Opportunities Funds Commentary

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Trident Investment Management, LLC
Opportunities Funds Commentary
UPDATE
October 31, 2014
Performance discussion
There was significant volatility in the third quarter of 2014, but despite some hiccups most equity markets made
new highs. The S&P 500, MSCI Europe and Nikkei indexes were up 0.6%, 0.4% and 6.7% respectively. Fixedincome markets also rallied on poor growth data with the German 10-year bond (the Bund) rallying 0.30% to
end at 0.95% for the quarter. Most commodities plunged over the quarter to recent lows. Gold fell 9.0% to finish
at $1208 per ounce, West Texas Intermediate (WTI) crude fell 13.5% to end at $91.16/barrel and most other
industrial commodities declined as well. The U.S. dollar strengthened significantly with the Trade Weight Dollar
Index appreciating 7.0%. The yen was the largest contributor to this strength, depreciating 8.2% against the U.S.
dollar. Despite growth weakness, credit spreads continued their tightening and remained close to levels that we
last saw in 2007.
We profited over all of the months in the third quarter, continuing our slow comeback from the losses of the first
quarter. Our long fixed-income positions, especially in South Korea and Europe helped considerably, as did our
long positions in Japanese equities. Our shorts in credit hurt us, as did some of our short hedges in U.S. equities.
We have significantly increased our equity exposure to Japan as well as our short exposure to the yen. We have
also added to our long positions in fixed income. Finally, we have recently built up our short positions in credit
given the current euphoria especially in the junk bond market. We believe that our portfolio is well positioned to
profit from the extremely unpleasant global environment that is suggested by data and being completely ignored
by the markets.
Market outlook and portfolio strategy
The U.S. Federal Reserve finally ended its Quantitative Easing (QE) program this month and suggested that
interest rates will be kept low until the data suggest a durable recovery. Market participants generally consider the
multiple rounds of QE conducted by the Fed since 2009 a resounding success. U.S. unemployment has dropped
from a pre-QE high of about 10% to under 6% today, growth has averaged about 2% since QE began and the U.S.
economy is expected to accelerate significantly from current levels.
For all the supposed success of QE, the evidence is not as rosy as might appear at first blush. In particular, the
U.S. recovery is one of the weakest on record and has come largely at the expense of increased deficit spending.
The decline in unemployment, while sizeable, has occurred primarily because of a big decline in the labour force
participation rate – absent this, the unemployment rate would be still in excess of 8%. Moreover, the supposed
labour market recovery has not improved wages or job prospects for the vast majority of U.S. labourers who have
nevertheless had to contend with much higher prices for food, energy, education and other necessities. And while
it is possible that the U.S. economy could accelerate from current levels, it is just as likely to continue its sub-par
trajectory or even worse, slow down considerably.
Despite the mixed verdict on U.S. QE, its proponents have argued that the policy staved off much more unpleasant
economic outcomes. Since these less benign outcomes are never fully analyzed, the effectiveness of QE cannot
be refuted and becomes an article of faith. The fact that the U.S. appears to be among the healthier economies in
the developed world is added impetus for the QE camp, notwithstanding the fact that other regions face different
challenges that QE cannot possibly help.
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UPDATE
The costs of QE have been considerable even if markets do not believe that to be the case. In particular, QE has
engineered a transfer of wealth from lower income savers to the ultra-rich that have access to significant borrowing
capacity. As such, the non-ultra-rich (the so called 99%) have not seen much improvement in their incomes or
living standards. So, while QE may have increased short-term demand by driving up asset prices, it has done
little to create a longer-term foundation for sustainable growth. Also, by manipulating the market price of risk
downwards, QE has encouraged continued risk-taking and speculation in an environment where such activity
does little to improve the structural framework for growth. In particular, QE has allowed excess capacity to remain
in numerous industries thanks to an abundance of cheap credit and has thus precluded the cathartic industrial
adjustments that might otherwise have occurred.
The Fed’s decision to end QE on schedule reflects its belief that the program has done as much as can reasonably
be expected. Recent pronouncements from Fed officials suggest that a new round of QE is unlikely to happen,
unless a major economic deceleration occurs.
Also, Fed officials have publicly acknowledged that the true success of QE cannot really be measured until
the entire program has ended and the Fed’s huge balance sheet expansion has been reversed. Thus, the grand
experiment with QE might have ended in the U.S., but it is too early to declare success.
The supposed success of QE in the U.S. has prompted market participants to clamor for similar medicine in other
becalmed economies in the world. In particular, there is considerable hope that the European Central Bank will
launch a QE program even though its charter effectively prohibits monetary financing of Eurozone member
governments. The United Kingdom recently ended its own QE program. And Japan launched a QE program of
its own in April 2013 that it boosted significantly in October 2014. The results in the United Kingdom, like in the
United States, were mixed at best.
While we are not generally proponents of QE, we believe that it is actually appropriate for Japan given its unique
circumstances. We will consider the Bank of Japan’s (BOJ’s) QE policy in greater detail in this letter and discuss
its implications for global markets, especially given the Fed’s recent ending of its QE.
1. The challenging situation in Japan
Since the bursting of Japan’s real estate bubble in 1991, the country’s economic situation has been difficult to say
the least. The three major problems the nation faces are demographics, debt and deflation.
Japan has an ugly demographic profile with a rapidly aging society that also has among the highest life expectancies
in the world. The country also has a falling birth rate and almost no net immigration. As such, its labour force has
barely increased since 1991. Even worse, the number of workers aged 15-44 has actually decreased substantially
so that the benefits for retirees are being paid by a shrinking pool of younger workers.
The rising benefit payments to the older groups in the population have been met over the last two decades with
government deficit spending. As a consequence, Japan now has a net sovereign debt ratio of about 140% of GDP
(as compared to under 20% in 1991) and gross debt at over 220%, a level surpassed now only by bankrupt Greece.
The ongoing fiscal deficit has hovered for the last few years at about 8%, a staggering level given the country’s
already high indebtedness.
Japan’s debt problem was compounded by the fact that for several years post the real estate collapse, the nation
operated with a financial system and a corporate sector in distress as well as a relentlessly appreciating currency.
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The former meant a lack of domestic engines for strong growth while the latter meant that exports could not power
growth either. The economic malaise resulted in a steady fall in prices over the last several years to the point where
a deflationary mindset is well entrenched among the public.
UPDATE
All said however, there are some silver linings to Japan’s bleak situation. For starters, despite the high levels of
sovereign debt, Japan’s domestic savers continue to believe in the nation’s solvency. About 95% of Japanese debt is
held by domestic savers. Despite its weak growth and appreciating currency over the last two decades, the nation
has managed to maintain a current account in surplus and until recently, even a trade surplus. In other words,
despite its problems, Japan has not racked up debt with foreigners. Finally, the country has sizeable foreign assets
and currency reserves and its corporate sector has significant overseas operations that are not fully reflected in
the nation’s financial accounts. Thus, while Japan may have its economic problems, it is not ultimately reliant
on the vagaries of foreign investment inflows. By any objective measure, it is a very rich nation that has to deal
with a number of unique domestic issues relating to inter-generational wealth transfers caused by unpleasant
demographics which have been exacerbated by the bursting of its real-estate bubble.
2. Potential solutions for Japan
There are four possible solutions (not all mutually exclusive) that Japan can adopt to deal with its malaise:
2.1 Structural reform
Given Japan’s demographic challenges, the country desperately needs to increase the output generated by its labour
force. To achieve this, the country could introduce measures to boost the size of its labour force and especially its
percentage of younger workers. It could also create mechanisms to significantly boost labour productivity so that
more output can be generated by the existing labour force. Were it able to achieve this, the higher output that
might accrue from the pool of Japanese labour could be used to fund the country’s growing entitlement payments
and gradually work down its large stock of debt.
Creating a larger labour force in Japan’s case will most likely involve measures to increase the participation rate
of women. Unfortunately, with more working women, there is likely to be a decline in the country’s birth rate,
possibly exacerbating its demographic problem. The simple expedient of allowing more immigration, which is one
adopted by many Western countries, is clearly possible in theory, but does not fit well with Japan’s relatively insular
society.
Japan’s labour productivity can likely be improved with a combination of greater technology use and/or a
reduction of structural barriers to competition and entrepreneurship. Despite Japan’s prowess in manufacturing,
its service sector’s use of technology lags far behind that in other developed nations, suggesting that a considerable
improvement in this sector might be possible. Again, a reduction in the many institutional barriers that smaller
Japanese companies face might help ignite more risk-taking and new business ventures possibly boosting overall
growth over the medium term.
The problem with structural reforms is that they are difficult to implement politically and they take time to work
their magic. With the Japanese economy mired in a low growth, deflationary phase for the last two decades,
structural reform is a longer-term requirement for the economy but is unlikely to prove a short-term palliative.
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2.2 Wealth redistribution
UPDATE
Since 1991, Japan’s government has operated with an implicit social bargain with the public. The government has
employed deficit finance aggressively to keep unemployment low and maintain social cohesion, but has racked up
astronomical levels of debt in the process. Since the debt is virtually all held by the Japanese public, the government
can effect a largely domestic wealth transfer either by imposing a wealth tax or one-time debt haircut to get its fiscal
house in order. Such a redistribution would reduce the wealth of the bondholders and/or wealthy while making the
government, and the future beneficiaries of its spending, proportionately better off.
Forced, explicit wealth re-distributions are rarely politically palatable either to the wealthy or the political elites.
As such, the government can achieve the same result, albeit more subtly, with rampant inflation. By maintaining
interest rates much lower than inflation the government can reduce real returns to debt holders while its nominal tax
collections rise due to rising price levels. If such an inflation tax can be maintained over time, and the government
can keep its nominal spending at or below the rate of inflation, there will be a virtuous cycle in the government
finances with a real reduction in the debt burden. The risk to this approach of course it that the bondholders could
stampede out of Japanese Government Bonds (JGBs) into other investments that give better protection against
inflation, possibly igniting a bond market and/or currency crisis.
The inflationary approach has been tried over time in much of Latin America. While it has typically worked to
reduce government debt levels when first tried, the inevitable result has been a descent into hyperinflation. Yet,
despite these risks, such a policy is perhaps more justifiable in Japan if only because the government bondholders
have benefited disproportionately from deflation over the last several years. Given the country’s huge foreign asset
holdings, any currency decline will mean an improvement in the government’s net asset position, improving its
overall solvency. A little inflation (2-5%) in Japan thus might be a very good thing, as long as it can be controlled.
2.3 Beggar-thy-neighbor
The Japanese can improve their government’s debt position also by forcing a large devaluation of their currency. This
policy will make the entire country poorer in the short-term when measured in terms of international purchasing
power. Yet it might help boost exports, improve growth and feed in to higher inflation as well. Importantly, such a
measure would boost the government’s solvency since it would increase the value of the government’s foreign assets
relative to its domestic liabilities while also increasing tax collection.
The problem with the devaluation approach is that it might help Japan but does so at the expense of growth in its
trading partners. Given the already weak growth in the world, such an action by Japan could unleash a wave of
global deflation that might in turn provoke retaliatory trade action by other countries. So, while such a policy might
work, it is unlikely to be sustainable for long.
2.4 Global investor
Japan can boost its returns to investment by simply becoming a more aggressive global investor with its wealth. By
seeking out international investments that might generate higher returns than domestic Japanese alternatives, the
country can potentially earn the high investment returns necessary for funding its deficits. This is tantamount to a
wealthy individual who lives off his investment income rather than his work.
This approach has much to recommend it. As a wealthy country, Japan has capital to invest even as many poorer
countries have need for investment. Operating as a government investor, Japan might be able to tap into specific
opportunities with many partner governments that are not easily available to the private sector. Moreover, the
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UPDATE
country would be a desirable investment partner to most developing nations since its return needs are predictable
and its horizon is considerably longer than most private sector entities. As such, the Japanese might prove a positive
force for improving conditions in countries that solicit such investment. Finally, such a policy does not have any
explicit trade implications and is distinct from beggar-thy-neighbor measures.
The primary disadvantage of this approach is that its success is dependent largely, if not entirely, on the quality of
investments selected overseas by Japan. Risks include overseas defaults, currency devaluations and the like, all of
which the government might not be able to fully control. Also, the scale of investment by Japan might result in
substantial questions of investment control, putting the country into potential conflict with foreign governments
and/or corporations in its investment destinations.
3. Policies adopted by Japan
When Shinzo Abe was re-elected Prime Minister of Japan in December 2012, he introduced a series of economic
measures that have collectively been called Abenomics. The three “arrows” of Abenomics were first robust fiscal
stimulus, second dramatic monetary easing and third structural reform to spur private sector growth and investment.
Among the four approaches we discussed above, the structural reform is perhaps the most important in terms of
addressing Japan’s domestic malaise. Abe’s third arrow clearly and explicitly acknowledges the need for such reform.
Most observers have so far been less than thrilled with the implementation of this arrow by the Abe government.
Yet, what is perhaps remarkable is that Japanese policymakers have been able to arrive at a virtual laundry list of
structural reforms that collectively address many of the issues that face the nation. Even if the implementation so
far has been non-existent, at least there is an unusual consensus on what needs to be done.
When it comes to Abe’s second arrow, there is no doubt that the implementation has been stunningly aggressive.
The Bank of Japan launched a colossal QE in April 2013 and in late October 2014 further expanded the QE
program. The QE program arguably has significant benefits for Japan since in one fell swoop it implements all of
the non-structural reform policies that we discussed above. In fact, Japan is perhaps the only country today where
aggressive QE is justifiable since its risks are far outweighed by its potential benefits.
3.1 The case for QE
The effects of QE are unquestionably positive for Japan at least in the near term, even if its distributional effects
are not. In particular:
-By buying bonds and growing the monetary base rapidly, the BOJ will ultimately force the yen lower.
This feeds in to greater levels of imported inflation thanks to Japan’s commodity imports as well as potentially
better growth from the export channel.
-With rates on longer-term government bonds below the rate of prevailing inflation and the currency on a
weakening trajectory, overseas investments offer much better returns. By guaranteeing the scale of its actions,
the BOJ has removed what was the biggest risk to overseas investment for the Japanese which was a steadily
appreciating yen.
-With rising inflation expectations, the primary beneficiary will be the government of Japan whose huge
debt load might become more manageable, especially if and when tax collections increase due to a higher
nominal price level and GDP. While the redistribution is unpleasant to holders of government bonds, they can
certainly sell their holdings today to the BOJ and move to more profitable investments – this is in fact what the
government wants.
2014
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UPDATE
The case for Japanese QE is much more compelling than it was in the U.S. In particular, the U.S. being the holder
of the reserve currency did not manage to weaken its currency as quickly as Japan has and hence it could not
benefit in terms of boosting domestic prices or exports. As a net debtor globally with ongoing foreign funding needs,
the U.S. could not have easily controlled an exodus from its bonds by foreign holders. And finally, the 2007-2008
crisis in the U.S. resulted from too much risk-taking in the private sector – a situation that is the opposite of what
prevails in Japan today. Forcing an already bankrupt private sector into even more leverage is a herculean task in
comparison to getting the Japanese private sector to start borrowing again after a two-decade hiatus.
Many observers today are clamoring for the European Central Bank (ECB) to also start its own QE. Yet, the logic for
European QE is not as compelling as that for Japan. In particular, the Eurozone is made of a multitude of different
nations each with its own national identity. The ECB was created with its considerably more limited mandate
primarily to ensure that it did not engage in wealth re-distribution across the Eurozone by financing profligate
governments – such an operation was left exclusively to the purview of the national fiscal authorities. The BOJ
operates under no such constraint. Again, a large devaluation of the Euro will benefit Germany disproportionately
since it is both the largest exporter and the largest foreign asset holder in the region. Yet, if Germany benefits the
rest of Europe will not, unless the former is willing to transfer its gains to other member nations. Put differently, the
Eurozone problems are inherently political and distributional in nature – centralized QE from the ECB will not
help fix these issues. The problems in Japan are inherently different and can be addressed at least partially with QE.
There are, however, significant risks to QE in Japan that are easy to understand. When a highly indebted government
is given free rein to spend more by a compliant central bank that is willing to monetize all its debt, the result is
inevitably hyperinflation and a currency collapse. The risks rise dramatically if the government does not use the
breathing room provided by QE to put its fiscal house in order (at least on an inflation-adjusted basis) and QE is
continued once the public actually expects inflation to pick up. There are equally big risks to the global economy
from Japanese QE. Given the country’s significant manufacturing prowess and capacity, any risk of a currency
collapse in Japan will create a huge trade problem for its competitors such as Germany and South Korea and more
generally could result in a global recession.
3.2 The BOJ’s QE program
The BOJ’s QE program is colossal by any metric we might use. In April 2013, the institution committed to purchase
60-70 trillion yen (or about U.S.$600 -$700 billion) of government bonds and other financial assets per year,
representing an aggregate purchase for the year of over 13% of GDP. The U.S.’ program in contrast was paltry at
only 8.3% of U.S. GDP when launched in 2009. The stated objective of the BOJ was to boost inflation to 2% and
break the deflationary mindset that had become prevalent over the last several years. Japanese authorities did not
discuss weakening the yen, though they were certainly delighted by the considerable weakening of the currency
that has since resulted.
In a remarkable turn of events in late October 2014, the BOJ stepped up its already huge QE effort, boosting its
asset purchases from its previous level to 80 trillion yen per year in the aggregate, which in the U.S. context would
be tantamount to the Fed’s purchasing $204 billion per month in securities. The BOJ’s action came on the heels
of Japanese economic data that had already started to improve post the consumption-tax hike that took effect in
April 2014. Reports from BOJ insiders indicate that this action might have been taken as insurance against recent
commodity, and especially energy, price declines that might have worked to push inflation down again.
What was more unusual in the BOJ’s October policy action was that it was an aggressive action taken with a deeply
divided board. In particular, it appears that the nine-member governing Board of the BOJ was evenly split 4-4 and
that Governor Kuroda had to actually vote to push this policy through. Given the collegial nature of the BOJ and the
desire to have consensus on most, if not all actions, such a public split of Board opinion is virtually unprecedented.
2014
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No doubt the dissenting members were concerned about the very real risks of hyperinflation from Japan’s large QE,
especially given the inability of the government from 1991 to rein in runaway spending or implement structural
reform.
UPDATE
3.3 Asset mix changes
The same day as the BOJ announcement, the Government Pension Investment Fund (GPIF) of Japan, the pension
fund for the public sector employees of the country, cut its allocations to Japanese government bonds substantially
and raised its weightings of Japanese equities and international financial assets. The GPIF action is significant since
the institution is the largest of its kind in the world – most other smaller Japanese pension funds are likely to adopt
similar changes to their asset allocations as well. The GPIF action reflects the need for Japanese investors to move
away from JGBs and move to equities or international assets for future returns. This is exactly what the BOJ has
been encouraging with its QE especially with its implicit promise to keep the yen weak.
In addition to the above news, we have also had recent persistent rumors that suggest that the second hike in Japan’s
consumption tax may be delayed or cancelled entirely. Numerous newspaper stories suggest that Prime Minister
Abe, who is still extremely popular, might actually dissolve the Lower House of the Diet and call for a fresh election
if only to get more support for what could be a more radical fiscal and/or restructuring agenda. The latest economic
data lend further support to these speculations. Japanese GDP data for the third quarter of 2014 suggest that the
country has slipped back into recession creating an urgent need for radical, near-term fiscal action.
In sum, the recent news from Japan suggests that the country’s policymakers are close to going “all in” with their
economic experiment to remake the nation. For now, there is strong consensus among key policymakers about
the need to take decisive action and the types of actions to be taken. The policies implemented so far reinforce
each other and appear to have had some effect, though clearly not enough to lift the economy out of its doldrums.
Nevertheless, if the leadership continues to act decisively, especially where it comes to structural reform, there is a
high likelihood that their actions will prove successful in ending Japan’s malaise. The risks of policy failure are of
course very high, but then, so are the odds of success.
4. Investment opportunities
The Japanese policy mix presents some compelling global investment opportunities. In particular:
1) Japanese stocks are exceptionally undervalued and present huge upside.
The BOJ is buying up all the government debt and forcing its returns below the rate of inflation. Yet
dividend yields today are much higher than JGB yields, and stocks provide an automatic inflation hedge
to the extent that corporate profits go up with inflation. Even better, if the yen remains weak, Japanese
companies benefit from higher overseas asset valuations and profits as well. And to cap it all off, the BOJ
and official government funds are doing everything to actually encourage the move into greater risk-taking
and particularly stocks.
The opportunity in stocks is, if anything, understated when looked at in a global context. Compared to
Europe and the U.S., the Japanese financial institutions are today paragons of virtue. They have some of the
highest capital ratios in the world, and their assets are fairly valued given that they have been restructured
over the last two decades. They may face a tough environment for loan demand but that is true today to a
much greater degree in both the European Union and the United States where consumers are much more
leveraged. The same is true for most Japanese industrial companies which have so long laboured under
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the crushing burden of deflation but might finally see a happy combination of low borrowing rates, higher
inflation and a benign currency environment.
UPDATE
2)The yen should depreciate against the currencies of highly solvent countries like Norway, Sweden or
the better positioned nations of the developing world.
With its policies, Japan has effectively launched a covert currency war. Its actions should inevitably force a
depreciation of the yen against the rest of the world. Yet, neither Europe nor the U.S. can afford significantly
appreciating currencies. As such, we could potentially see retaliatory policies in these countries leading
to heightened exchange rate volatility. For many of the developing countries however, the declining
commodity prices and weaker yen and Euro will serve to brake high domestic inflation feeding potentially
into a more virtuous economic cycle.
3)Weak global growth will mean excellent upside in fixed-income investments in select countries
outside Japan.
Currency wars are not growth positive. The release of Japan’s excess capacity into the world will mean a
renewed bout of deflationary pressure, especially if exports emerge as the main engine for Japan’s recovery.
Fixed income in South Korea, which is already showing signs of weak growth, provides compelling
opportunity. The country is currently expected to keep rates stable possibly raising them over time.
However, significant won strength against the yen will likely induce Korean rate cuts if only to weaken the
won and keep exports stable contrary to markets’ expectations.
4)High risk assets outside Japan will face a more challenging environment. Small capitalization stocks
and junk credits in the developed world are likely to be particularly affected.
Weak growth, a currency war and shaky political and economic fundamentals at a time when U.S. QE has
ended are not harbingers for good risk-asset performance. What is good for Japan because of its domestic
policies will not translate into something good for the world.
5. Conclusion
The world has become even more complex in October. U.S./Russia political tensions, Middle Eastern
turmoil, European depression and a looming Chinese real-estate crash are all reasons enough to be
worried. The Fed also just ended its QE which has inevitably meant market turmoil. Japan has also added
a new wrinkle in the form of highly aggressive, Western-blessed monetary policy that may have sown the
seeds of a currency war. Yet, market participants have remained remarkably bullish with many equity
markets at all-time highs. In fact, markets outside Japan celebrated Japan’s recent QE expansion by rising
even more – the S&P 500 was actually up more than Japan in October. The wild party is in full swing,
but the punch bowl has already been taken away except in Japan where it just has been spiked afresh.
The party has moved elsewhere but market participants have yet to relocate to the changed venue.
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Performance Summary at October 31, 2014
Trident Global Opportunities Fund
1 Mth.
3 Mth.
6 Mth.
1 Yr.
2 Yr.
3 Yr.
5 Yr.
10 Yr.
YTD
Since Inception
(Feb. ‘01)
2.9%
5.7%
0.6%
-1.4%
-1.1%
-1.5%
10.1%
0.1%
8.1%
0.9%
CI Global Opportunities Fund
1 Mth.
3 Mth.
6 Mth.
1 Yr.
3 Yr.
5 Yr.
10 Yr.
15 Yr. YTD
Since Inception
(Mar. ‘95)
2.8%
5.6%
0.6%
-1.2%
-1.5%
10.6%
6.6%
0.2%
14.7%
0.9%
The indicated rates of return reflect changes to the net asset value of the Fund (the “Fund NAV”) since inception, include the effect of distributions,
are reported net of management fees and operating expenses but do not take into account issue expenses, sales, redemption, distribution or
optional charges or income taxes payable by any securityholder that would have reduced returns. The rates of return are not intended to reflect
future values or returns on investment in an investment fund. Investment funds are not guaranteed, their values change frequently and past
performance may not be repeated. Nothing herein should be read to constitute an offer or solicitation by Trident Investment Management, LLC
or its principal 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 or minimum purchase 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 sophisticated investors only. ®CI Investments and
the CI Investments design are registered trademarks of CI Investments Inc.
Forward-Looking Statements
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.
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