Transcript No Slide Title

CI Global High Dividend
Advantage Fund
Epoch Investment
Partners, Inc.
Table of Contents
Highlights
A Case for Global Shareholder Yield
Portfolio Characteristics
2
Highlights
Actively Managed Portfolio
 Exposure to Global Portfolio focused on “Shareholder Yield”
comprised of:
 High Dividend Paying Securities
 MLPs / REITs
 Equities
 Diversified by company, geography and industry
 Proven investment strategy: Epoch Investment Partners
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Highlights
Attractive, tax efficient monthly distributions
 6% annual initial target distribution
 Approx. 8.5% pre-tax interest equivalent
 Forward structure recharacterizes income into tax-efficient
capital gains, return of capital
 Benefits of traditional Closed End funds without their
drawbacks
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Details
 Price: $10 per unit
 Minimum investment: $500
 Target Yield: 6% (8.5% pre-tax equivalent)
Commission
Class A
ISC
DSC
LL
MLL
0-5%
5.00%
2.00%
3.00%
ISC
DSC
LL
MLL
1.00%
0.50%
0.50% first 3 yrs
1.00% thereafter
0.40% first 4 yrs
1.00% thereafter
Service Fees
Class A
Fund Code
Class A
Class F
Class I
Fund Name
ISC
DSC
LL
MLL
ISC
ISC
CI Global High Dividend Advantage Fund
2810
3810
1610
6976
4810
5810
CI Global High Dividend Advantage Fund US$
2811
3811
1611
6977
4811
N/A
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Epoch Investment
Partners, Inc.
A Case for Global Shareholder Yield
William W. Priest, CFA, CPA
Chief Executive Officer/Chief Investment Officer
Michael A. Welhoelter, CFA
Managing Director, Portfolio Manager
Backdrop

Financial Economy & Real Economy Are Linked – Role of
Inflation and Interest Rates

Changing Order Within Sources of Return Leads to Rising
Importance of Yield

Globalization Turbo-Charges Global Real Growth and
Enhances Free Cash Flow Growth Rates

Importance of Free Cash Flow Metric for Capital Allocation
Options

Dividends and Shareholder Yield

Summary Case for Shareholder Yield
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Financial Economy and
Real Economy are Linked
- Role of Inflation and
Interest Rates
Real and Financial Economy: Directly Connected
Real Economy
Financial Economy
Real GDP
+
Inflation
P/E Ratio
=
Nominal
GDP
EPS
x
Stock
Market Level
9
“3.11- A Rate, Not A Date” – Bill Priest
“Following almost 20 years of expanding P/E ratios,
interest rates are poised to rise, thereby eliminating
P/E ratios as the major driver of total equity returns
as was the case over the 1980-2000 period.”*
* See Bill Priest’s Paper “3.11- A Rate, Not a Date”
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Sources of Equity Returns: P/E’s, Earnings, & Dividends
 P/E’s Are Inversely Related to Interest Rates
15.0
Trailing P/E Ratio
13.5
40.0
12.0
35.0
10.5
Long Term Government
Bond Interest Rate
30.0
9.0
Source: Epoch Investment Partners/Standard & Poors
2002
1998
1994
1990
1986
1982
1978
1974
0.0
1970
0.0
1966
1.5
1962
5.0
1958
3.0
1954
10.0
1950
4.5
1946
15.0
1942
6.0
1938
20.0
1934
7.5
1930
25.0
1926
P/E ratios at year end
45.0
Interest Rates (%) on 10-year Gov’t Securities
50.0
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Sources of Equity Returns: P/E’s, Earnings, & Dividends
Nominal GDP and Earnings: Long-term History
10.00
5.00
Ln Nominal GDP
4.00
Ln S&P 500 Earnings
Per Share
8.00
3.00
7.00
2.00
6.00
1.00
5.00
0.00
S&P 500 EPS, LN(EPS)
Nominal GDP, LN(GDP)
9.00
4.00
-1.00
1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
Source: Epoch Investment Partners/Standard & Poors
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Changing Order Within the
Sources of Return Leads to
Rising Importance of Yield
Sources of Equity Returns
1. P/E’s
2. Earnings
3. Dividends
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Sources of Equity Returns: P/E’s, Earnings, & Dividends
Components of Compound Annual Total
Returns for Trailing 10-year Periods
(S&P 500 Composite 1926-2004)
20%
15%
10%
5%
0%
Combined Effects
P/E Expansion
Earnings Growth
Dividends & Reinvestment
Total Return
-10%
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
-5%
Ending Date of 10-year Period
Source: Epoch Investment Partners/Standard & Poors
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Globalization Turbo-Charges
Real Growth and Enhances
Free Cash Flow Growth
Turbo-Charging Real Economic Growth Through:
 Globalization and its Instrument –
 The Law of Comparative Advantage
 “Volume of tradable goods has doubled
in the past five years”
- Stephen Roach
Economist, Morgan Stanley
 Emergence of new trading paradigms has led to:
Productivity
Profitability
Inflation
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Importance of Free Cash Flow Metric
for Capital Allocation Options
Importance of Free Cash Flow Analysis for Capital Application Options
 From an investor’s perspective, “Free cash flow is the cash available
for distribution to investors after all planned capital investment and
taxes.”*
 “But, accountants define the cash flow of a company as the sum of
net income plus depreciation and other non-cash items that are
subtracted in computing net income.”* - too inadequate for
financial decisions
 Free cash flow is emerging as dominant capital allocation driver and
hence, that of equity returns as well
 Rise in Private Capital Firms emphasizing
role of free cash flow exclusively
“The New Kings of Capitalism”
Economist
*Valuations for Mergers, Buyouts, and Restructuring , Enrique R. Arzac
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Free Cash Flow Options
Acquisitions
Reinvestment in
Business
Firm Growth
Dividends
Share repurchase
Shareholder Yield
Debt reduction
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Dividends and Shareholder Yield
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Dividends and Shareholder Yield
 Shareholder Yield is a better measure of a firm’s
ability to deliver income to investors
 Application of free cash flow model clarifies
components
 Traditional dividend measures fail to capture all
shareholder yield contributions
 Buybacks and debt reduction are now viewed
as important use of cash
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Dividend Yield to become Shareholder Yield
 Dividend Yield will be re-defined as Shareholder Yield with
ascendancy of free cash flow metric
 Shareholder Yield will rise sharply as corporations more
efficiently use their capital
200
Dividends as a Share of Free Cash Flow 1
1974 Through November 2005
180
160
140
120
100
Current
80
60
40
20
0
74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Source: Corporate Reports, Empirical Research Partners Analysis.
1
Largest 1,500 stocks; data smoothed on a trailing one-year basis. Excluding Microsoft's special dividend in 12/2004.
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Shareholder Yield
 Shareholder Yield positively affected by
emerging compensation policies
 Restricted Stock Units
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Summary Case for
Shareholder Yield
Summary Case for Shareholder Yield

Interest rates will stay flat or rise for the
foreseeable future.

P/E ratios will stay flat or fall.

To the extent that equities deliver positive returns,
such positive returns will, out of necessity, be
driven by dividends and earnings (the other two
contributing sources of total return).

Both dividends and earnings are “real”
phenomena as opposed to “pricing multipliers”.
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Summary Case for Shareholder Yield

Assume overall economy (nominal terms) grows
6%. Assume current dividend yield is 2%. The
return to equities will be 8%.

If interest rates rise, P/E ratios will fall. Under such
a scenario, equity returns will be less than 8%.

To the extent that equities deliver positive returns,
such positive returns will, out of necessity, be
driven by dividends and earnings.

A clear opportunity exists by focusing on the
sources of real returns.
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Summary Case for Shareholder Yield

Through the use of a financial metric (free cash flow) rather
than an accounting metric (earnings) it is easier to discern
those firms most likely to utilize their free cash flow intelligently
for shareholder value creation.
 If the return on incremental capital to be deployed in the
business is equal to or less than the present average
return on capital, the capital should be returned to
shareholders.

By assembling a portfolio of companies that offer superior
dividend levels (direct dividends, share repurchases, debt
reductions) and operating earnings growth we will be able to
deliver performance superior to that of the broad-based equity
market.
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Portfolio Characteristics
 Core Portfolio Process
 Current Portfolio Allocation
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Core Portfolio Process: Fund Competitive Positioning
 Exceptional, robust, current yield > 5%
Exceeds long bonds
Roughly 300 bps greater than global equity indices
 Consistent dividend growth
3% compound annual growth last three years
85% of companies raised their dividend in the last 12 months
 Global participation and diversification
 Innovative Portfolio Construction
Stock-specific performance and income risks reduced
Simultaneously allocating portfolio weight, income, and dividend growth
 Special Dividend Capture Program
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Core Portfolio Process: Epoch’s Proprietary Income Screen

Income Security and Growth
Current yield > 4%
3+ years of monotonically increasing dividends

Cash from operations exceeds dividends (or cash returned)
over trailing three years
Want ample dividend coverage and to avoid liquidating income vehicles

No dividend cancellations in available financial history up to 20 years
Dividend is “sacred”

Low incidence of dividend reduction in available history

Company has increased dividend in more than 50% of available history

Positive growth in cash flow from operations over the last 5 years

Liquidity:
Market Capitalization > $250 million U.S.
For lightly traded stocks, prospective position is less than one-day of trading
volume
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Core Portfolio Process: Portfolio Construction

Take candidate stocks ( n ~ 150)

Use quadratic optimizer to maximize the probability of achieving the
following portfolio goals:

1.
Conventional Dividend Yield >= 5%
2.
Recent Dividend Growth = 10% (Expected Incremental Yield = 0.50%)
3.
R-squared of security dividend streams > 0.9 for two-thirds of holdings
4.
Seek additional 1.5% of shareholder yield through expected share
repurchases and debt reduction
Position Constraints:
Maximum assets per security = 2.5%
Maximum income contribution per security = 3%
Maximum incremental income per security = 5%
Minimum position = 0.50%
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Current Portfolio Allocation
Economic Sectors
portfolio weight
Citigroup BMI World weight
30%
25%
20%
15%
10%
5%
0%
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Current Portfolio Allocation
Geographic Diversification
Portfolio
Citigroup BMI World
60%
50%
40%
30%
20%
10%
0%
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Summary details
Minimum Purchase:
$500 / Each subsequent investment minimum: $50.
RSP Eligibility:
100% eligible for RRSPs, RRIFs, RESPs.
Distributions:
Paid monthly. Automatically reinvested with the option to receive in cash.
Selling Concession:
5.00% upfront plus 0.50% per annum trailer.
Liquidity:
Daily liquidity.
Commission
Class A
ISC
DSC
LL
MLL
0-5%
5.00%
2.00%
3.00%
ISC
DSC
LL
MLL
1.00%
0.50%
0.50% first 3 yrs
1.00% thereafter
0.40% first 4 yrs
1.00% thereafter
Service Fees
Class A
Switches: Clients can switch units of one class of the fund to another class of the fund or to another fund managed
by CI subject to any applicable fees. See the Prospectus for more details.
Redemption Fees:
DSC Withdrawal Privileges:
Class A (DSC):
7-year declining schedule
Class A (DSC):
10% free units, annually
Class A (LL):
3-year declining schedule
Class A (LL):
Not Available
Class A (MLL):
4-year declining schedule
Class A (MLL):
Not Available
Short-term trading fee may apply if units are sold within 30 business of purchase.
35
Disclaimer
Commissions, trailing commissions, management fees and expenses all may be
associated with mutual fund investments. Please read the prospectus before
investing. Mutual funds are not guaranteed, their values change frequently and
past performance may not be repeated. ™CI Investments and CI Investments
design are trademarks of CI Investments Inc.
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THANK YOU
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