Opportunities Funds Commentary

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Trident Investment Management, LLC
Opportunities Funds Commentary
UPDATE
April 30, 2016
Performance Review
The global fundamental picture evolved in the first quarter of 2016, much as we had anticipated. Growth slowed
dramatically in virtually all regions, with the U.S. in particular expanding at an anemic 0.5%, a far cry from the
3.5% that many analysts had expected in January. The Eurozone, Japan, China and most developing countries
also weakened, prompting the International Monetary Fund to cut its global growth outlook. The weak growth
coupled with falling commodity prices through the first two months of 2016 intensified global deflationary forces.
Thus, the Eurozone and Japan had inflation well below the levels aimed for by their central banks, Australia
showed the weakest inflation figures in two decades, and even many of the developing countries showed declining
rates of inflation. In the U.S., inflation continued to undershoot the U.S. Federal Reserve’s target, and in China it
remained far below ranges observed a few years ago.
In the face of slow growth and very low inflation, global debt levels continued to climb. China, in particular, saw
a virtual explosion in credit extension in the first quarter, creating an amazing 18% of GDP (annualized) worth
of credit! Debt issuance also spiked in the corporate sector in the U.S. and Europe, despite a rather significant
decline in cash flow so that the divergence between cash generation and debt accumulation over the first quarter
was one of the largest observed.
The rather unpleasant fundamentals coupled with the Fed’s December 2015 rate hike caused a mini-meltdown
in markets over the first two months of the year as participants finally began to appreciate that the global central
banks’ policies were not having the desired growth effects. However, the European Central Bank expanded its
quantitative easing (QE) even further in March, around the same time when news of the Chinese credit expansion
also hit. Panicked by the market swoon, the Fed’s members also started to backtrack on their need to raise rates,
with some actually discussing rate cuts since a 0.25% rate for the economy might be too much to bear. These
actions caused a dramatic reversal in sentiment in March sending markets soaring, and especially those for some
commodities such as iron ore and oil, despite fundamentals that continued to worsen over the period.
Our portfolio, which had been performing well over the first two months of the year, suffered significantly in
March and April. We got hurt most in credit partly because the worst credits tightened substantially starting in early
March, despite clearly deteriorating cash flows. We also suffered from our long positions in fixed income because
there was a significant rise in rates, especially in Australia due to the spike in commodity prices, notwithstanding
falling inflation. Our long positions in Japanese equities also hurt performance because Japan, mysteriously, did
not participate in the rampant stock euphoria in the U.S. and Europe. Our only offsets to performance came from
our long positions in gold which did not contribute enough, however, to make up for our losses.
More than half of our losses in credit since March came because credit default swaps, which we had purchased
to obtain short exposure to credit, tightened substantially even though the cash bonds underlying these swaps did
not come in as much. Such a basis difference between cash bonds and CDS is something that we have rarely seen
except during crisis times when participants simply do not have the cash to put up for buying bonds. Thus, the
credit markets are behaving as they would in a crisis despite the substantial tightening in the CDS market. Again,
in fixed income, we had anticipated significant volatility and had taken virtually all of our exposure through
options. A considerable fraction of our losses actually arose not so much because of the rise in yields, but because
of a collapse in volatility levels despite the relatively significant daily moves we are now seeing. In a world where
everything seems uncertain, implied options volatility is plumbing record lows!
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UPDATE
We have made relatively few changes to our portfolio over the last few weeks. Our exposures both in fixed income
and in Japan have come down considerably because our long options positions have lost delta. Our gold and silver
options exposures have increased substantially as the metals rise, and we have actually continued to add to our
positions both in gold stocks and in the metals. We reduced our credit exposure a little in response to the recent
desperate “dash for trash” and are looking to reload on our short exposure. While the last several weeks have been
unpleasant to say the least, we remain heartened by the fact that fundamentals continue to develop along the lines
that we had anticipated. We thus view the recent market reversals as providing an excellent opportunity to add to
our positions. The adjustment to reality which we believe will soon follow should be brutal to say the least.
Market outlook and portfolio strategy
The aggressively easy monetary policies that have been adopted globally since 2009 have resulted in the world’s
being awash in liquidity. Much of this liquidity has flowed into markets and particularly into equity and credit
markets. Investors believe that a key tenet of central banking today is to keep markets aloft and prevent large
corrections or credit accidents. Participants remain confident that fundamentals will eventually catch up to
market valuations even though they have been consistently wrong on this for more than five years. Yet, there is
little risk or opportunity cost to waiting because the authorities remain ready to support markets, while keeping
rates on safer investments such as cash or short-term bonds close to zero. So far, fundamentals have not mattered
– only central bank policies have.
The recent economic data paint an unpleasant picture. Rather than improving as participants expected, global
growth appears to be stalling or turning down. Even optimistic observers are getting increasingly uncertain
about economic direction. Seasoned equity and credit analysts have started to caution about lofty valuations. Yet,
investors remain unfazed and retain their faith in their policymakers. Thus, the gap between market valuations
and fundamentals has rarely been as wide as it is today.
We consider below why aggressive monetary policies are no longer working and then turn to what we can expect
policymakers to do next. Finally we look at how we can profit from this extraordinarily difficult environment.
1. Monetary policy hoist with its own petard
Since 2009, we have been in a world where monetary policy has been very accommodative everywhere. In fact,
ultra-low interest rates along with QE or fiat credit extension have been the measures of choice adopted by much
of the developed world and large developing nations such as China. Many of the growth issues that the world faces
today can be directly traced back to the effects of overly easy monetary policy.
The direct growth effects from monetary policy have largely come through increased investment, especially in
China which can reasonably be credited with being the locomotive for global growth since 2009. The overreliance on investment however, leads to problems of over-capacity. Also the inflationary effects of monetary policy
affect capital intensive manufacturing sectors differently from the services sectors leading to differing patterns of
inflation and employment. Taken together, these factors do not provide a stable foundation for continued growth
as we discuss below.
1.1 Excess capacity and weak growth
Easy monetary policy encourages increased investment. The purchase of additional capital stock by businesses
unambiguously benefits the manufacturers of the same. However, the effect of increased machinery usage by
firms is to reduce the number of workers needed for a given level of output. Unless the investing firms are able to
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UPDATE
sell more of their output without hurting their profitability they will tend to shed labour. As such, the employment
effects of increased investment are ambiguous. The firms that use the new capital equipment might actually fire
workers unless they increase output, while those that produce the equipment might employ more labor. Clearly,
what is true for a firm is also true for the industry at large. If all the firms in an industry invest, they could well create
excess capacity and impair their profitability for years. The future adjustments to bring the industry into balance
might actually cause employment to fall more than if the investment had never taken place.
Thus, increased investment does not always lead to a job creation boom except perhaps in the industries that are
directly making the capital equipment in question. A significant expansion in final demand is essential to boost
employment. Absent such demand, if investment is still undertaken, the result might be net job losses over time.
With these facts in mind, consider the monetary stimulus that has been tried globally since 2009. The stimulus has
been through QE and zero rates in the U.S., Europe and Japan, while it has occurred through fiat credit extension,
primarily to manufacturing in China. The effect of these policies has been to boost capital usage and capacity in
manufacturing to levels where demand just cannot keep up. Much of the unusable excess capacity created needs
to be shut down completely.
The Chinese investment boom has directly led to job losses in manufacturing in the developed world. The creation
of new capacity in China and the resultant price competition and deflation unleashed, meant an inexorable
exodus away from the higher-wage developed countries to China or even lower cost regions. The primary
beneficiaries from easy monetary policies in the developed world have been the global companies which have
enjoyed record profitability as they shed high-cost labor and invested in lower cost overseas manufacturing. By
aggressively subsidizing such action with their policies, the developed nations’ central banks contributed directly to
manufacturing job losses in their countries.
1.2 Inflation targeting as a route to impoverishment
The loss in manufacturing jobs in the developed world and the existence of excess capacity in China are both
deflationary forces which are being exacerbated by the move to keep rates low and spur even more investment.
The excess capacity is almost entirely manifested in the low prices of tradable goods. Unfortunately, any attempt
to keep inflation at close to 2% (the oft-desired central bank target) requires an increase in the prices of services
(non-tradables) which are set locally. There is admittedly little logic to this approach because there is no reason why
haircuts should be made more expensive because the cost of televisions has fallen. This has nevertheless been the
policy of choice among our intelligentsia.
The most direct way to drive up services prices would be to boost incomes, especially among the lower income
groups. This would ideally be done with explicit fiscal measures such as tax breaks, subsidies and the like that
would work directly to increase employment. Virtually no country since 2009 has adopted such measures because
their fiscal situations were already quite precarious. The preferred approach has been to boost investment with
low interest rates (which means more investment for China) or to increase asset prices and hope that asset holders
consume out of their new-found wealth. Unfortunately, a side effect of easy credit has also been an explosion in
speculative financial engineering. Companies have used the cheap money on offer to engage in buyouts and other
debt-financed asset purchases, increasing their scale and pricing power in the process. Whenever possible, they
have also raised prices.
There is no doubt that the easy monetary policies since 2009 have worked to create service sector inflation. In the
U.S. for example, the costs for medical care and education, both decidedly local activities, have skyrocketed in
the last few years at rates more than double those of headline inflation. Rents have also risen at rates much above
inflation in the major cities even though first-time homeowners make up the smallest fraction of new home buyers
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UPDATE
in generations. In China, the inflation in food prices and real estate are largely the handiwork of the government’s
monetary policies. In Europe, despite high unemployment and weak demand, services prices have still not declined
to levels suggested by the high region-wide unemployment and lack of demand.
While the service sectors which have been seeing price increases have been steady job creators for the last several
years, especially in the U.S., the jobs are typically lower-paying with little or no benefits. Low interest rates do not
directly help to boost wages in the service sector since it is not as capital intensive as manufacturing and does not
see the returns to scale from capital deepening. Even worse, the rise in service sector prices has meant that the
costs of most essentials like medical care and education have increased, even as those for discretionary items such
as televisions have plummeted. With virtually stagnant inflation-adjusted incomes in the U.S. and other developed
nations since 2000, one could argue that the average worker is actually much worse off today. These are not the
conditions that foretell a durable consumer-led recovery.
The relative impoverishment of the average developed country household over the last decade or more has meant
an increase in the level of long-term government dependence. Thus, the boom in U.S. higher education has arisen
from a virtual explosion of student loans, much of which are government sponsored. The dramatic increase in
medical expenditures has been a direct consequence of Obamacare which once again is government largesse and
intervention at work. Again, European unemployment has resulted in an increased reliance on government social
safety nets and stubbornly high fiscal deficits.
1.3 The dismal report card
The aggressive monetary policies globally since 2009 have, if anything, created even bigger imbalances than existed
in 2006 leading up to the crisis of 2007-2008. Far from having a durable backdrop for global growth, what we have
are consumers who are facing flat incomes, rising prices for necessities and little hope for the future.
There is a mountain of evidence as to the ineffectiveness of the monetary policies of the last few years. Consider
the following:
1.Growth is slower so far this year than even in 2015 which was already the year of weakest global growth
since 2008.
2.Deflationary forces are everywhere. Thus, headline inflation in the Eurozone is stubbornly low despite record
easing with QE and negative rates. Japan is showing much weaker inflation despite its own QE.
3.Unemployment, especially among the less-skilled cohorts, is at high levels. Youth unemployment in the
Eurozone remains at record levels as does overall unemployment. In the U.S., the percentage of discouraged
workers in the labour force is close to cycle highs, even as the participation rate is plumbing multi-decade lows.
4.Manufacturing jobs continue to be lost from the developed world to countries such as China. The only bright
spots of recent years which were in the commodity-producing industries are now also suffering with the collapse
in commodity prices over the last year.
5.In the face of weak inflation or deflation everywhere, medical costs, rents and education costs are rising at
annual rates of 3.6%, 3.7% and 3.8% respectively. These are astonishing figures considering that they did not
rise as much in prior booms! This in turn has meant a dramatic increase in the usage of student loans, food
stamps, Medicaid and other such government supports.
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UPDATE
6)The wealth distribution has been skewed considerably over the last few years. The last time we had such a
global divergence between the haves and the have-nots was in the late 1920s. We have very likely exceeded
even those levels today
2. Policy choices
Faced with the above reality, our policymakers now have three choices:
2.1 Business as usual
The preferred alternative for our policymakers would be to continue with the existing measures with the narrative
that a durable recovery is just around the corner. This will mean maintaining the current policies of QE, negative
interest rates or fiat credit of the last several years and possibly extending and/or expanding these measures as
needed to deal with market exigencies. Most market participants clearly favour such measures if only because the
perception is that there is no alternative.
Several factors have made a continuation of the status quo much more problematic:
1.The political support for such policies is waning. The wealth re-distribution engendered by easy monetary
policy has done little to improve the lot of the average citizen of the developed world and he is reflecting his
discontent at the polling booth. Witness thus, that the fringe candidates and parties of a few years ago have
all become mainstream. Most of the newly favoured candidates are promising radical shifts in policy which,
even if they do not affect the central banks directly, might make it impossible for them to continue with their
current measures.
2.There are technical limits to how much more aggressive monetary policy can be. Rates in much of Europe
and in Japan are already negative, although not for all classes of retail deposits. Any attempt to drive rates
much more negative will be correctly viewed as a tax imposed by the unelected monetary rather than fiscal
authorities. This could result in an exodus of cash from the banking system leading to major systemic problems.
3.Even with more aggressive monetary policy, it is not clear that the real economy will benefit much. Declining
profitability, if not outright corporate distress in countries like China, means that new lending, if any, will be
to companies which will almost certainly default. Given the high percentage of existing bad loans in China
and Europe, the banks are in no position to absorb large new losses. As such, the transmission mechanism for
monetary policy is completely broken.
4.More sensible policymakers have started to acknowledge that their policies are affecting markets more than
the real economy. Even previously dovish central bankers, especially in the Fed, now concede that they
may have already done too much. The Chinese central bank appears dead against more easing, even if it is
periodically forced into credit creation to prevent a crisis.
While more QE is certainly feasible and more negative rates can perhaps still be implemented, most policymakers
are recognizing that they are running into the limits of monetary policy. A last hurrah of monetary madness is thus
certainly possible, but unlikely since there is little reason to believe it will work this time
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2.2 Structural reform
UPDATE
Most policymakers pay lip service to the concept of structural reform to create a sound foundation for sustainable
growth. Yet, few of them detail the actual reforms that need to be undertaken to address the gross distortions
created by a decade or more of hyper-easy monetary policy. True structural reform should involve numerous global
adjustments and a willingness to share pain. Specifically:
•China would pull back on credit extension and close down excess capacity. The country would re-orient
growth away from investment to consumption, a process that is long overdue.
•Europe would allow countries like Greece and Portugal to default on debt, reducing it to more sustainable
levels. Wealthier countries like Italy which have substantial debt would have to come up with a plan to tax
wealth and reduce debt.
•Japan would take steps to get its fiscal house in order with other nations accepting a depreciation of the yen.
•The U.S., Eurozone and Japan would announce strict limits on bailouts and other market interventions. Large
corporations and banks can and should be allowed to fail so that the markets are no longer viewed as casinos
where central banks are the ultimate patsies.
•Fiscal policy would be used sensibly to partially mitigate the pain engendered by the above changes.
When we contemplate the above policies, we realize that they are all but impossible with the current political
setup. We could have reasonably engaged in such reform in the crisis years of 2008-2009, but that time is long past
and the problems today are considerably bigger than they were then. Even worse, we have almost no policy levers
left to deal with the issues that our responses have created. Any structural reform will mean enormous pain and,
given uncertain global politics, will likely induce extreme political turmoil.
2.3 Radical measures – functional finance
While we may be devoid of conventional policies to address our global problems, there are many radical measures that
can and almost certainly will be tried soon. The most obvious policy would be a coordinated global fiscal expansion
where most governments dramatically increase their expenditure by 10% of GDP or more. An impediment to such
an approach has been the fact that virtually all the major developed nations in the world operate with nose-bleed
levels of debt. Any fiscal expansion of this magnitude will mean a huge increase in debt ratios. Yet if the debt is
financed by the central bank either directly or indirectly by QE, and not by the public, it may not be “true” debt.
So, is central-bank-monetized fiscal expansion a panacea or will it trigger a global crisis?
There is a school of thought in economics that argues that government debt should not matter at all. The most
elegant formulation of this position was provided by economist Abba Lerner in a seminal article, Functional
Finance and the Federal Debt published in 1943, in which he expounded his theory of functional finance. At its
core, functional finance simply says that the government should always be the swing spender in the economy to
ensure that all the goods and services the nation can potentially produce without inflation are in fact purchased.
Thus, if the economy is able to produce $100 of output without pricing pressures and the private sector has the
resources to purchase only $80 worth, the government should step in to purchase (either directly or with tax credits
or grants to the public) the remaining $20. It can finance its purchase by issuing debt or printing money, but the
mechanism of how the government achieves this goal does not matter – only the results do. The role of taxation
in this approach is to ensure that private demand never exceeds the economy’s ability to produce without creating
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inflation. Thus, when private demand is $120 say but $100 is all the output the economy can produce without
inflation, the government should tax the public $20 and save the same, thus reducing total spending. The core
of Lerner’s idea is that the government should focus on the functions it performs by taxation and spending rather
than the instruments it uses to perform them, hence the term functional finance. With functional finance the
amount of government debt simply does not matter.
There are three main problems with functional finance. The first is that it can be viewed as a form of central
planning. The government becomes the primary arbiter of how the economy functions and its swing consumer.
It has to determine the non-inflationary, full-employment level of output and act to achieve the same. Second,
there is no way to enforce discipline on the government. While it is supposed to aim for low or stable inflation,
there is no guarantee that it will do so today or in the future, and there is no agency that could force it to do so.
Finally, functional finance may prove incompatible with an open capital account and free exchange rates. The
approach completely removes the separation between monetary and fiscal policy since the central bank is now
merely an arm of the government ready to do its bidding. If the country’s citizens lost faith in their government’s
policies, they might convert their cash into foreign currencies leading to a currency collapse and rampant inflation,
especially when the country has a big trade deficit. This might create a vicious cycle of domestic taxation and force
abandonment of the whole approach.
The idea of functional finance has resurfaced of late, although it is not referred to as such. There is an undeniable
appeal to this theory today because many developing nations operate with debt that is un-repayable under most
scenarios. Also, in the 1940s most governments did not have the unfettered ability to print money. The U.S. dollar
then was backed by gold and the loss of public confidence in the currency was a very real risk. Today’s central
banks have no such constraints since most of the developed world operates with fiat currency that has no gold or
other backing.
Japan is an ideal candidate for functional finance measures and one could reasonably argue that it has been
engaging in this for the last two decades, albeit not to the degree necessary. The build-up of Japanese debt over
the period while significant is not ultimately alarming from the Lerner perspective. A radical policy change with
dramatically increased fiscal expenditure is entirely possible in Japan and could even be successful. Even better,
if the policy created inflationary alarm and a currency decline, the process might be self-limiting if only because
of the nation’s trade prowess. Recent economic data from Japan suggest that the country’s growth is slipping. The
Bank of Japan appears unwilling to do more QE or take rates more negative, possibly because it may feel that it has
already done enough. Rumors have also recently surfaced about high-level discussions for radical fiscal expansion.
We believe that the odds of a big policy shift in Japan are rising.
The conditions in Japan are also largely true for China. The country operates with significant net foreign assets
and a large trade surplus. As such, a dramatic fiscal expansion is possible and in fact desirable in China, especially
if it is financed by the printing of new money. However, the situation in China does not mirror that in Japan
on the inflation front. The country is likely grappling with significant inflationary pressures in food, shelter and
other necessities and so the ideas of functional finance are not directly applicable here. What China needs is
a conventional adjustment with higher rates, a dramatic cut back in investment and fiscal stimulus to support
consumption in the face of corporate distress. A maxi-devaluation of its currency would also help in this context
The Eurozone can also consider radical fiscal policy for the simple reason that it does not face issues of a trade
deficit or significant externally held debt. However, Europe lacks a region-wide government which has the
authority to engage in the types of expenditures contemplated in functional finance. The problem in Europe has
been and continues to be the lack of a unified political vision. Without such a vision it is impossible to settle on
an ideal mix of policies, let alone build consensus around one.
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Finally, the U.S. and the U.K. are not good candidates for functional finance. Both nations have open capital
accounts and run huge trade deficits, while also being large net external debtors. Yet, in both nations there has
been considerable discussion about these ideas. Many U.S. politicians and particularly former Texas Congressman
Ron Paul have suggested the cancellation of all Treasuries held by the Fed on the grounds that it is no longer
debt. In fairness, Paul also advocates significant limitations on what the Fed is allowed to do in the future. Many
British policymakers and even some central banking officials have quietly advocated cancelling all or part of the
Gilts (bonds) held by the Bank of England. We believe that if either the U.K. or the U.S. go along the functional
finance path, they risk igniting a serious global currency crisis.
3. Opportunities
We believe that the odds for radical policy are steadily increasing. As we see it now, there is a less than 5% chance
of real structural reform in the near term, about a 30% chance for radical policy and a 65% chance of continuing
with the status quo. The longer the status quo fails to deliver, the higher will be the odds of radical policy. We
expect the global economy to weaken much further this year and as such believe that the odds of radical policy
will increase to 65% or more within the next six months.
The best investment ideas given the difficult backdrop and the prospects for radical policy changes are as below:
1)Buy gold and other precious metals and their associated mining stocks.
2)
Buy bonds/swaps of countries that still have high rates on offer and that are in broad internal and
external balance.
3)Short low-quality credit while buying higher quality credit.
4)Buy Japanese equities, and especially banks.
5)Go long the currencies of select developing countries.
The markets are becoming increasingly volatile and liquidity in the financial system continues to dwindle despite
ample monetary emissions by the central banks. Even worse, the economic environment appears to have taken a
decisive turn for the worse. We had anticipated much of what has transpired this year and had positioned for the same
with large options holdings. Thanks to the vagaries of dealer pricing and illiquidity, implied volatilities are dropping
to virtually all time lows even as actual macro uncertainty is reaching multi-year highs. The stage is set for an epic
market adjustment followed likely by a period of prolonged economic and market turmoil. Fortunately, we still retain
most of our risk exposure, even if it is now being priced more cheaply than we could have ever anticipated.
4. Conclusion
What a difference a few weeks make! In mid February, the markets were skittish, credit spreads were starting to
blow out, equities were weak and volatility was high. Since early March, the economic fundamentals have not
changed much, but we have nevertheless seen a huge equity and credit rally with a volatility collapse, along with
a big back up in sovereign bond and swap yields. Participants are aggressively trading the markets without paying
attention to fundamentals. Much like the last few years, market participants prefer to bask in the fantasy rather
than acknowledge the reality. Reality has started to knock, and with it we believe opportunity has started to knock
for our portfolio.
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Performance summary at April 30, 2016
Trident Global Opportunities Class A
1 Mth.
3 Mth.
6 Mth.
1 Yr.
2 Yr.
3 Yr.
5 Yr.
10 Yr.
YTD
Since Inception
(Feb. ‘01)
-1.4% -5.7% -5.0% -8.3%3.3%-3.3% 0.4% 8.3% -4.1%
7.3%
CI Global Opportunities Fund Class A
1 Mth.
3 Mth.
6 Mth.
1 Yr.
3 Yr.
5 Yr.
10 Yr.
15 Yr. YTD
Since Inception
(Mar. ‘95)
-5.8%
-5.1%
-8.4%
3.6%
0.1%
8.8%
5.8%
-4.2%
13.6%
UPDATE
-1.4%
Some of the statements contained herein including, without limitation, financial and business prospects and financial outlook may be forwardlooking statements which reflect management’s expectations regarding future plans and intentions, growth, results of operations, performance
and business prospects and opportunities. Words such as “may,” “will,” “should,” “could,” “anticipate,” “believe,” “expect,” “intend,”
“plan,” “potential,” “continue” and similar expressions have been used to identify these forward-looking statements. These statements reflect
management’s current beliefs and are based on information currently available to management. Forward-looking statements involve significant
risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking
statements including, but not limited to, changes in general economic and market conditions and other risk factors. Although the forward-looking
statements contained herein are based on what management believes to be reasonable assumptions, we cannot assure that actual results will
be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forwardlooking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new events or circumstances.
Nothing herein should be read to constitute an offer or solicitation by Trident Investment Management, LLC or CI Investments Inc. to provide
investment advisory services to any person or entity. This is not to be construed as a public offering of securities in any jurisdiction of Canada.
The offering of units of the Trident Global Opportunities Fund are made pursuant to the Offering Memorandum only to those investors in
jurisdictions of Canada who meet certain eligibility requirements. Important information about the Funds, including a statement of the Fund’s
fundamental investment objective, is contained in the Offering Memorandum. Obtain a copy of the Offering Memorandum and read it carefully
before making an investment decision. These Funds are for accredited investors only. ®CI Investments and the CI Investments design are
registered trademarks of CI Investments Inc.
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