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Q2.17 Cidel Canadian Preferred Shares The Preferred Share pool is designed for investors pursuing a stable, tax-advantaged stream of dividend income. Investors benefit from our longstanding expertise, our active management of the portfolio, and our deep understanding of the complexities of the Canadian preferred share market. cidel.com The Process Overview The Investment is a diversified portfolio of quality Canadian preferred shares. The Objective is to provide enhanced yield while seeking to reduce the key risks inherent in the Canadian preferred share market. The Investment Philosophy is to use fundamental research to take advantage of mispriced securities and identify opportunities with the best risk-return profile. Market Commentary Fundamental Research. Using both equity and fixed income research to understand the characteristics of the issuer’s business operations, credit quality, and industry. Valuation. Performing financial analysis and examining the characteristics of the security to identify mispriced issues. Portfolio Construction. Diversifying holdings by industry exposure, sensitivity to economic factors, and type of preferred share. Over the second quarter of 2017, the Bank of Canada clearly signalled its intention to move to a tightening stance and around the world sentiment shifted to anticipate a broad shift to tighter monetary policy. The big banks continue to issue preferred shares, and we expect issuance from midstream issuers likely in the fall of 2017. Rate reset preferred shares outperformed perpetual rate preferred shares over the quarter. The focus of the Preferred Shares fund continues to be on rate reset preferred shares with later reset dates and higher spreads, while opportunistically adding perpetual rate preferred shares to the portfolio to reduce interest rate risk exposure. Portfolio Summary NOTABLE HOLDINGS PORTFOLIO SUMMARY 4.8% Yield Approx. Weight RATINGS BANK OF NOVA SCOTIA SER 38 3.5% BELL CANADA ENTERPRISES SER AQ 3.0% INDUSTRIAL ALLIANCE SER B 3.0% Pfd-2 56.7% ALGONQUIN POWER & UTILITY SER A 2.8% Pfd-3 43.3% SUN LIFE FINANCIAL SER 1 2.5% DIVIDEND TYPE Variable 67.3% Fixed 32.7% YIELD ADVANTAGE OVER CORPORATE BONDS SECTOR ALLOCATION 3% 8% 6% 5.5% 16% Energy Financial Utilities Yield 48% 3.5% 2.5% Dec '11 Consumer, Non-cyclical 19% 4.5% Dec '12 Dec '13 iShares S&P/TSX Canadian Preferred Shares ETF Dec '14 Dec '15 Communications Funds Dec '16 iShares Canadian Corporate Bond Index ETF Toron AMI Canadian Preferred Shares Portfolio Fund For distribution only to accredited investors as defined by regulatory authorities in your resident jurisdiction. Historic performance should not be interpreted as a guarantee of future results. Performance figures are based on total returns which are time-weighted and geometrically linked (meaning that performance is not influenced by the timing of portfolio additions or withdrawals and is calculated on a compounded basis). Toron Asset Management International and Cidel Financial Group are operating names of Cidel Asset Management Inc.