Knight Bain Funds · 2009-08-18 · – 4 – Knight Bain Pure Canadian Equity Fund Statement of Investment Portfolio as at March 31, 2009 No. of Shares/ Average Fair Face Amount

Knight Bain Funds

Annual Financial St atements | as at March 31, 2009

A look inside

Overview ...................................................................................................................................1

About the CI Funds Board of Governors and

Letter from the CI Funds Board of Governors...................................................................2

Management and Auditors’ Reports .....................................................................................3

Equity Funds

Knight Bain Pure Canadian Equity Fund .......................................................................................4

Knight Bain Small Cap Fund .........................................................................................................9

Balanced Funds

Knight Bain Diversified Monthly Income Fund............................................................................14

Income Funds

Knight Bain Canadian Bond Fund ...............................................................................................20

Knight Bain Corporate Bond Fund ..............................................................................................26

Notes to the Financial Statements ......................................................................................31

Legal Notice............................................................................................................................37

– 1 –

Enclosed are the Financial Statements for the CI Investments mutual

funds for the year ending March 31, 2009. These financial statements

also include a complete list of portfolio holdings for each fund.

Additional information about the funds can be found on our website,

www.ci.com, including fund profiles, which are updated monthly,

Management Reports of Fund Performance, and portfolio manager

commentaries.

If you have any questions about your investments, please contact your

financial advisor. CI is proud to partner with advisors across Canada.

We believe investors are most successful when they follow an

investment plan developed with the assistance of a qualified advisor.

You may also contact CI Client Services at 1-800-792-9355. Thank

you for investing with us.

ABOUT CI INVESTMENTS

CI has been investing on behalf of Canadians since 1965 and has

grown to become one of Canada’s largest investment fund companies.

We manage over $43 billion on behalf of two million Canadians.

CI is a subsidiary of CI Financial Corp., a TSX-listed financial services

firm with $78 billion in fee-earning assets at March 31, 2009.

CI provides one of the industry’s widest selections of investment

products and services and a strong lineup of leading portfolio

management teams. Our portfolio management expertise is offered

through several platforms, including mutual funds, tax-efficient funds,

segregated funds, and managed solutions.

2 Queen Street East, Twentieth FloorToronto, Ontario M5C 3G7www.ci.com

Telephone: 416-364-1145Toll Free: 1-800-268-9374Facsimile: 416-364-6299

– 2 –

The CI Funds Board of Governors was voluntarily established by CI in 1998 making it one of the first

such fund governance bodies in Canada.

The Board of Governors acts as an independent governance body the Funds, providing impartial

judgment on conflicts of interest with a view to the best interests of the Funds and investors. The

Board of Governors recommends the best course of action to achieve a fair and reasonable result on

any conflict of interest issues, and CI takes into account its recommendation in accordance with its

fiduciary duty to the Funds. All of the members of the Board are independent of CI.

The Board of Governors mandate is set out in a separate charter and reviewed annually by the Board

to ensure its mandate conforms to the expectations and requirements of Canadian securities

regulators. Along with dealing with conflicts of interest, the mandate provides that the Board acts as

an audit committee for the Funds for the purpose of reviewing the financial statements of the Funds

with the auditors of the Funds and reviews holdings, purchases and sales by the Funds of securities

of the Bank of Nova Scotia and CI Financial Corp.

The Board also reviews and discusses on a regular basis matters including compliance of the Funds

with CI’s relevant policies and procedures, approval of the Funds’ auditors and the fees paid to those

auditors, and the performance of the Board and its members.

The Board of Governors adheres to the requirements set out by Canadian securities regulators in

National Instrument 81-107 Independent Review Committee for Investment Funds which requires all

mutual funds in Canada to have independent review committees.

The Board of Governors are compensated as recommended by the Canadian securities regulators in

their rule and as set out in its mandate. These expenses are paid by CI and charged to the Funds as

part of their administration fee.

The members of the Board of Governors are:

William Harding, Managing Partner, Alpine Asset Advisors AG

Governor since June 2005

Stuart P. Hensman, Corporate Director

Governor since December 2004

Christopher M. Hopper, General Manager, KLQ Mechanical Ltd.

Governor since May 2007

Sharon M. Ranson, President, The Ranson Group

Governor since December 2004

About the CI Funds Board of Governors

The Funds Board of Governors is pleased to report on its activities in respect of the annual period

ended March 31, 2009 and to date. The Governors are appointed pursuant to the Declarations of Trust

governing the Funds.

The Governors have reviewed, commented on and approved the CI Code of Ethics and Conduct, which

establishes rules of conduct designed to ensure fair treatment of the Funds’ securityholders and that,

at all times, the interests of the 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 of the highest standards of integrity and

ethical business conduct. The CI Code of Ethics and Conduct requires the prior clearance of personal

trades and restricts the ability of staff to trade any securities held by the Funds. The objective is not

only to remove any potential for real conflict of interest but to avoid any perception of conflict. The

Manager's year 2008 report on compliance with the CI Code of Ethics and Conduct and other relevant

policies has been provided to the Governors in a timely and satisfactory manner.

The Governors report that management has been open and cooperative, permitting the Governors to

meet with subadvisers, to meet with individual department heads and personnel to review control

mechanisms and compliance procedures, including those relating to the personal securities trading

activity of employees, and to consider other matters that affect the Funds. During 2008, the Governors

also acted as the audit committee of the Funds. The audit committee reviewed, with the Funds’

auditors, the planning, scope and results of the audit of the financial statements of the Funds for the

year 2008. In May 2009, the Board of Governors received and accepted the Annual Financial

Statements of the Funds.

Stuart P. Hensman

Chair, Board of Governors

May 27, 2009

Letter from the CI Funds Board of Governors

Annual Financial Statements as at March 31, 2009

– 3 –Annual Financial Statements as at March 31, 2009

Management and Auditors’ Reports - CI Mutual Funds

MANAGEMENT’S RESPONSIBILITY

FOR FINANCIAL REPORTING

The accompanying financial statements have been prepared by CI Investments Inc., the Manager of the

Funds, and approved by the Board of Directors of the Manager. The Funds’ Manager is responsible

for the information and representations contained in these financial statements and other sections of

this report.

CI Investments 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.

Financial information provided elsewhere in this report is consistent with that in the financial

statements.

The Board of Directors is responsible for reviewing and approving the financial statements and

overseeing the performance of its financial reporting responsibilities. They also review the adequacy

of internal controls, the audit process and financial reporting with external auditors.

PricewaterhouseCoopers LLP are the external auditors of the Funds. 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 statements. Their audit report follows.

Chief Executive Officer

CI INVESTMENTS INC.

Chief Financial Officer

CI INVESTMENTS INC.

AUDITORS’ REPORT

To the Unitholders of the CI Mutual Funds listed in Note 1 to the financial statements

(the “Funds”).

We have audited the Statement of Investment Portfolio of each of the Funds as at March 31, 2009 and

the Statements of Net Assets, Operations and Changes in Net Assets as at and for the periods indicated

in Note 1. These financial statements are the responsibility of the Funds' 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 of 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 Funds, the results of each of their operations and the changes in each of their net assets

as at and for the periods indicated in Note 1 in accordance with Canadian generally accepted

accounting principles.

PRICEWATERHOUSECOOPERS LLP

Chartered Accountants, Licensed Public Accountants

Toronto, Ontario

June 5, 2009

– 4 –

Knight Bain Pure Canadian Equity FundStatement of Investment Portfolio as at March 31, 2009

No. of Shares/ Average FairFace Amount Cost ($) Value ($)

FINANCIALS (23.3%) 40,200 Bank of Nova Scotia†† 1,925,656 1,252,632 19,100 Canadian Imperial Bank of Commerce 962,664 875,735 57,500 Manulife Financial Corp. 2,240,906 814,775 28,700 Power Financial Corp.* 841,072 582,610 54,800 Royal Bank of Canada 2,871,014 2,001,296 45,000 Toronto-Dominion Bank 2,911,603 1,955,700

11,752,915 7,482,748ENERGY (20.9%)

15,900 Canadian Natural Resources Ltd. 902,754 778,941 21,400 Canadian Oil Sands Trust 761,979 514,456 31,900 Enbridge Inc.* 1,239,384 1,159,565 35,600 EnCana Corp. 2,452,590 1,846,216 32,900 Nexen Inc. 1,041,761 703,073 63,100 Progress Energy Resources Corp. 1,002,574 589,985 40,700 Suncor Energy Inc. 1,761,776 1,141,635

9,162,818 6,733,871MATERIALS (13.0%)

14,400 Agnico-Eagle Mines Ltd.* 760,773 1,034,640 10,600 Agrium Inc. 479,504 479,332 26,200 Goldcorp Inc. 703,106 1,103,020 35,100 Kinross Gold Corp. 800,345 804,141

7,400 Potash Corp. of Saskatchewan Inc. 825,248 754,430 3,568,976 4,175,563

CONSUMER DISCRETIONARY (11.6%) 9,800 Canadian Tire Corp., Ltd., Class A,

Non-Voting Shares 737,925 425,320 27,400 Rogers Communications Inc., Class B 1,272,291 795,970 77,600 Shaw Communications Inc., Class B 1,831,456 1,491,472 31,400 Tim Hortons Inc. 1,150,663 1,006,684

4,992,335 3,719,446INDUSTRIALS (8.3%)

193,300 Bombardier Inc., Class B, Sub-Voting Shares 1,124,910 568,302 18,500 Canadian National Railway Co. 978,385 824,915 32,900 Finning International Inc. 928,963 411,908 27,000 SNC-Lavalin Group Inc. 1,129,731 858,600

4,161,989 2,663,725CONSUMER STAPLES (5.1%)

37,500 Shoppers Drug Mart Corp. 1,933,162 1,625,250

INFORMATION TECHNOLOGY (3.4%) 19,800 Research In Motion Ltd. 1,497,863 1,078,902

Commission and other portfolio transaction costs (38,345)

Total Equities (85.6%) 37,031,713 27,479,505

Short Term Notes (13.4%) 4,295,960 4,295,958

Total Investments (99.0%) 41,327,673 31,775,463

Other Assets (net) (1.0%) 386,996

Total Net Assets (100.0%) 32,162,459

††CI Investments Inc., the manager, is a corporation controlled by CI Financial Corp. The Bank of Nova Scotia owns a significant interest in CI Financial Corp. and is therefore, considered a related party to CI Investments Inc. Investments in The Bank of Nova Scotia are identified above.*Denotes all or part of securities lent.The accompanying notes are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund.

Annual Financial Statements as at March 31, 2009 CIG - 6805

– 5 –

Knight Bain Pure Canadian Equity FundFinancial Statements


AssetsInvestments at fair value*CashShort term investmentsMargin for short salesIncome taxes recoverableDaily variation margin on derivative investmentsUnrealized gain on derivative investmentsCash collateral received for securities on loan (Note 6)Premium paid for options contractReceivable for unit subscriptionsReceivable for securities soldManagement fee rebate receivableReceivable for dividends and accrued interest

LiabilitiesBank overdraftManagement fees payableAccrued expensesUnrealized loss on derivative investmentsPremium received from options contractPayable for securities purchasedPayable for unit redemptionsPayable for cash collateral under securities lending (Note 6)Investments sold short at fair value**Distributions payable

Net assets and unitholders' equity

**Investments at cost**Investments sold short at cost

Net assets per classClass AClass FClass I

Net assets per unit (see Schedule of Net Assets Reconciliation)

Class AClass FClass I

Number of units outstanding(see Schedule of Fund Unit Transactions)


IncomeDividendsInterest Securities lending (Note 6)Derivative income (loss)Income distribution from investmentsManagement fee rebateLess: Foreign withholding taxes

ExpensesManagement fees (Note 5)Administrative fees (Note 5)Interest expenseGoods and services tax

Net investment income (loss) for the year

Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs (see Schedule of Commissions)

Realized gain (loss) on investmentsForeign exchange gain (loss)Commissions and other portfolio transaction costsCapital gain distribution from investmentsChange in unrealized appreciation (depreciation)

of investmentsNet gain (loss) on investmentsIncrease (decrease) in net assets from operations

Increase (decrease) in net assets from operations per classClass AClass FClass I

Increase (decrease) in net assets from operationsper unit (Note 2)


27,480 39,891275 249

4,296 5,986- -- -- -- -- -- -

68 45- -- -

46 5732,165 46,228

- -1 2- -- -- -- -2 7- -- -- -3 9

32,162 46,219

37,032 40,578- -

791 1,118- -

31,371 45,101

6.45 10.006.62 10.286.62 10.27

122,699 111,8751 1

4,740,025 4,391,374

688 402217 145

3 2- -- -- -

(2) (1)906 548

20 172 2- 51 1

23 25883 523

(8,006) (1,450)- (4)

(45) (66)- -

(8,894) (675)(16,945) (2,195)(16,062) (1,672)

(434) (65)(3) -

(15,625) (1,607)

(3.64) (0.98)(4.97) (1.00)(3.46) (0.71)

Statements of Operations for the years ended March 31(in $000’s except for per unit amounts)

2009 2008

Statements of Net Assets as at March 31(in $000’s except for per unit amounts and units outstanding)

2009 2008

The accompanying notes are an integral part of these financial statements.

– 6 –

Class ANet assets, beginning of yearSection 3855 transitional adjustment Adjusted net assets, beginning of year Capital transactions

Proceeds from units issued Reinvested distributions (Note 7)Amounts paid for units redeemed

Distributions to investorsFrom realized gainsFrom net incomeFrom return of capital

Increase (decrease) in net assets from operationsNet assets, end of year

Class FNet assets, beginning of yearSection 3855 transitional adjustment Adjusted net assets, beginning of year Capital transactions




Class INet assets, beginning of yearSection 3855 transitional adjustment Adjusted net assets, beginning of year Capital transactions




Total FundNet assets, beginning of yearSection 3855 transitional adjustment Adjusted net assets, beginning of year Capital transactions




45,101 -- -

45,101 -

5,558 48,062882 434

(3,663) (1,354)2,777 47,142

- (177)(882) (257)

- -(882) (434)

(15,625) (1,607)31,371 45,101

46,219 310- -

46,219 310

6,184 49,470886 434

(4,179) (1,889)2,891 48,015

- (177)(886) (257)

- -(886) (434)

(16,062) (1,672)32,162 46,219

1,118 310- -

1,118 310

593 1,4084 -

(486) (535)111 873

- -(4) -- -

(4) -(434) (65)791 1,118

- -- -- -

33 -- -

(30) -3 -

- -- -- -- -

(3) -- -

Knight Bain Pure Canadian Equity FundFinancial Statements


Statements of Changes in Net Assets for the years ended March 31 (in $000’s)

2009 2008


Statements of Changes in Net Assets (cont’d)for the years ended March 31 (in $000’s)

2009 2008

– 7 –

Class ABalance, beginning of yearUnits issued for cash Units issued for reinvested distributions (Note 7)Units redeemedBalance, end of year

Class FBalance, beginning of yearUnits issued for cash Units issued for reinvested distributions (Note 7)Units redeemedBalance, end of year

Class IBalance, beginning of yearUnits issued for cash Units issued for reinvested distributions (Note 7)Units redeemedBalance, end of year

Schedule of Securities Lending (Note 6)as at March 31 (in $000’s)

2009 2008

LoanedCollateral (non-cash)

2,794 5,4142,977 5,754

Knight Bain Pure Canadian Equity FundFinancial Statements – Supplementary Schedules

Schedule of Commissionsfor the years ended March 31 (in $000’s)

2009 2008

Brokerage commissionsSoft Dollar commissions†

44 65- 6

Schedule of Fund Unit Transactions for the years ended March 31

2009 2008

111,875 28,44764,988 134,560

599 -(54,763) (51,132)

122,699 111,875

1 12,896 -

- -(2,896) -

1 1

4,391,374 1659,669 4,479,583127,290 40,777(438,308) (128,987)

4,740,025 4,391,374


†A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund.The accompanying notes are an integral part of these financial statements.

Annual management fee rateClass AClass FClass I

Annual fixed administration fee rateClass AClass FClass I

1.950.95

Paid directly by investor

0.200.20

-

Schedule of Fees (Note 5)as at March 31 (%)

2009

Class ANet assets per unitSection 3855 adjustment on net assets per unitNet asset value per unit

Class FNet assets per unitSection 3855 adjustment on net assets per unitNet asset value per unit

Class INet assets per unitSection 3855 adjustment on net assets per unitNet asset value per unit

6.45 10.000.01 0.016.46 10.01

6.62 10.280.02 0.016.64 10.29

6.62 10.270.01 0.016.63 10.28

Schedule of Net Assets Reconciliation (Note 2)as at March 31 (in $)

2009 2008

Net capital loss carried forward

Non-capital losses expiring:2009201020142015202620272028Total

7,850

--------

Schedule of Tax Loss Carry Forwards (Note 4)as at March 31 (in $000’s)

2009

Other Price RiskThe Fund is predominantly invested in Canadian stocks and therefore sensitive to changes ingeneral economic conditions in Canada.

As at March 31, 2009, had the Canadian markets increased or decreased by 10%, with all othervariables held constant, net assets of the Fund would have increased or decreased, respectively,by approximately $2,748,000. In practice, the actual trading results may differ from this analysis.The difference may be material.

Credit RiskThe Fund was invested in debt securities, preferred securities and derivative instruments, as applicable,with the following credit ratings, as per table below:

as at March 31, 2009*Net Assets

Credit Rating (%)AAA/Aaa/A++ 13.4 Total 13.4

*Credit ratings are obtained from Standard & Poor’s, otherwise ratings are obtained from: Moody'sInvestors Service, Dominion Bond Rating Services and Canadian Bond Rating Services, respectively.

– 8 –

Knight Bain Pure Canadian Equity FundFund Specific Financial Instruments Risks (Note 11)



Currency RiskThe table below summarizes the Fund's exposure to currency risk, net of derivative instruments, asapplicable.

as at March 31, 2009Derivatives Net Currency Net

Exposure Exposure* AssetsCurrency (in $000’s) (in $000’s) (%)US Dollar - 18 0.1 Total - 18 0.1

*The exposure is to financial instruments net of derivatives.

As at March 31, 2009, had the Canadian dollar strengthened or weakened by 10% in relation toall other foreign currencies held in the Fund, with all other variables held constant, net assets ofthe Fund would have decreased or increased, respectively, by approximately $2,000. In practice, theactual trading results may differ from the sensitivity analysis and the difference may be material.

Interest Rate RiskThe Fund has insignificant exposure to interest rate risk as the majority of its assets are invested in stocks.

– 9 –

Knight Bain Small Cap FundStatement of Investment Portfolio as at March 31, 2009


HEALTH CARE (26.2%) 300 Atrium Innovations Inc.* 4,807 3,579 200 Beckman Coulter Inc. 13,789 12,862 200 Catalyst Health Solutions Inc. 6,482 4,995 200 Dentsply International Inc. 7,363 6,762 300 Pediatrix Medical Group Inc. 16,754 11,108

49,195 39,306 INDUSTRIALS (20.8%)

300 Genivar Income Fund Trust 7,557 6,654 400 Navigant Consulting Inc.* 7,609 6,591 100 Roper Industries Inc., Rights 6,135 5,339 500 Seacliff Construction Corp. 6,370 3,555 600 UTI Worldwide Inc. 18,579 9,039

46,250 31,178 INFORMATION TECHNOLOGY (15.4%)

100 Alliance Data Systems Corp.* 6,831 4,653 300 Altera Corp. 5,407 6,615 200 Check Point Software Technologies Ltd. 4,584 5,600 200 Solera Holdings Inc. 3,961 6,248

20,783 23,116 FINANCIALS (12.8%)

300 Eaton Vance Corp. 10,514 8,631 600 GMP Capital Trust 9,513 4,200 300 MSCI Inc. 9,280 6,365

29,307 19,196 CONSUMER STAPLES (8.7%)

300 Alberto-Culver Co. 7,760 8,532 350 Liquor Stores Income Fund 6,110 4,550

13,870 13,082 MATERIALS (4.3%)

800 Red Back Mining Inc.* 6,716 6,480

ENERGY (3.5%) 200 Calfrac Well Services Ltd. 6,188 1,352 300 Galleon Energy Inc., Class A* 4,868 1,080 300 Progress Energy Resources Corp. 4,099 2,805

15,155 5,237

Commission and other portfolio transaction costs (273)

Total Investments (91.7%) 181,003 137,595


Total Net Assets (100.0%) 149,810

*Denotes all or part of securities lent.The accompanying notes are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund.


– 10 –

Knight Bain Small Cap FundFinancial Statements




















138 18112 17

- -- -- -- -- -- -- -- -- -- -- -

150 198

- -- -- -- -- -- -- -- -- -- -- -

150 198

181 216- -

150 198- -- -

5.78 7.756.09 7.96

- -

25,904 25,6111 1- -

1 11 1- -- -- -- -- -2 2

3 6- 1- -- -3 7(1) (5)

(41) (16)- (1)- (1)- -

(9) (45)(50) (63)(51) (68)

(51) (68)- -- -

(1.97) (2.63)(2.00) (2.98)

- (0.98)


2009 2008


2009 2008


– 11 –

















- -- -- -

- -- -- -- -

- -- -- -- -- -- -

198 213- -

198 213

27 296- -

(24) (243)3 53

- -- -- -- -

(51) (68)150 198

198 213- -

198 213

27 296- -

(24) (243)3 53

- -- -- -- -

(51) (68)150 198

- -- -- -

- -- -- -- -

- -- -- -- -- -- -

Knight Bain Small Cap FundFinancial Statements



2009 2008



2009 2008

– 12 –





2009 2008


22 2924 31

Knight Bain Small Cap FundFinancial Statements – Supplementary Schedules


2009 2008


- -- -


2009 2008

25,611 20,3193,919 28,382

- -(3,626) (23,090)

25,904 25,611

1 1- -- -- -1 1

- 1- -- -- (1)- -





1.950.95


0.200.20

-


2009




5.78 7.750.02 0.015.80 7.76

6.09 7.960.01 0.016.10 7.97

- -- -- -


2009 2008



62

-----426


2009

Other Price RiskThe Fund is invested in U.S. stocks and therefore sensitive to changes in general economicconditions in the United States.

As at March 31, 2009, had the U.S. markets increased or decreased by 10%, with all othervariables held constant, net assets of the Fund would have increased or decreased, respectively,by approximately $14,000. In practice, the actual trading results may differ from this analysis. Thedifference may be material.

Credit RiskThe Fund is not exposed to credit risk as the majority of its assets are invested in stocks.

– 13 –

Knight Bain Small Cap FundFund Specific Financial Instruments Risks (Note 11)



Currency RiskThe table below summarizes the Fund's exposure to currency risk, net of derivative instruments, as applicable.




As at March 31, 2009, had the Canadian dollar strengthened or weakened by 10% in relation to allother foreign currencies held in the Fund, with all other variables held constant, net assets of theFund would have decreased or increased, respectively, by approximately $10,000. In practice, theactual trading results may differ from the sensitivity analysis and the difference may be material.

Interest Rate RiskThe Fund has insignificant exposure to interest rate risk as the majority of its assets are invested in stocks.

– 14 –

Knight Bain Diversified Monthly Income FundStatement of Investment Portfolio as at March 31, 2009



FINANCIALS (25.3%) 450,000 Bank of Montreal FX/FL Subordinated Debenture

6.17% 03/28/2023 451,845 452,750 9,600 Bank of Nova Scotia†† 471,513 299,136 9,000 Boardwalk REIT 306,701 233,280

21,200 Calloway REIT 498,006 211,788 23,300 Canadian REIT 696,383 461,573

USD 300,000 Couche-Tard Finance Corp.,Callable 7.5% 12/15/2013 335,659 371,591

500,000 GE Capital Canada Funding Co.5.53% 08/17/2017 499,770 447,970

500,000 Great-West Lifeco Inc., FRN,Callable 5.691% 06/21/2067 496,025 388,510

40,000 Great-West Lifeco Inc., Preferred, Series I 897,350 596,000 34,800 H&R REIT 727,650 264,480

200,000 Merrill Lynch & Co., Inc. 4.5% 01/30/2012 191,660 188,920 40,000 Power Financial Corp.,

4.95% Preferred, Series K 961,345 664,000 27,500 RioCan REIT 619,471 342,100 14,500 Royal Bank of Canada 723,814 529,540 45,000 Royal Bank of Canada 4.5% Series AG 925,650 756,000

300,000 Royal Bank of Canada 5.2% 08/15/2012 301,332 322,041 350,000 Royal Bank of Scotland Group PLC

6.666% 12/31/2049 350,000 96,250 14,000 Toronto-Dominion Bank 943,140 608,440

10,397,314 7,234,369 ENERGY (18.5%)

31,000 ARC Energy Trust 647,422 438,650 21,000 Bonavista Energy Trust 625,126 318,150 19,300 Canadian Oil Sands Trust 728,233 463,972

USD 400,000 Chesapeake Energy Corp.,Senior Notes 6.5% 08/15/2017 398,294 410,988

16,600 Enbridge Inc.* 610,380 603,410 47,200 Enbridge Income Fund 516,283 479,552

8,700 EnCana Corp. 593,857 451,182 200,000 EnCana Corp. 5.8% 01/18/2018 200,540 196,566

29,000 Keyera Facilities Income Fund 549,286 449,500 USD 250,000 OPTI Canada Inc., Callable 8.25% 12/15/2014 274,141 141,041

400,000 Suncor Energy Inc. 5.8% 05/22/2018 399,700 369,768 10,900 TransCanada Corp. 413,158 324,493

300,000 True Energy Trust, Convertible UnsecuredSubordinated Debenture 7.5% 06/30/2011* 283,875 160,050

18,700 Vermilion Energy Trust 693,817 503,030 6,934,112 5,310,352

CONSUMER STAPLES (12.7%) USD 690,000 Constellation Brands Inc.,

Senior Notes 7.25% 09/01/2016 708,588 826,389 19,000 Liquor Stores Income Fund 362,029 247,000

700,000 Loblaw Cos. Ltd. 6.45% 02/09/2028 674,070 558,775 200,000 Metro Inc. 4.98% 10/15/2015 191,100 189,558 500,000 Molson Coors Capital Finance Co.,

Senior Notes 5% 09/22/2015 477,250 482,275

CONSUMER STAPLES (12.7%) (cont’d)9,000 Procter & Gamble Co. 605,835 533,390 7,000 Shoppers Drug Mart Corp. 398,918 303,380

500,000 Sobeys Inc. 7.16% 02/26/2018 476,481 483,930 3,894,271 3,624,697

CONSUMER DISCRETIONARY (7.5%) 13,000 Le Chateau Inc. 172,650 98,800

USD 305,000 MGM Mirage Inc.,Senior Notes 6.625% 07/15/2015 273,770 136,502

USD 190,000 Neiman Marcus Group Inc.10.375% 10/15/2015 170,464 76,651

USD 165,000 Shaw Communications Inc. 7.2% 12/15/2011 191,750 206,455 200,000 Shaw Communications Inc. 7.5% 11/20/2013 217,600 211,676

24,000 Shaw Communications Inc., Class B 548,010 461,280 500,000 Shaw Communications Inc.,

Senior Notes 5.7% 03/02/2017* 463,800 461,980 82,200 Yellow Pages Income Fund 1,027,166 493,200

3,065,210 2,146,544 UTILITIES (7.4%)

USD 200,000 CMS Energy Corp. 6.55% 07/17/2017 197,630 221,253 38,400 Duke Energy Corp.* 726,331 692,276

390,000 Reliance LP 7.3% 04/03/2013 390,000 400,487 19,000 TransAlta Corp. 394,077 350,550

600,000 TransAlta Corp. 6.9% 11/15/2030 590,034 451,908 2,298,072 2,116,474

INDUSTRIALS (5.6%) 12,800 Bird Construction Income Fund 404,074 284,160 24,000 Bombardier Inc., Preferred, Class B 449,060 197,760

125,000 Canadian Pacific Railway Co.6.25% 06/01/2018 124,174 117,452

20,000 Genivar Income Fund Trust 503,800 443,600 630,000 Iron Mountain Inc. 7.5% 03/15/2017 584,761 554,400

2,065,869 1,597,372 HEALTH CARE (4.6%)

USD 60,000 Biomet Inc. 10% 10/15/2017 74,414 74,886 16,900 Eli Lilly and Co., Rights 851,345 710,550

USD 640,000 HCA Inc. 6.5% 02/15/2016 528,627 528,486 1,454,386 1,313,922

INFORMATION TECHNOLOGY (1.5%) USD 500,000 Sungard Data Systems Inc.,

Callable 10.25% 08/15/2015 544,618 441,245

MATERIALS (1.3%) USD 100,000 Nova Chemicals Ltd. 6.5% 01/15/2012 103,639 109,681 USD 250,000 Teck Cominco Ltd. 6.125% 10/01/2035 148,128 156,280

14,600 Teck Cominco Ltd., Class B* 604,333 102,930 856,100 368,891



– 15 –

Knight Bain Diversified Monthly Income FundStatement of Investment Portfolio as at March 31, 2009


TELECOMMUNICATION SERVICES (1.1%) USD 240,000 Rogers Wireless Inc. 8% 12/15/2012 259,722 305,216

Commission and other portfolio transaction costs (31,776)

Total Bonds & Equities (85.5%) 31,737,898 24,459,082

Short Term Notes (12.6%) 3,596,580 3,596,616



Total Net Assets (100.0%) 28,638,168

Principal amounts stated in:USD U.S. Dollar

The accompanying notes are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund.


– 16 –

Knight Bain Diversified Monthly Income FundFinancial Statements




















24,459 31,508319 286

3,597 1,396- -- -- -- -- -- -

26 65- -- -

238 24928,639 33,504

- -1 2- -- 121- -- 283- 9- -- -- -1 415

28,638 33,089

31,738 32,506- -

549 784114 225

27,975 32,080

6.89 9.287.08 9.467.23 9.57

79,771 84,42116,099 23,824

3,869,886 3,350,719

440 3501,666 896

2 2- -- -- -

(12) (7)2,096 1,241

16 212 3- 41 1

19 292,077 1,212

(2,262) (601)(17) 13(11) (56)

- -

(6,164) (1,119)(8,454) (1,763)(6,377) (551)

(158) (9)(51) (3)

(6,168) (539)

(1.85) (0.11)(2.24) (0.14)(1.71) (0.30)


2009 2008


2009 2008


– 17 –

















32,080 -- -

32,080 -

5,936 36,1352,290 1,445

(3,872) (3,516)4,354 34,064

- (167)(2,092) (940)

(199) (338)(2,291) (1,445)(6,168) (539)

27,975 32,080

33,089 820- (2)

33,089 818

6,172 37,1402,340 1,515(4,234) (4,307)4,278 34,348

- (174)(2,149) (1,005)

(203) (347)(2,352) (1,526)(6,377) (551)

28,638 33,089

784 517- (1)

784 516

206 99537 47

(273) (707)(30) 335

- (6)(44) (46)

(3) (6)(47) (58)

(158) (9)549 784

225 303- (1)

225 302

30 1013 23(89) (84)(46) (51)

- (1)(13) (19)(1) (3)

(14) (23)(51) (3)

114 225

Knight Bain Diversified Monthly Income FundFinancial Statements



2009 2008



2009 2008

– 18 –





2009 2008


1,599 3,5451,704 3,767

Knight Bain Diversified Monthly Income FundFinancial Statements – Supplementary Schedules


2009 2008


11 55- 5


2009 2008

84,421 50,95426,662 102,2154,617 4,895

(35,929) (73,643)79,771 84,421

23,824 29,6883,417 9541,562 2,291

(12,704) (9,109)16,099 23,824

3,350,719 1705,216 3,560,877278,714 147,099

(464,763) (357,258)3,869,886 3,350,719





2.001.00


0.220.22

-


2009




6.89 9.280.01 0.026.90 9.30

7.08 9.460.01 0.017.09 9.47

7.23 9.570.01 0.027.24 9.59


2009 2008



2,346

--------


2009

Other Price RiskThe Fund is invested in Canadian stocks and therefore sensitive to changes in general economicconditions in Canada, however some of the Fund's assets are invested in fixed income securitiesand their market risk exposure will be discussed in the following sections.

As at March 31, 2009, had the Canadian markets increased or decreased by 10%, with all othervariables held constant, net assets of the Fund would have increased or decreased, respectively,by approximately $1,392,000. In practice, the actual trading results may differ from this analysis.The difference may be material.



Credit Rating (%)AAA/Aaa/A++ 14.1 AA/Aa/A+ 1.1 A 12.6 BBB/Baa/B++ 11.6 BB/Ba/B+ 10.1 B 6.9Not Rated 0.6 Total 57.0


– 19 –

Knight Bain Diversified Monthly Income FundFund Specific Financial Instruments Risks (Note 11)





Exposure Exposure* AssetsCurrency (in $000’s) (in $000’s) (%)US Dollar - 6,034 21.1 Total - 6,034 21.1



Interest Rate RiskThe table below summarizes the Fund's exposure to interest rate risk, categorized by the contractualmaturity date.

as at March 31, 2009

Interest Rate Exposure

As at March 31, 2009, had the prevailing interest rates increased or decreased by 0.25%, with allother variables held constant, net assets of the Fund would have decreased or increased,respectively, by approximately $122,000. In practice, the actual results may differ. The differencemay be material.

Less than 1 - 3 3 - 5 Greater 1 Year Years Years than 5 Years Total

(in $000’s) (in $000’s) (in $000’s) (in $000’s) (in $000’s)

3,916 665 1,611 8,266 14,458

– 20 –

Knight Bain Canadian Bond FundStatement of Investment Portfolio as at March 31, 2009



CORPORATE BONDS (61.5%) 1,100,000 407 International Inc. 5.96% 12/03/2035 1,186,086 1,017,126

600,000 American Express Canada 4.7% 05/20/2011 589,908 580,782 400,000 Bank of Ireland 3.8% 09/22/2015 385,448 395,352

2,000,000 Bank of Montreal 5.04% 09/04/2012 1,994,602 2,120,900 800,000 Bank of Montreal 5.45% 07/17/2017 804,504 851,240

5,850,000 Bank of Montreal FX/FL Subordinated Debenture 6.17% 03/28/2023 5,848,245 5,885,744

2,050,000 Bank of Nova Scotia 4.58% 02/15/2011†† 2,049,877 2,139,934 3,650,000 Bank of Nova Scotia 5% 09/13/2010†† 3,652,144 3,816,805 1,400,000 Bell Aliant Regional Communications LP

5.41% 09/26/2016 1,254,120 1,269,380 800,000 Brookfield Renewable Power Inc.

5.84% 11/05/2036 713,480 438,736 800,000 Calloway REIT, Callable 4.51% 09/22/2010 782,600 773,520

8,100,000 Canada Housing Trust No.14.55% 12/15/2012 8,226,642 8,860,266

9,000,000 Canadian Imperial Bank of Commerce FRN5.15% 06/06/2018 8,987,040 9,111,690

1,000,000 Canadian Natural Resources Ltd.4.95% 06/01/2015 953,100 934,950

700,000 Caterpillar Financial Services Ltd.4.94% 06/01/2012 691,726 691,992

1,000,000 Commerzbank AG FRN 4.5% 12/15/2016 971,570 989,700 900,000 Deutsche Bank AG 4.9% 08/22/2016 890,478 818,982 900,000 Enbridge Gas Distribution Inc.

6.9% 11/15/2032 1,064,502 933,066 900,000 EnCana Corp. 5.8% 01/18/2018 897,642 884,547 800,000 FortisAlberta Inc. 5.33% 10/31/2014 813,424 837,680

1,300,000 France Telecom SA 4.95% 06/23/2011 1,280,344 1,305,265 1,300,000 GE Capital Canada Funding Co.

4.375% 09/28/2012 1,264,731 1,231,191 1,200,000 GE Capital Canada Funding Co.



5.73% 10/22/2037 3,301,660 2,432,602 700,000 George Weston Ltd. 7.1% 02/05/2032 730,366 587,678 400,000 Greater Toronto Airports Authority

6.25% 12/13/2012 418,972 430,904 600,000 Greater Toronto Airports Authority,

Callable 6.98% 10/15/2032 710,472 599,430 1,000,000 HSBC Bank Canada 4.94% 03/16/2021 956,020 901,800 1,000,000 HSBC Bank Canada 4.53% 05/19/2009 990,910 1,002,940 2,500,000 Hydro One Inc., Callable 5% 11/12/2013 2,497,250 2,668,100 9,000,000 Inter-American Development Bank

4.25% 12/02/2012 8,895,780 9,576,990 6,000,000 International Bank for Reconstruction and

Development 4.3% 12/15/2012* 5,993,940 6,407,160 1,000,000 John Hancock Canadian Corp.

6.822% 05/31/2011 1,055,440 1,028,670 2,700,000 Merrill Lynch & Co., Inc. 4.5% 01/30/2012 2,560,014 2,550,420

700,000 MetLife Global Funding I 4.5% 02/10/2011 683,606 676,032 1,100,000 Metro Inc. 5.97% 10/15/2035 1,026,861 802,494

CORPORATE BONDS (61.5%) (cont’d)800,000 Molson Coors Capital Finance Co.,

Senior Notes 5% 09/22/2015 759,008 771,640 800,000 National Bank of Canada 4.456% 11/02/2016 778,848 786,264 900,000 Nordea Bank AB 3.95% 08/05/2015 871,542 891,081 600,000 Queen's University 6.1% 11/19/2032 683,928 645,084

1,100,000 RBC Capital Trust 4.87% 12/31/2050 1,042,448 950,796 1,100,000 RBC Capital Trust 6.821% 06/30/2018 1,100,000 1,016,213

600,000 RioCan REIT 4.91% 03/08/2011 589,296 577,752 700,000 RONA Inc. 5.4% 10/20/2016 652,379 533,813

1,100,000 Royal Bank of Canada 4.97% 06/05/2014 1,086,239 1,186,746 3,800,000 Royal Bank of Canada 5.2% 08/15/2012 3,816,473 4,079,186 1,000,000 Royal Bank of Canada, Deposit Note

4.92% 07/06/2011 994,590 1,055,280 1,100,000 Royal Bank of Canada, Senior Notes

4.53% 05/07/2012 1,070,652 1,156,331 2,400,000 Royal Bank of Scotland Group PLC

6.666% 12/31/2049 2,244,480 660,000 1,400,000 Scotiabank Capital Trust 5.65% 12/31/2036 1,354,553 845,894 1,900,000 Sun Life Financial Inc. 7.9% 03/31/2019 1,897,454 1,928,994 1,000,000 Suncor Energy Inc. 5.8% 05/22/2018 999,250 924,420 1,000,000 Suncor Energy Inc. 5.39% 03/26/2037 926,830 642,540 6,650,000 Toronto-Dominion Bank 4.779% 12/14/2105 5,472,593 5,349,260 1,100,000 Toronto-Dominion Bank 4.97% 10/30/2104 1,057,463 939,642

950,000 Toronto-Dominion Bank FRN,Callable 5.382% 11/01/2017 950,000 979,346

600,000 TransCanada Pipelines Ltd. 11.8% 11/20/2020 951,600 817,302 2,000,000 TransCanada Pipelines Ltd. 5.05% 08/20/2013 1,997,380 2,077,860

850,000 TransCanada Pipelines Ltd. 6.89% 08/07/2028 959,420 792,863 600,000 Union Gas Ltd. 5.46% 09/11/2036 592,566 513,468

1,000,000 University of Ottawa 6.28% 04/15/2043 1,174,240 1,153,650 700,000 Wells Fargo Financial Canada Corp.

4.38% 06/30/2015 656,670 616,658 1,100,000 Wilfrid Laurier University 5.429% 02/01/2045 1,134,903 1,066,131

113,581,123 110,950,832 GOVERNMENT BONDS (21.7%)

7,400,000 Canadian Government Bond3.75% 06/01/2012* 7,662,600 7,948,266




2,000,000 Canadian Government Bond8% 06/01/2027 2,907,680 3,159,000

5,850,000 Canadian Government Bond,Series YR94 3.75% 06/01/2019* 6,136,120 6,348,128

36,238,885 39,092,940 PROVINCIAL BONDS (14.3%)

3,000,000 55 Ontario School Board Trust5.9% 06/02/2033 3,337,560 3,119,790

1,000,000 City of Montreal 6% 06/01/2043 1,133,250 1,038,690 4,000,000 Province of Ontario 4.3% 03/08/2017 3,820,160 4,125,000 3,000,000 Province of Ontario 4.7% 06/02/2037 2,872,350 2,950,530



– 21 –

Knight Bain Canadian Bond FundStatement of Investment Portfolio as at March 31, 2009


PROVINCIAL BONDS (14.3%) (cont’d)4,000,000 Province of Ontario 6.5% 03/08/2029 4,790,920 4,767,200 3,000,000 Province of Quebec 4.5% 12/01/2016 2,898,990 3,121,020

600,000 Province of Quebec 5.35% 06/01/2025 617,244 608,826 2,000,000 Province of Quebec 4.5% 12/01/2017 1,923,820 2,043,200 1,000,000 Province of Quebec 5.5% 12/01/2014* 1,037,770 1,126,860

700,000 Province of Quebec 5.75% 12/01/2036 772,702 762,916 2,000,000 Province of Quebec 6% 10/01/2029 2,242,000 2,197,780

25,446,766 25,861,812

Commission and other portfolio transaction costs -

Total Bonds (97.5%) 175,266,774 175,905,584

Short Term Notes (0.9%) 1,698,470 1,698,402


Other Assets (net) (1.6%) 2,696,605

Total Net Assets (100.0%) 180,300,591

*Denotes all or part of securities lent.The accompanying notes are an integral part of these financial statements. Percentages shown in brackets relate investments at fair value to total net assets of the Fund.


– 22 –

Knight Bain Canadian Bond FundFinancial Statements




















175,906 182,293227 61

1,698 2,394- -- -- -- -- -- -

198 179- -- -

2,289 2,214180,318 187,141

- -6 71 1- -- -- -

10 108- -- -- -

17 116180,301 187,025

175,267 178,047- -

4,867 5,4492 1

175,432 181,575

10.10 10.3210.04 10.2410.11 10.32

481,743 528,150211 75

17,347,347 17,598,188

- -8,879 5,739

24 15- -- -- -- -

8,903 5,754

67 398 5- 14 2

79 478,824 5,707

(91) 1,375- -

(2) (1)- -

(3,617) 4,256(3,710) 5,6305,114 11,337

66 228- -

5,048 11,109

0.13 0.530.37 0.490.29 0.64

Statements of Operations for the periods ended March 31(in $000’s except for per unit amounts)

2009 2008


2009 2008


– 23 –

















181,575 -- -

181,575 -

15,285 183,7738,771 5,532

(26,475) (13,307)(2,419) 175,998

(177) -(8,595) (5,532)

- -(8,772) (5,532)5,048 11,109

175,432 181,575

187,025 -- -

187,025 -

15,761 189,8048,946 5,624

(27,597) (14,116)(2,890) 181,312

(181) -(8,767) (5,624)

- -(8,948) (5,624)5,114 11,337

180,301 187,025

5,449 -- -

5,449 -

475 6,030175 92

(1,122) (809)(472) 5,313

(4) -(172) (92)

- -(176) (92)

66 2284,867 5,449

1 -- -1 -

1 1- -- -1 1

- -- -- -- -- -2 1

Knight Bain Canadian Bond FundFinancial Statements


Statements of Changes in Net Assets for the periods ended March 31 (in $000’s)

2009 2008


Statements of Changes in Net Assets (cont’d)for the periods ended March 31 (in $000’s)

2009 2008

– 24 –





2009 2008


42,129 41,44744,899 44,049

Knight Bain Canadian Bond FundFinancial Statements – Supplementary Schedules

Schedule of Commissionsfor the periods ended March 31 (in $000’s)

2009 2008


- -- -

Schedule of Fund Unit Transactions for the periods ended March 31

2009 2008

528,150 -47,218 598,94517,485 9,004

(111,110) (79,799)481,743 528,150

75 -130 74

6 1- -

211 75

17,598,188 -1,520,220 18,360,716

875,534 542,929(2,646,595) (1,305,457)

17,347,347 17,598,188





1.350.85


0.170.17

-


2009




10.10 10.32- -

10.10 10.32

10.04 10.24- -

10.04 10.24

10.11 10.32- -

10.11 10.32


2009 2008



-

--------


2009

Other Price RiskThe other price risk of this Fund is insignificant as the Fund is predominantly invested in fixed incomesecurities and their market risk exposure will be discussed in the following sections.



Credit Rating (%)AAA/Aaa/A++ 39.7 AA/Aa/A+ 19.6 A 34.3 BBB/Baa/B++ 4.8 Total 98.4


– 25 –

Knight Bain Canadian Bond FundFund Specific Financial Instruments Risks (Note 11)



Currency RiskThe Fund's investments are denominated in Canadian dollars, the functional currency of the Fund.As a result, the Fund is not exposed to currency risk.




As at March 31, 2009, had the prevailing interest rates increased or decreased by 0.25%, with allother variables held constant, net assets of the Fund would have decreased or increased,respectively, by approximately $2,733,000. In practice, the actual results may differ. Thedifference may be material.



2,928 17,157 47,249 110,497 177,831

– 26 –

Knight Bain Corporate Bond FundStatement of Investment Portfolio as at March 31, 2009



CORPORATE BONDS (77.6%) USD 50,000 Ace Cash Express Inc. 10.25% 10/01/2014 15,209 15,759

40,000 Aeroports De Montreal 6.55% 10/11/2033 38,680 38,562 50,000 Altalink Investments LP 5.019% 11/21/2012 50,150 50,456

USD 35,000 Axcan Intermediate Holdings Inc.9.25% 03/01/2015 41,993 42,690

18,000 Bank of Ireland 3.8% 09/22/2015 17,345 17,791 20,000 Bank of Montreal FX/FL Subordinated Debenture

6.17% 03/28/2023 20,099 20,122 40,000 Bank of Nova Scotia 5.04% 04/08/2013††* 42,680 42,795 40,000 Bell Aliant Regional Communications LP,

Callable 4.72% 09/26/2011 39,612 39,477 40,000 Bell Canada 5.5% 08/12/2010 41,164 41,094

USD 15,000 Bombardier Inc. 6.3% 05/01/2014 14,793 13,332 40,000 Canadian Natural Resources Ltd.

4.95% 06/01/2015 38,548 37,398 25,000 Canadian Pacific Railway Co. 6.25% 06/01/2018 24,835 23,490 20,000 Canadian Tire Corp., Ltd. 4.95% 06/01/2015 19,460 19,022

USD 25,000 Cascades Inc. 7.25% 02/15/2013 16,583 17,571 USD 20,000 Chesapeake Energy Corp., Senior Notes

6.5% 08/15/2017 19,634 20,549 USD 10,000 CMS Energy Corp. 6.55% 07/17/2017 9,882 11,063 USD 20,000 Constellation Brands Inc., Senior Notes

7.25% 09/01/2016 21,802 23,953 USD 25,000 Couche-Tard Finance Corp., Callable

7.5% 12/15/2013 27,972 30,966 15,000 EnCana Corp. 5.8% 01/18/2018* 15,234 14,742 40,000 Finning International Inc. 5.16% 09/03/2013 39,296 38,879

USD 40,000 FMG Finance Pty. Ltd. 10.625% 09/01/2016 40,598 42,360 USD 25,000 Freeport-McMoRan Copper & Gold Inc.

8.25% 04/01/2015 28,515 30,178 40,000 GE Capital Canada Funding Co.

5.73% 10/22/2037 37,672 29,046 30,000 Great-West Lifeco Inc., FRN,

Callable 5.691% 06/21/2067 28,297 23,311 USD 50,000 Hawker Beechcraft Corp. 8.5% 04/01/2015 15,670 16,074 USD 20,000 HCA Inc. 6.5% 02/15/2016 17,206 16,515 USD 25,000 Intelsat Bermuda Ltd. 11.25% 06/15/2016 28,749 30,572

20,000 Iron Mountain Inc. 7.5% 03/15/2017 19,588 17,600 USD 40,000 Jabil Circuit Inc. 8.25% 03/15/2018 36,142 37,569 USD 50,000 Kansas City Southern 12.5% 04/01/2016 58,191 59,562

25,000 Loblaw Cos. Ltd. 6.45% 02/09/2028 24,409 19,956 10,000 Merrill Lynch & Co., Inc. 4.5% 01/30/2012 9,583 9,446 40,000 MetLife Global Funding I 4.5% 02/10/2011 38,420 38,630 15,000 Metro Inc. 4.98% 10/15/2015 14,973 14,217

USD 10,000 MGM Mirage Inc., Senior Notes6.625% 07/15/2015 11,012 4,475

40,000 Molson Coors Capital Finance Co.,Senior Notes 5% 09/22/2015 38,614 38,582

USD 25,000 Neiman Marcus Group Inc. 10.375% 10/15/2015 26,504 10,086 USD 25,000 Newell Rubbermaid Inc. 10.6% 04/15/2019 31,166 31,816 USD 15,000 Nova Chemicals Ltd. 6.5% 01/15/2012 15,546 16,452 USD 15,000 OPTI Canada Inc., Callable 8.25% 12/15/2014 16,781 8,462

20,000 RBC Capital Trust 6.821% 06/30/2018 20,316 18,477 10,000 Reliance LP 7.3% 04/03/2013 10,000 10,269 20,000 Rogers Wireless Inc. 7.625% 12/15/2011 21,450 21,108

CORPORATE BONDS (77.6%) (cont’d)USD 10,000 Rogers Wireless Inc. 8% 12/15/2012 10,822 12,717

5,000 Royal Bank of Canada 5.95% 06/18/2014 5,200 4,663 USD 25,000 Sabine Pass LNG LP 7.5% 11/30/2016 19,789 21,117 USD 25,000 Scientific Games Corp. 7.875% 06/15/2016 27,113 27,263 USD 10,000 Shaw Communications Inc. 7.2% 12/15/2011 11,621 12,512

10,000 Shaw Communications Inc. 7.5% 11/20/2013 11,000 10,584 10,000 Shaw Communications Inc.,

Senior Notes 5.7% 03/02/2017 9,977 9,240 50,000 Sherritt International Corp. 8.25% 10/24/2014 32,000 34,750

USD 25,000 SLM Corp. 4.5% 07/26/2010 23,325 23,638 30,000 Sobeys Inc. 7.16% 02/26/2018 28,514 29,036

USD 25,000 Steel Dynamics Inc.,Senior Notes 6.75% 04/01/2015 21,149 21,353

40,000 Sun Life Financial Inc. 5% 07/11/2031 38,850 38,863 15,000 Suncor Energy Inc. 5.8% 05/22/2018 14,989 13,866 15,000 Suncor Energy Inc. 5.39% 03/26/2037 13,680 9,638

USD 10,000 Sungard Data Systems Inc.,Callable 10.25% 08/15/2015 11,680 8,825

USD 25,000 Teck Cominco Ltd. 5.375% 10/01/2015 17,662 16,704 USD 25,000 Teck Cominco Ltd. 6.125% 10/01/2035 14,813 15,628 USD 5,000 The Mosaic Co. 7.375% 12/01/2014 5,937 6,177

20,000 The Thomson Corp. 5.2% 12/01/2014 19,300 20,284 30,000 Toronto-Dominion Bank 4.779% 12/14/2105 28,630 24,132 30,000 TransAlta Corp. 6.9% 11/15/2030 26,150 22,595 5,000 TransCanada Pipelines Ltd. 6.89% 08/07/2028 5,945 4,664

USD 5,000 TransCanada Pipelines Ltd., FRN,Callable 6.35% 05/15/2067 5,433 3,593

10,000 True Energy Trust, Convertible UnsecuredSubordinated Debenture 7.5% 06/30/2011 9,462 5,335

USD 30,000 United Surgical Partners International Inc.8.875% 05/01/2017 28,852 29,311

50,000 Viterra Inc. 8.5% 08/01/2017 49,438 51,726 1,635,704 1,582,688

PREFERRED SHARES (0.1%) 300 Bombardier Inc., Preferred, Class B 5,678 2,472

Commission and other portfolio transaction costs (25)

Total Bonds & Equities (77.7%) 1,641,357 1,585,160

Short Term Notes (17.1%) 349,481 349,784



Total Net Assets (100.0%) 2,040,785

Principal amounts stated in:USD U.S. Dollar



– 27 –

Knight Bain Corporate Bond FundFinancial Statements




















1,585 41591 54

350 50- -- -- -- -- -- -- -- -- -

35 72,061 526

- -2 1- -- 9- -

18 -- -- -- -- -

20 102,041 516

1,641 456- -

1,950 41691 100

- -

7.30 8.587.63 8.90

- -

267,117 48,45611,988 11,220

- -

- 156 41

- -- -- -- -- -

56 42

13 102 1- -1 1

16 1240 30

(78) (33)- -- -- -

(5) (56)(83) (89)(43) (59)

(33) (59)(10) -

- -

(0.33) (1.10)(0.81) (0.27)

- 0.08


2009 2008


2009 2008


– 28 –

















- -- -- -

- -- -- -- -

- -- -- -- -- -- -

516 467- (1)

516 466

1,859 41353 29

(290) (303)1,622 139

- (2)(38) (28)(16) -(54) (30)(43) (59)

2,041 516

416 467- (1)

416 466

1,758 31348 28

(190) (303)1,616 38

- (2)(34) (27)(15) -(49) (29)(33) (59)

1,950 416

100 -- -

100 -

101 1005 1

(100) -6 101

- -(4) (1)(1) -(5) (1)

(10) -91 100

Knight Bain Corporate Bond FundFinancial Statements



2009 2008



2009 2008

– 29 –





2009 2008


59 5963 63

Knight Bain Corporate Bond FundFinancial Statements – Supplementary Schedules


2009 2008


- -- -


2009 2008

48,456 45,707237,091 30,718

6,402 3,121(24,832) (31,090)267,117 48,456

11,220 111,435 11,136

635 83(11,302) -11,988 11,220

- 1- -- -- (1)- -





1.500.75


0.200.20

-


2009




7.30 8.58- -

7.30 8.58

7.63 8.90- (0.01)

7.63 8.89

- -- -- -


2009 2008



91

--------


2009

Other Price RiskThe other price risk of this Fund is insignificant as the Fund is predominantly invested in fixedincome securities and their market risk exposure will be discussed in the following sections.



Credit Rating (%)AAA/Aaa/A++ 18.6 AA/Aa/A+ 5.9 A 10.8 BBB/Baa/B++ 25.9 BB/Ba/B+ 18.4 B 12.0 CCC/Caa/C++ 2.9 Not Rated 0.3 Total 94.8


– 30 –

Knight Bain Corporate Bond FundFund Specific Financial Instruments Risks (Note 11)











As at March 31, 2009, had the prevailing interest rates increased or decreased by 0.25%, with allother variables held constant, net assets of the Fund would have decreased or increased,respectively, by approximately $14,000. In practice, the actual results may differ. The differencemay be material.



441 208 214 1,161 2,024

1. THE FUNDS

The following funds are open-ended mutual fund trusts created under the laws of Ontario by declarations of trust.

Inception Date Inception Date Inception Date

of Class A Units of Class F Units of Class I Units

CI Funds

CI Alpine Growth Equity Fund May 1, 1997 December 13, 1999 May 31, 2006

CI American Equity Fund May 25, 1989 July 17, 2000 July 31, 2001

CI American Small Companies Fund September 9, 1985 July 17, 2000 July 31, 2001

CI American Value Fund May 27, 1957 November 17, 2000 November 1, 1996

CI Canadian Investment Fund November 16, 1932 November 17, 2000 November 1, 1996

CI Canadian Small/Mid Cap Fund November 1, 1992 December 13, 1999 June 20, 2005

CI Emerging Markets Fund September 10, 1991 July 17, 2000 July 31, 2001

CI European Fund September 10, 1991 July 31, 2001 May 25, 2004

CI Global Bond Fund August 31, 1992 July 17, 2000 July 31, 2001

CI Global Fund February 28, 1986 July 17, 2000 July 31, 2001

CI Global High Dividend Advantage Fund January 20, 2006 January 20, 2006 May 15, 2006

CI Global Small Companies Fund April 7, 1993 July 17, 2000 July 31, 2001

CI Global Value Fund June 12, 1996 July 17, 2000 July 31, 2001

CI International Balanced Fund September 29, 1994 July 17, 2000 July 31, 2001

CI International Fund August 5, 1999 July 17, 2000 August 29, 2003

CI International Value Fund June 12, 1996 July 31, 2001 July 31, 2001

CI Money Market Fund October 1, 1990 July 31, 2001 July 31, 2001

CI Pacific Fund October 31, 1981 July 17, 2000 July 31, 2005

CI US Money Market Fund January 30, 1995 – –

Portfolio Select Series

Select Canadian Equity Managed Fund – – November 27, 2006

Select Income Managed Fund – – November 27, 2006

Select International Equity Managed Fund – – November 27, 2006

Select Staging Fund November 7, 2005 November 7, 2005 –

Select U.S. Equity Managed Fund – – November 27, 2006

Harbour Funds

Harbour Fund June 27, 1997 July 17, 2000 July 31, 2001

Harbour Growth & Income Fund June 27, 1997 July 31, 2001 July 31, 2001

Knight Bain Funds

Knight Bain Canadian Bond Fund July 27, 2007 July 27, 2007 July 27, 2007

Knight Bain Corporate Bond Fund September 1, 2006 September 1, 2006 September 1, 2006

Knight Bain Diversified Monthly Income Fund September 1, 2006 September 1, 2006 September 1, 2006

Knight Bain Pure Canadian Equity Fund September 1, 2006 September 1, 2006 September 1, 2006

Knight Bain Small Cap Fund September 1, 2006 September 1, 2006 September 1, 2006

Signature Funds

Signature Canadian Asset Allocation Fund* (Formerly CI Canadian Asset Allocation Fund) September 1, 1992 November 17, 2000 November 1, 1996

Signature Canadian Balanced Fund June 25, 1997 July 17, 2000 July 18, 2003

Signature Canadian Bond Fund* (Formerly CI Canadian Bond Fund) January 20, 1993 July 17, 2000 July 31, 2001

Signature Canadian Resource Fund April 11, 1997 July 31, 2001 –

Signature Corporate Bond Fund December 17, 2001 July 15, 2003 July 15, 2003

Signature Dividend Fund October 29, 1996 July 31, 2001 August 29, 2003

Signature Global Income & Growth Fund February 22, 2007 February 22, 2007 February 22, 2007

Signature High Income Fund December 18, 1996 July 31, 2001 August 28, 2002

Notes to the Financial Statements - CI Mutual FundsAs at March 31, 2009


THE FUNDS (cont’d)

Inception Date Inception Date Inception Date

of Class A Units of Class F Units of Class I Unitss

Signature Funds

Signature Income & Growth Fund October 14, 1994 July 31, 2001 March 29, 2005

Signature Long-Term Bond Fund* (Formerly CI Long-Term Bond Fund) June 15, 1989 November 17, 2000 November 1, 1996

Signature Mortgage Fund * (Formerly CI Mortgage Fund) May 1, 1993 December 13, 1999 August 28, 2006

Signature Select Canadian Fund May 13, 1998 July 17, 2000 July 31, 2001

Signature Short-Term Bond Fund* (Formerly CI Short-Term Bond Fund) May 31, 1976 November 17, 2000 November 1, 1996

Synergy Funds

Synergy American Fund August 31, 1992 July 17, 2000 July 31, 2001

Synergy Focus Canadian Equity Fund April 10, 2000 November 13, 2000 _

Synergy Focus Global Equity Fund January 26, 2001 January 26, 2001 _

Synergy Tactical Asset Allocation Fund September 18, 1998 November 13, 2000 August 22, 2002

Portfolio Series Funds

Portfolio Series Balanced Fund November 9, 1988 November 17, 2000 November 1, 1996

Portfolio Series Balanced Growth Fund December 17, 2001 December 17, 2001 November 8, 2005

Portfolio Series Conservative Balanced Fund December 17, 2001 December 17, 2001 October 31, 2005

Portfolio Series Conservative Fund December 1, 1997 November 17, 2000 December 1, 1997

Portfolio Series Growth Fund December 17, 2001 December 17, 2001 October 11, 2002

Portfolio Series Income Fund December 1, 1997 November 17, 2000 December 1, 1997

Portfolio Series Maximum Growth Fund December 17, 2001 December 17, 2001 October 31, 2005

*Name change effective July 21, 2008.



The following Funds offered Insights units to investors commencing on July 15, 2003:

CI American Value Fund CI International Fund

CI Canadian Investment Fund CI International Value Fund

CI Global Bond Fund Signature Canadian Bond Fund

(Formerly CI Canadian Bond Fund)

CI Global Fund Signature Corporate Bond Fund

CI Global Small Companies Fund Signature Select Canadian Fund

CI Alpine Growth Equity Fund, CI Canadian Small/Mid Cap Fund and Signature Mortgage Fund offered

Class B units to investors commencing on December 13, 1999.

Signature Dividend Fund offered Class X units and Class Y units to investors commencing August 29, 2003.

Harbour Growth & Income Fund and Signature Dividend Fund offered Class Z units to investors

commencing on August 29, 2003.

Signature Select Canadian Fund and Signature Canadian Balanced Fund offered Class Z units to

investors commencing on August 2, 2005.

CI Money Market Fund offered Class M units to investors commencing October 18, 2005.

Select Staging Fund offered Class W units to investors commencing November 7, 2005.

On October 1, 2007 the following Funds issued T-Class units (also called the T-Class Securities).

The T-Class units are available in Class A, Class F, Class I and Class W units and unlike other classes

of units offered by the Funds; holders of T-Class securities receive regular monthly cash distributions.

The following Funds had T-Class units outstanding as at March 31, 2009:

Portfolio Series Balanced Fund - AT5, AT8

Portfolio Series Balanced Growth Fund - AT5, AT8, FT8

Portfolio Series Growth Fund - AT5, AT8

Portfolio Series Maximum Growth Fund - AT5, AT8

The Statement of Investment Portfolio for each of the Funds is as at March 31, 2009 and the

Statements of Net Assets, Schedule of Net Assets Reconciliation and Schedule of Securities Lending

are as at March 31, 2009 and March 31, 2008. The Schedules of Fees and Tax Loss Carry Forwards for

each Fund are as at March 31, 2009. The Statements of Operations, Statements of Changes in Net

Assets, Schedule of Fund Unit Transactions and Schedule of Commissions for each Fund, excluding the

Knight Bain Funds, are for the years ended March 31, 2009 and March 31, 2008. The Statements of

Operations, Statements of Changes in Net Assets, Schedule of Fund Unit Transactions and Schedule

of Commission for each Knight Bain Fund are for the year ended March 31, 2009 and for the period

from January 1, 2008 to March 31, 2008, except for Knight Bain Canadian Bond Fund for which the

information provided relates to the year ended March 31, 2009 and for the period from July 27, 2007

to March 31, 2008. The Fund Specific Financial Instruments Risks for each of the Funds are as at

March 31, 2009.

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with Canadian Generally Accepted

Accounting Principles (“GAAP”).

(a) Adoption of New Accounting Standards

The Canadian Institute of Chartered Accountants (“CICA”) issued Section 3862 “Financial Instruments

– Disclosures” and Section 3863 “Financial Instruments – Presentation” in place of Section 3861

“Financial Instruments – Disclosure and Presentation”. Sections 3862 and 3863 became effective for

interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007,

specifically April 1, 2008 for the Funds. These sections establish standards for disclosure of financial

instruments including the nature and extent of risks arising from financial instruments to which the

Funds are exposed during the reporting period. The adoption of the new accounting standards has no

impact on valuation policies, nor the way the Funds’ Net Assets are calculated.

Section 1535 “Capital Disclosures” establishes standards for disclosing information about an entity’s

capital and how it is managed. This new standard became effective for interim and annual financial

statements relating to fiscal years beginning on or after October 1, 2007, specifically April 1, 2008 for

the Funds. The adoption of this new accounting standard has no impact on the Funds’ Net Assets.

(b) Valuation of Investments

The Canadian Institute of Chartered Accountants (“CICA”) issued Section 3855, “Financial Instruments –

Recognition and Measurement”, which requires the fair value of financial instruments to be measured

based on investments’ bid/ask price depending on investment position (long/short). For financial

reporting purposes, on April 1, 2007, the Funds adopted Section 3855 on a retrospective basis without

restatement of prior years’ numbers. Prior to adoption of Section 3855 the fair value of investments for

financial reporting purposes was measured based on the closing market price for the day.

The Canadian Securities Administrators (“CSA”) amended section 14.2 of National Instrument 81-106

on September 5, 2008. The amended section 14.2 requires the net asset value of an investment fund to

be calculated using the fair value of the fund's assets and liabilities. The adoption of Section 3855

results in a different valuation method for calculating net asset value for financial reporting purposes.

For the purpose of processing unitholder transactions, net asset value is calculated based on the closing

market price (referred to as “Net Asset Value”), while for financial statement purposes net asset value

is calculated based on bid/ask price (referred to as “Net Assets”). In accordance with NI 81-106, a

reconciliation between the Net Asset Value per unit and the Net Assets per unit is disclosed in the

Schedule of Net Assets Reconciliation as at March 31, 2009 and 2008. The Portfolio Series Funds invest

in units of other funds, “underlying funds”. As a result, the Section 3855 has no impact on the Funds’

valuation policies. The underlying funds will continue to be valued at their net asset value as reported

by the funds manager. The Funds’ investment transactions are not subject to transaction costs.

Investments are categorized as held for trading in accordance with Section 3855, “Financial

Instruments – Recognition and Measurement” and are recorded at their fair value for financial

reporting purposes. Listed securities are valued based on the bid price for securities held long and the

ask price for securities held short on the financial reporting date. Unlisted securities are valued based

on price quotations from recognized investment dealers, or failing that, their fair value is determined

by the Manager on the basis of the latest reported information available. Fixed income securities,

debentures, money market investments and other debt instruments are valued at the bid quotation

from recognized investment dealers. Underlying funds are valued on each business day at their Net

Asset Value as reported by the fund manager.

(c) Commissions and other portfolio transaction costs

Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities,

are included in “Commissions and other portfolio transaction costs” in the Statements of Operations.

(d) Cost of Investments

Cost of investments represents the amount paid for each security and is determined on an average cost

basis excluding commissions and transactions costs.

(e) Investment Transactions and Income Recognition

Investment transactions are accounted for on the trade date for financial reporting purposes and any

realized gains and losses from such transactions are calculated on an average cost basis.

Dividend income and distributions from investment funds are recognized on the ex-dividend/ex-

distribution date and interest income on the accrual basis.

Distributions received from income trust holdings are recorded as income, capital gains or a return of

capital, based on the best information available to the Manager. Due to the nature of these

investments, actual allocations could vary from this information. Distributions from income trusts that

are treated as a return of capital for income tax purposes reduce the average cost of the underlying

investment trust.

(f) Foreign Exchange

Foreign currency amounts are translated into the functional currency as follows: fair value of

investments, forward currency contracts, other assets and liabilities at the closing rate of exchange on

each business day and income, expenses and purchases, sales and settlements of investments at the

rate of exchange prevailing on the respective dates of such transactions. Foreign exchange gains

(losses) on completed transactions are included in “Foreign exchange gain (loss)” as reflected in the

Statements of Operations.

(g) Increase (Decrease) in Net Assets from Operations per Unit

“Increase (decrease) in net assets from operations per unit” in the Statements of Operations is

calculated by dividing the increase (decrease) in net assets from operations per class of a Fund by the

weighted average number of units outstanding during the period for that class.

(h) Forward Contracts

The Fund may enter into forward contracts. Forward foreign currency contracts are valued, using a bid

price on the related public exchange, on each valuation day according to the gain (loss) that would be

realized if the contracts were closed out.

All gains (losses) arising from forward foreign currency contracts are recorded as part of “Change in

unrealized appreciation (depreciation) of investments” in the Statements of Operations and

“Unrealized gain (loss) on derivative instruments” in the Statements of Net Assets until the contracts

are closed out or expire, at which time the gains (losses) are realized and reported as ) ”Realized gain

(loss) on investments” in the Statements of Operations.

(i) Futures Contracts

Futures contracts are valued on each valuation day using the bid/ask price posted on the related public

exchange. All gains or losses arising from futures contracts are recorded as part of “Change in

unrealized appreciation (depreciation) of investments” in the Statements of Operations until the

contracts are closed out or expired, at which time the gains (losses) are realized and reported as

”Realized gain (loss) on investments” in the Statements of Operations.



(j) Short Selling

Certain Funds have obtained relief from the required regulators to engage in short selling. When a

Fund sells a security short, it will borrow that security from a broker to complete the sale. The Fund

will incur a loss as a result of a short sale if the price of the borrowed security increases between the

date of the short sale and the date on which the Fund closes out its short position by buying that

security. The Fund will realize a gain if the security declines in price between those dates. The gain or

loss that would be realized if, on the valuation date, the position were to be closed out is reflected in

the Statements of Operations as part of “Change in unrealized appreciation (depreciation) in value of

investments” and in the Statements of Net Assets in “Investments sold short at market value”.

When the short position is closed out, gains and losses are realized and included in “Net realized gain

(loss) on sale of investments”.

(k) Private Placements

The fair value of private placements are determined using indicative bid values obtained from third-

party broker-dealers. The broker-dealers determine the fair value using valuation models that are

based, in part, on assumptions that are not supported by observable market inputs. The indicative bid

values are independently assessed internally to ensure that they are reasonable. The fair values of

private placements are affected by the perceived credit risk of the issuers, predictability of cash flows

and the length of time to maturity.

(l) Cash and Short-Term Investments

Cash is comprised of cash on deposit. Short-term investments are comprised of short term-debt

instruments with maturity of less than one year at acquisition.

(m) Net Asset Value Per Unit

Net asset value per unit for each class is calculated at the end of each day on which the Toronto Stock

Exchange is open for business by dividing the net asset value 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, and gains and losses are allocated to each class proportionately based upon the

relative net asset value of each class.

(n) Use of Estimates

The preparation of financial statements in accordance with Canadian Generally Accepted Accounting

Principles requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities at the reporting date and the reported amounts of income and expenses during

the reporting period. Actual results could differ from those estimates.

3. UNITHOLDERS’ EQUITY

Units issued and outstanding represent the capital of each Fund.

Each Fund is authorized to issue an unlimited number of redeemable, transferable units of each class.

Generally the Funds have no restrictions or specific capital requirements, except for the minimum

subscription/ redemption amounts. The relevant changes pertaining to subscription and redemption of

each Fund units are disclosed in the Statements of Changes in Net Assets. In accordance with the

objectives and risk management polices outlined in Note 11, the Funds endeavor to invest subscriptions

received in appropriate investments while maintaining sufficient liquidity to meet redemptions through

utilizing a short-term borrowing facility or disposal of investments when necessary.

The unitholder transactions are processed based on net asset value which is calculated daily based

on the closing market price on that day.

4. INCOME TAXES

The Funds qualify as mutual fund trusts under the provisions of the Income Tax Act (Canada) and 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 Fund’s 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 generally be 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 sufficient 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.

Net capital losses may be carried forward indefinitely to reduce future net realized capital gains.

Non-capital losses arising in taxation years up to 2003 may be carried forward seven years. Non-

capital losses arising in taxation years 2004 and 2005 may be carried forward ten years. Non-capital

losses arising in taxation years after 2005 may be carried forward twenty years. Refer to fund specific

schedules in the financial statements for tax loss carried forward information.

5. MANAGEMENT FEES AND OTHER EXPENSES

CI Investments Inc. is the Manager of each Fund and in consideration of management fees provides

management services required in the day-to-day operations of the Funds including management of the

investment portfolios of the Funds.

The management fee is calculated based on the net asset values of each class of the Fund (other than

Class I) at the end of each business day.

Investors in Class I units are charged a management fees directly as negotiated between the investor

and the Manager.

During the year ended March 31, 2009, the Manager of the Fund absorbed total of $263,000 and

U.S. $53,000 in Management Fees due to the declining yields generated by the following funds

CI US Money Market Fund and CI Money Market Fund.

The manager bears all of the operating expenses of the Funds (other than certain taxes, borrowing costs

and new governmental fees) in return for fixed annual administration fees (the “Administration Fees”).

Each Administration Fee is calculated as a fixed annual percentage of the net asset value of each class

of a Fund (other than Class I or M) at the end of each business day.

Refer to fund specific schedules in the financial statements for management fee and administration

fee rates applicable to each class.

During the reporting period the Fund may receive management fee rebates from the Underlying

Funds. The management fee rebates are included in “Management fee rebate receivable” and in

“Management fee rebate” as reflected in the Statement of Net Assets and Statement of Operations

of each Fund, as applicable. However, upon the manager’s discretion the management fee rebate may

from time to time be netted against management fees expenses.



6. SECURITIES LENDING

Certain Funds have entered into a securities lending program with their custodian, RBC Dexia Investor

Services Trust ("RBC Dexia"). The aggregate market value of all securities loaned by a Fund cannot

exceed 50% of the net 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. RBC Dexia

has indemnified the Funds against the credit risk of the borrowers. For those Funds participating in the

program, amounts for securities loaned and the collateral received, appear on the fund specific

schedules in the financial statements, income from securities lending is included in "Securities

lending" in the Statements of Operations and any cash collateral received or cash collateral payable

is included in the Statements of Net Assets in “Cash collateral received for securities on loan “or”

Payable for cash collateral under securities lending”.

7. REINVESTMENT OF DISTRIBUTIONS

When a Fund pays a distribution to a unitholder, it will be paid in the same currency in which the units

are held. Distributions are automatically reinvested without charge in the same Fund or paid out in

cash to the unitholder. The Manager may change the distribution policy at its discretion.

8. RELATED PARTY TRANSACTIONS

On October 6, 2008 Sun Life Financial Inc. sold its significant interest in CI Financial Corp. (formerly

CI Financial Income Fund) to The Bank of Nova Scotia. As CI Financial Corp. is the parent company of

the Manager, The Bank of Nova Scotia therefore is considered a related party to the Funds. The Bank

of Nova Scotia did not hold investments in the Funds as at March 31, 2009.

Blackmont Capital Inc. is a subsidiary of CI Financial Corp. As CI Financial Corp., is the parent company

of the Manager of the Funds, Blackmont Capital Inc. is thus considered a related party to the Funds.

The Funds paid the following brokerage commissions to Blackmont Capital Inc., an affiliated company

of CI Investments Inc. during the years ended March 31, 2009 and 2008:

2009 2008

Fund ($) ($)

CI Alpine Growth Equity Fund - 369

CI Canadian Asset Allocation Fund - 1,656

CI Canadian Investment Fund 82,440 -

CI Canadian Small/Mid Cap Fund 15,363 45,395

CI International Fund 1,278 -

Harbour Fund 57,600 59,700

Harbour Growth & Income Fund 84,100 64,712

Knight Bain Corporate Bond Fund - 12

Knight Bain Diversified Monthly Income Fund 400 6,496

Select Canadian Equity Managed Fund 2,084 360

Select Income Managed Fund 139 103

Signature Canadian Asset Allocation Fund 1,968 -

Signature Canadian Balanced Fund 9,354 10,137

Signature Canadian Resource Fund 24,492 6,889

Signature Dividend Fund 3,598 5,315

Signature Global Income & Growth Fund 51 28

Signature High Income Fund 20,400 32,713

Signature Income and Growth Fund 14,586 14,254

Signature Select Canadian Fund 38,318 30,151

Synergy Focus Canadian Equity Fund 12,084 10,222

Synergy Focus Global Equity Fund 647 - 647

Synergy Tactical Asset Allocation Fund 4,664 2,487

9. FUTURE ACCOUNTING STANDARDS

“International Financial Reporting Standards”

On February 13, 2008, the Canadian Accounting Standards Board (“AcSB”) confirmed that the use

of International Financial Reporting Standards (“IFRS”) will be required in 2011 for all publicly

accountable profit-oriented enterprises. IFRS will replace Canadian Generally Accepted Accounting

Principles (“GAAP”). IFRS becomes effective for interim and annual financial statements relating to

fiscal years beginning on or after January 1, 2011.

At March 31, 2009, the Manager is taking the following steps to transition to IFRS:

• Identification of areas where changes in disclosure will be required under IFRS standards.

• Identification of operational areas impacted by the adoption of IFRS.

• Identification of major differences between current accounting policies and IFRS standards.

• Assessment of impact, if any, on net asset value per unit.

• Assessment of current reporting systems and their readiness for IFRS implementation.

• Implementation of an IFRS transition plan.

As at March 31, 2009, the Manager has determined that there is no expected impact to net asset value

per unit as a result of the transition to IFRS.

Amendments to Section 3862, “Financial Instruments - Disclosures”

Section 3862, was recently amended and requires publicly accountable enterprises to enhance their

disclosures about fair value measurements and the liquidity risk of financial instruments. The

amendments will be effective for annual financial statements relating to fiscal years ending after

September 30, 2009, specifically the March 31, 2010 financial statements of the Funds. These

amendments have been made to address the need for increased consistency and comparability in fair

value measurements, and to expand the disclosure surrounding fair value measurements, and do not

have any impact on the net assets of the Funds.

10. FINANCIAL INSTRUMENTS

The categorization of financial instruments in accordance with CICA 3855, Financial Instruments –

Recognition and Measurement (“CICA 3855”) are as follows: financial assets and financial liabilities

held for trading which include investments and derivative instruments are stated at fair value.

Due from brokers, interest and dividends receivable, subscriptions receivable and other receivables are

designated as loans and receivables. They are recorded at amortized cost which approximates their

fair value due to their short term nature. Similarly, redemptions payable, due to brokers, accrued

management fees, accrued expenses and other payables are designated as other liabilities and are

carried at their amortized cost which approximates their fair value, due to their short term nature.

11. FINANCIAL INSTRUMENTS RISK

Risk Management

The Funds are exposed to a variety of financial instruments risks: credit risk, liquidity risk and market risk

(including interest rate risk, currency risk and other price risk). The level of risk to which each Fund is

exposed depends on the investment objective and the type of investments the Fund holds. The value of

the investments within the portfolio can fluctuate daily as a result of changes in prevailing interest rates,

economic and market conditions and company specific news related to investments held by the Funds.

The Manager of the Funds may minimize potential adverse effects of these risks on the Funds’

performance by, but not limited to, regular monitoring of the Funds’ positions and market events,

diversification of the investment portfolio by asset type, country, sector, term to maturity within the

constraints of the stated objectives, and through the usage of derivatives to hedge certain risk exposures.

Details of each individual Fund’s exposure to financial instruments risks are available in the “Fund

Specific Financial Instruments Risks” section of the financial statements of each Fund.



Other Price Risk

Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes

in market prices (other than those arising from interest rate risk or currency risk). The value of each

investment is influenced by the outlook of the issuer and by general economic and political conditions,

as well as industry and market trends. All securities present a risk of loss of capital. Except for options

written, future contracts sold short and investments sold short, the maximum risk resulting from

financial instruments is equivalent to their fair value.

Other assets and liabilities are monetary items that are short-term in nature and therefore are not

subject to significant other price risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value of interest-bearing investments will fluctuate due to

changes in prevailing levels of market interest rates. As a result, the value of the Funds that invest in

debt securities and income trusts will be affected by changes in applicable interest rates. If interest

rates fall, the fair value of existing debt securities may increase due to the increase in yield. On the

other hand, if interest rates rise, the yield of existing debt securities decrease which may then lead to

a decrease in their fair value. The magnitude of the decline will generally be greater for long-term debt

securities than for short-term debt securities.

Interest rate risk also applies to Funds that invest in convertible securities. The fair value of these

securities varies inversely with interest rates, similar to other debt securities. However, since they may

be converted into common shares, convertible securities are generally less affected by interest rate

fluctuations than other debt securities.

All fixed income securities rated BBB/Baa/B++ or above are considered investment grade and have a

lower credit risk than below investment grade bonds.

The Portfolio Series Funds invest only in units of underlying funds and may be exposed to indirect

interest rate risk in the event that the underlying fund invests in interest bearing financial instruments.

Currency Risk

Currency risk arises from financial instruments that are denominated in a currency other than the

functional currency of the Funds. As a result, the Funds may be exposed to the risk that the value of

securities denominated in other currencies will fluctuate due to changes in exchange rates.

The Statement of Investment Portfolio identifies all bonds and derivative instruments denominated in

foreign currencies, if applicable. Equities traded in foreign markets are also exposed to currency risk

as the prices denominated in foreign currencies are converted to the Funds’ functional currency to

determine their fair value.


currency risk in the event that the underlying fund invests in financial instruments that are

denominated in a currency other than the functional currency of the Fund.

Credit Risk

Credit risk is the risk that a security issuer or counterparty to a financial instrument will fail to meet

its financial obligations. The fair value of a debt instrument includes consideration of the credit

worthiness of the debt issuer. The carrying amount of debt instruments as presented on the Statement

of Investment Portfolio represent credit risk exposure of each Fund. Credit risk exposure for derivative

instruments is based on each Fund’s unrealized gain on the contractual obligations with the

counterparty as at the reporting date. The credit rating of a counterparty to derivative instrument is

disclosed in Statement of Investment Portfolio of each Fund, if applicable. The credit risk exposure

of the Fund’s other assets are represented by their carrying amount as disclosed in the Statements of

Net Assets.

Significant cash balances may be maintained at the custodian and the manager monitors the credit

worthiness of the custodian on an regular basis.

All transactions executed by a Fund in listed securities are settled / paid for upon delivery using

approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made

once the broker has received payment. Payment is made on a purchase once the securities have been

received by the broker. The trade will fail if either party fails to meet its obligation.


credit risk in the event that the underlying fund invests in debt instruments, preferred securities

and derivatives.

Liquidity Risk

Liquidity risk is the risk that the Funds may not be able to settle or meet their obligations, on time or

at a reasonable price. The Funds are exposed to daily cash redemption of redeemable units. Therefore,

the Funds aim to invest the majority of their assets in investments that are traded in active markets

and can be readily disposed of. In addition, the Funds aim to retain sufficient cash and cash

equivalents positions to maintain liquidity. From time to time, the Funds may enter into derivative

contracts or invest in unlisted securities that may not trade in an organized market and may be illiquid.

Illiquid securities are identified in the Statement of Investment Portfolio of each Fund, if applicable.



– 37 –

Legal Notice

Notice: Should you require additional copies of this Annual Report or have received more than one copy,please contact CI Investments Inc. (the “Manager”) or your financial advisor.

Commissions, trailing commissions, management fees and expenses all maybe associated with mutual fundinvestments. Please read the prospectus before investing. Unless otherwise indicated and except forreturns for periods less than one year, the indicated rates of return are the historical annual compoundedtotal returns including changes in security value. All performance data assume reinvestment of alldistributions or dividends and do not take into account sales, redemption, distribution or optional charges orincome taxes payable by any securityholder that would have reduced returns. Mutual funds are notguaranteed, their values change frequently and past performance may not be repeated. Mutual fundsecurities are not covered by the Canada Deposit Insurance Corporation or by any other governmentdeposit insurer.

The commentaries contained herein are provided as a general source of information and should not beconsidered personal investment advice or an offer or solicitation to buy or sell securities. Every effort hasbeen made to ensure that the material contained in these commentaries is accurate at the time ofpublication. However, the Manager cannot guarantee its accuracy or completeness and accepts noresponsibility for any loss arising from any use of or reliance on the information contained herein.

Simplified Prospectus: The Simplified Prospectus and Annual Information Form of a Fund are renewedannually. The Manager would be pleased to provide, without charge, the most recent SimplifiedProspectus upon request to its Toronto office.

®CI Funds, CI Investments, CI Investments design, Harbour Funds, Global Managers and AmericanManagers are registered trademarks of CI Investments Inc.

™The Portfolio Select Series and Signature Funds are trademarks of CI Investments Inc.


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2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I www.ci.com

KB_AR_06/09E

Head Office / Toronto416-364-1145 1-800-268-9374

Calgary 403-205-43961-800-776-9027

Montreal 514-875-00901-800-268-1602

Vancouver 604-681-33461-800-665-6994

Client Services English: 1-800-563-5181French: 1-800-668-3528

Knight Bain Funds · 2009-08-18 · – 4 – Knight Bain Pure Canadian Equity Fund Statement of Investment Portfolio as at March 31, 2009 No. of Shares/ Average Fair Face Amount

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