CI Financial Income Trust Valuation Matrix

National Bank Financial Research: CIX Income Trust yield matrix

June 22, 2006

John Aiken, john.aiken@nbfinancial.com
Associate: Philip Hardie, philip.hardie@nbfinancial.com

CI Announces Shareholder Approval to an Income Trust
At a special meeting today, shareholders approved CI Financial's plan to convert to an income trust. The conversion is anticipated to be completed by June 30, with the first monthly distribution (estimated to be $0.1675 per share, or $2.01 annualized) most likely to be paid out on July 14. Further, it is anticipated that CI will change its year end from its current May to December.
Our Opinion
As discussed in previous research, we view the conversion favourably and believe that CI will ultimately be viewed as one of the premier income trusts. That said, CI's share price has declined over recent weeks, down almost 14% from its high.

As of yesterday's close, CI's pro forma yield was approximately 7%, well above the yield of some of the high quality, recurring revenue trusts of just over 6.5%. Using similar valuations, CI's valuation as a trust would be fairly valued at over $30, providing strong upside not even accounting for its higher yield.

In the chart below, we provide a valuation sensitivity on our forecast for fiscal 2007 distributions of $2.25, which represent growth of only 12% from CI's announced run-rate. While CI's valuation is currently being impacted by negative sentiment garnered by the weakness in the equity markets, we note that, even assuming fairly punitive markets for 2007, our cash distribution forecasts only decline to roughly $2.09, reflecting a $30 valuation on current implied yield and $32 based on premium trust valuations.


We note that each 1% decline in annualized investment returns only decreases forecast cash distributions by $0.01 per share (or $0.15 on its valuation). Further, assuming flat net sales for the year does not have a detrimental impact on near term cash distribution levels, as the declining revenue is offset by the lack of cash outflows required to fund deferred sales charges.

We believe that CI's current valuation represents an overly conservative view on its future prospects and believe that, with no serious impediments remaining to CI's conversion, its valuation will once again align with those of the premier income trusts. Consequently, we believe that this is an excellent opportunity to begin to accumulate the stock for investors wishing to hold it as a trust.

gENUITY RESEARCH NOTE: Canadian Asset Managers : Preliminary May IFIC results

June 5, 2006 Karin Huo, CA, CFA – 416.687.5311 karin.huo@genuitycm.com
Mario Mendonca, CA, CFA – 416.687.5265 mario.mendonca@genuitycm.com

Preliminary May IFIC results

AGF Management Ltd (AGF.NV) 21.50$ Hold $26.00

CI Financial (CIX) 31.39$ Restricted Stock Recommendation Return Restricted

Dundee Wealth Mgmt (DW) 11.65$ Hold $13.00

IGM Financial (IGM) 46.55$ Hold $53.00

• Based on a sample of preliminary data, IFIC estimates net new sales for the month of May to be between $100 million and $600 million. This compares to net new sales of $537.1 million in the prior month and $1.1 billion in the prior year. Long-term net new sales are estimated to be approximately $883 million, while money market funds are estimated to have experienced net redemptions of $532 million.

• Industry assets under management at the end of May 2006 are estimated to be between $588 billion to $593 billion, down approximately 2.8% from last month’s total of $608 billion.

• Uncertain market conditions resulted in most of the major indices falling in May. The S&P/TSX Composite Index fell 3.8%, led by a decline in energy and materials. In the rest of the world, the S&P 500 was down 3.1%, the NASDAQ was down 6.2%, and the MSCI World Index was down 3.7%. Foreign equity funds were negatively impacted by the continuing strength of the Canadian dollar.

• RBC Asset Management continues to lead the industry with net new sales of $267 million in May. CI Financial was second with net new sales of $238 million, and Dynamic Mutual Funds was third with net new sales of $110 million.

• CIBC Asset Management was the worst performer this month with net redemptions of $296 million. AIM Trimark was close behind with net redemptions of $281 million. The other companies reporting net redemptions this month include AIC, National Bank Mutual Funds, TD Asset Management, Altamira, Scotia Securities, and AGF Management. AGF was unable to continue its trend of positive net new sales this month and reported net redemptions of $11 million.

• The results from the six major banks (BMO, BNS, CM, NA, RY, and TD) were again mixed this month. TD Asset Management reported its first month of net redemptions since September 2004, primarily from its money market funds. Overall, the six major banks generated net redemptions of $125 million in May, down from net new sales of $549 million (55.2% of industry) in the prior year.

• According to IFIC, the four independent public asset managers reported much better results than the banks this month. Overall, they reported net new sales of $426 million (121.4% of industry), versus net new sales of $158 million (15.9% of industry) last year.
Preliminary industry results Last Friday, the Investment Funds Institute of Canada (IFIC) released its preliminary estimates for the Canadian mutual fund companies for May 2006.

NET NEW SALES Source: IFIC Industry net new sales and assets Based on a sample of preliminary data, IFIC estimates net new sales for the month of May to be between $100 million and $600 million. This compares to net new sales of $537.1 million in the prior month and $1.1 billion in the prior year.

Long-term net new sales are estimated to be approximately $883 million, while money market funds are estimated to have experienced net redemptions of $532 million. Industry assets under management at the end of May 2006 are estimated to be between $588 billion to $593 billion, down approximately 2.8% from last month’s total of $608 billion. Volatility in equity markets reduces assets under management Uncertain market conditions resulted in most of the major indices falling in May. The S&P/TSX Composite Index fell 3.8%, led by a decline in energy and materials. In the rest of the world, the S&P 500 was down 3.1%, the NASDAQ was down 6.2%, and the MSCI World Index was down 3.7%. Foreign equity funds were negatively impacted by the continuing strength of the Canadian dollar.

RBC Asset Management leads the industry again in May RBC Asset Management continues to lead the industry with net new sales of $267 million in May. CI Financial was second with net new sales of $238 million, and Dynamic Mutual Funds was third with net new sales of $110 million. Eight companies reported net redemptions in May, and four of those companies were banks. CIBC Asset Management was the worst performer this month with net redemptions of $296 million, coming from both long-term and money-market funds. AIM Trimark was close behind with net redemptions of $281 million. The other companies which reported net redemptions this month include AIC, National Bank Mutual Funds, TD Asset Management, Altamira, Scotia Securities, and AGF Management. The results from the six major banks (BMO, BNS, CM, NA, RY, and TD) were again mixed this month with only two of the banks reporting positive net new sales. TD Asset Management reported its first month of net redemptions since September 2004, primarily from its money market funds due to higher interest rates and market volatility. Overall, the six major banks generated net redemptions of $125 million in May, down from net new sales of $549 million (55.2% of industry) in the prior year. Canadian asset managers According to IFIC, the four independent public asset managers reported significantly better results than the banks this month. Overall, they reported net new sales of $426 million (121.4% of industry), versus net new sales of $158 million (15.9% of industry) last year. The remainder of our discussion of the asset managers focuses on the data from the separate press releases provided by the companies that disclose net sales and AUM.

AGF Management

AGF Management reported net redemptions of $11.0 million, versus net new sales of $1.9 million last month and net redemptions of $205.2 million last year. While AGF was unable to continue its trend of positive net new sales this month, the magnitude of redemptions in May 2006 was well below May 2005. Mutual fund assets under management were $23.7 billion, down 4.0% from $24.7 billion in the previous month. Weak investment markets as well as a rising Canadian dollar reduced assets under management by $978.0 million in May. Total assets under management (including institutional and Private Investment Management) were $37.7 billion, down 3.6% from the previous month. Although AGF reported net redemptions in May, gross sales of $366.3 million were up 110% from the previous year. We continue to believe that AGF has implemented the right initiatives to address its difficulties and the company is well positioned to maintain its sales momentum throughout the rest of the year.

CI Financial

CI Financial reported gross sales of $932 million, up from $720 million last month and $675 million last year. Net new sales (excluding reinvested distributions) were $227 million, versus $131 million last year. Total fee-earning assets as of May 31, 2006 were $74.2 billion, down 2.6% from $76.2 billion last month. Mutual fund assets were $55.8 billion, down 2.7% from the previous month and up 16.6% from last year.

Dundee Wealth Management

Dundee Wealth Management reported net new sales of $175 million in May, versus $82 million last month and $142 million last year. Total assets under management (including Dundee Securities Managed Accounts) were $21.3 billion, down 2.7% due to negative market performance. Dundee continues to report solid and consistent sales results each month, and we believe that it will continue to do so throughout the rest of the year. We continue to rate Dundee Wealth a HOLD with a target price of $13.50. IGM Financial IGM Financial reported total mutual fund assets under management in May of $96.8 billion, down 2.7% from the previous month. Net sales were $85.5 million, down 43% from $141.9 million last year.

IGM Financial

While Investors Group continues to generate solid sales results, Mackenzie Financial reported its first month of net redemptions since January 2005.

BMO NESBITT BURNS: CI FINANCIAL (CIX) OUTPERFORM RESEARCH NOTE

CI Financial Inc (CIX-TSX)

Stock Rating: Outperform
Stock
Price: $31.03
Target Price: $39.00
Member of:Top 15 Income Stock Selections

June 1, 2006
Brief Research Note
Financial Services - Diversified Financials John Reucassel, CFA(416) 359-4379 John.Reucassel@bmonb.com
Assoc: Jennifer Kao, CFA


Very Good May Net Inflows; Estimated $0.16-0.17 monthly distribution upon conversion.

Impact Potentially Positive

Details & Analysis

CI announced long-term fund net sales of $185 million for May 2006 A strong result given the market volatility and a non-RRSP month. We believe that these results underscore the company's strong competitive position. Industry results are likely to also be favourable, with the banks showing particular strength.

The management circular was also released yesterday and indicated that as a business trust, CI expects its monthly distributions to start atapproximately $0.16-0.17, or $1.92 to $2.04. Using the mid-range of $2.00 implies a current yield of 6.5% (13.0x 2007E EBITDA; FYE is May). Given the company's organic growth prospects of roughly 7% over a cycle, we believe that this growth combined with the yield makes CI an attractive business trust. CI hopes to convert shortly after the shareholder meeting schedulefor June 22, 2006, and is conditional on receiving an advanced tax ruling.

CI remains Outperform rated.