitled to receive from a Fund
with respect to an investment in a Fund provided that the amount of the
management fee reduction is distributed to the investor for whose benefit the
fees were reduced.
In order to reduce the effective MER’s of certain funds, some or all of the man-
agement fees and/or operating expenses may have been waived or absorbed by
the Manager. The total amount absorbed by the Manager is presented in the
Statement of Operations as “Expenses borne by management company.”
5. SECURITIES LENDING
Certain Funds have entered into a securities lending program with their custo-
dian, Royal Trust Company of Canada ("Royal Trust"). The aggregate market
value of all securities loaned by a Fund cannot exceed 50% of the assets of the
Fund. A Fund will receive collateral of at least 102% of the value of securities
on loan. Collateral will generally be comprised of cash and obligations of or
guaranteed by the Government of Canada or a province thereof, or by the
United States government or its agencies, but may include obligations of other
governments with appropriate credit ratings. Royal Trust has indemnified the
Funds against the credit risk of the borrowers. For those Funds participating in
the program, amounts for securities loaned, the collateral received, and the
income collected appear on the Statement of Net Assets and income from secu-
rities lending is included in "Interest Income" in the Statement of Operations.
6 . RELATED PARTY TRANSACTIONS
Sun Life Financial Services of Canada Inc. (“Sun Life”) owns a significant inter-
est in CI Mutual Funds Inc. and is therefore considered a related party to the
Funds. The following is a summary of the investments by Sun Life in the Funds
at December 31, 2002.
Fund Names Net Asset Value ($ooo’s)
CI TACTONICS Fund Class F 1,167
CI American Value Fund Class F 934
CI Asian Dynasty Fund Class F 294
CI Canadian Small Cap Fund Class F 177
CI TACTONICS RSP Fund Class F 47
7 . PORTFOLIO TRANSACTIONS
A copy of the Statement of Portfolio Transactions (unaudited) for any Fund
for the period ended December 31, 2002 is available without charge upon writ-
ten request to the manager, CI Mutual Funds Inc., CI Place, 151 Yonge Street,
Eleventh Floor, Toronto, Ontario M5C 2W7.
N o t e s t o t h e F i n a n c i a l S t a t e m e n t 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
Notes to the Financial Statement
MANAGEMENT’S RESPONSIBILITY
FOR FINANCIAL REPORTING
The accompanying financial statements have been prepared by CI Mutual
Funds Inc., the manager of the Funds, and approved by the Board of
Directors of the manager. The Funds’ manager is responsible for the infor-
mation and representations contained in these financial statements and
other sections of the Annual Report.
CI Mutual Funds Inc. maintains appropriate processes to ensure that
relevant and reliable financial information is produced. The financial
statements have been prepared in accordance with accounting principles
generally accepted in Canada and include certain amounts that are based
on estimates and judgments. The significant accounting policies which
management believes are appropriate for the Funds are described in Note 2
to the financial statements.
Deloitte & Touche LLP are the external auditors of the Funds, appointed
by the unitholders. They have audited the financial statements in
accordance with Canadian generally accepted auditing standards to enable
them to express to the unitholders their opinion on the financial state-
ments. Their report is set out at the right.
President Chief Financial Officer
CI MUTUAL FUNDS INC. CI MUTUAL FUNDS INC.
AUDITORS’ REPORTS
To the unitholders of each of the CI Funds (as defined in Note 1)
(“the Funds”):
We have audited the Investment Portfolio of each of the CI Funds as at
December 31, 2002, their Statements of Net Assets as at December 31,
2002 and September 30, 2001, their Statements of Operations and
Changes in Net Assets for the periods then ended and the Statements of
Financial Highlights for the period ended December 31, 2002 and each of
the years in the four-year period ended September 30, 2001. These finan-
cial statements are the responsibility of each of the Fund’s management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements are
free from material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of each of the CI Funds as at December 31,
2002 and September 30, 2001, the results of their operations and changes
in their net assets for the periods then ended and their financial highlights
for the period ended December 31, 2002 and each of the years in the
four-year period ended September 30, 2001 in accordance with Canadian
generally accepted accounting principles.
Toronto, Ontario DELOITTE & TOUCHE LLP
February 21, 2003 Chartered Accountants
M a n a g e m e n t a n d A u d i t R e p o r t s 2 0 0 2 A n n u a l R e p o r t a s a t D e c e m b e r 3 1 , 2 0 0 2
Management and Audit Reports
NOTICE: Should you require additional copies of this Annual Report or havereceived more than one copy, please contact CI Mutual Funds Inc. (the“Manager”) or your financial adviser.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus beforeinvesting. 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 perform-ance data assume reinvestment of all distributions or dividends and do not takeinto account sales, redemption, distribution or optional charges or income taxespayable by any securityholder that would have reduced returns. Mutual fundsare not guaranteed, their values change frequently and past performance maynot be repeated. Mutual fund securities are not covered by the Canada DepositInsurance Corporation or by any other government deposit insurer.
The commentaries contained herein are provided as a general source of information and should not be considered personal investment advice or anoffer or solicitation to buy or sell securities. Every effort has been made toensure that the material contained in these commentaries is accurate at thetime of publication. However, the Manager cannot guarantee its accuracy orcompleteness and accepts no responsibility for any loss arising from any use ofor reliance on the information contained herein.
SIMPLIFIED PROSPECTUS: The Simplified Prospectus and AnnualInformation Form of a Fund are renewed annually. The Manager would bepleased to provide, without charge, the most recent Simplified Prospectus uponrequest to its Toronto office.
DISTRIBUTION OR DIVIDEND REINVESTMENT: Distributions or dividends from the Funds are automatically reinvested, free of any sales commissions or charges, in additional securities of the relevant Fund, unlessyou otherwise direct. You may withdraw from participation in the reinvestmentplan at any time by delivering a written request to your financial adviser or tothe Manager.
REDEMPTION OF SECURITIES: Securities may be redeemed by security-holders on any business day by delivering to your financial adviser or the Managera redemption request in writing, or in such other form as permitted by yourfinancial adviser. If your redemption request is received by the Manager on anyValuation Date prior to 4:00 p.m. (Eastern time), then your securities beingredeemed will be priced at the next valuation time following receipt by theManager of the redemption request. If the proceeds of redemption exceed$10,000 or are to be paid to someone other than the registered owner, your signature must be guaranteed by a bank, trust company, investment dealer, orbroker. If certificates representing the securities to be redeemed have beenissued, the redemption request must be accompanied by the certificates, properly endorsed for redemption with the signature guaranteed in the mannerdescribed above. If the registered owner is a corporation, partnership, agent,fiduciary or surviving joint owner, additional documentation may be required.
®Boomernomics, Harbour Funds, CI Funds, the CI Funds logo design, BPIFunds, CI Sector Funds and Global Managers are registered trade marks of CI Mutual Funds Inc. ™Landmark Funds, Signature Funds and AmericanManagers are trademarks of CI Mutual Funds Inc.
Board of Governors’ Letter
Legal Notice
Your CI Funds’ Board of Governors is pleased to report on its activities inrespect of the year ended December 31, 2002. The Governors are appointedpursuant to the Declarations of Trust governing the Funds that are trusts, andconstitute the board of directors of CI Sector Fund Limited.
The Governors’ mandate is to consult with CI Mutual Funds Inc. (the “Manager”) and any investment advisers (referred to as “Subadvisers”) in matters pertaining to investment policy; receive and review periodic reports concerning the investment of the Funds’ assets, the issue and redemption of securities and distributions to securityholders; and to review and advise or consent, if appropriate, with respect to any other matter required by theDeclarations of Trust and by applicable securities laws, regulations and rules. The Governors met quarterly.
The Governors have reviewed, commented on and approved the CI Code ofEthics and Conduct, which establishes rules of conduct designed to ensure fairtreatment of the Funds’ securityholders and that, at all times, the interests of thethe Funds and their securityholders are placed above personal interests of employees, officers and directors of the Manager and each of its subsidiaries and affiliates, the Subadvisers, and the Governors, through the application ofthe highest standards of integrity and ethical business conduct. The objectiveis not only to remove any potential for real conflict of interest but to avoid any perception of conflict.
The independent Governors report that management has been open and cooperative, permitting the Governors to meet with Subadvisers, to meet withindividual department heads and personnel to review control mechanisms andcompliance procedures, including those relating to the personal securities
trading activity of employees, and to consider other matters that affect theFunds, such as customer complaints. The personal trading rules under the CI Code of Ethics and Conduct require prior clearance of personal trades andrestrict the ability of staff to trade any securities held by the Funds. The three independent Governors comprise the Audit Committee of the Boardof Governors. The Audit Committee independently reviewed, with the Fund’s auditors, the planning, scope and results of the audit of the financial statementsof the Funds for the year 2002, and reported to the Board of Governors. The Board of Governors has received and accepted the 2002 Annual Reports of the Funds.
The Manager's year 2002 report on compliance with the CI Code of Ethics andConduct has been provided to the Governors in a timely and satisfactory manner.
Stephen T. MooreCHAIR, CI FUNDS BOARD OF GOVERNORS
March 6, 2003
Members of the Board of GovernorsStephen T. Moore, ChairJasmine HerltThomas L. JarmaiPeter W. Anderson, President, CI Mutual Funds Inc. (commencing February 2003)
Head OfficeCI Place, 151 Yonge Street, Eleventh FloorToronto, Ontario M5C 2W7Tel: 416-364-1145Toll Free: 1-800-268-9374Client Services Team: 1-888-771-2999
Sales OfficesCalgary Tel: 403-205-4396 Toll Free: 1-800-776-9027Halifax Tel: 902-422-2444 Toll Free: 1-888-246-8887Montreal Tel: 514-875-0090 Toll Free: 1-800-268-1602Vancouver Tel: 604-681-3346 Toll Free: 1-800-665-6994CI Teleservice: 1-800-275-3672 Automated account informationE-mail: service@cifunds.com • www.cifunds.com
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