Uncovering opportunity in a global economy

GLOBAL

What does globalization really mean?

Machine sold by Canadian retailer

Software applications designed in the United Kingdom

Processor made in Japan

Memory storage produced in China

Camera made in Germany

Microphone designed in Switzerland

Glass produced in the United States

Semi-conductors manufactured in Taiwan

After-market accessories designed in Mexico

The term ’globalization’ is nothing new - pundits have been talking

about a ‘global village’ for several decades now. But to see what

these concepts really mean in practical terms, it might help to examine

the global roots of something as simple as making a phone call.

With Renaissance Investments’ global expertise and investing opportunities, clients can reap the global advantage.

Investors share in wealth creation as they gain the benefits of geographic and sector diversification.

From living in the global economy to investing in it is a natural step.

Luc de la DurantayeFirst Vice-President, Global Asset Allocation & Currency Management, CIBC Global Asset Management

Canada: Small and narrow

The World: Big and broad

The Canadian stock market is known for its strength in three core sectors:

• Financials - banks and insurance companies• Energy - oil and gas producers• Materials - base and precious metals producers

These three industries account for over 76% of all the stocks in the Canadian S&P/TSX Composite Index. While this is good for the Canadian economy, this narrow focus means that investment opportunities in other key sectors – such as manufacturing, technology, and health care – are relatively scarce within our borders.

In addition, the overall size of the Canadian market is small on a global scale, accounting for slightly more than 3% of the world’s total stock market capitalization.*

*Source: Bloomberg as at July 31, 2012.

Global markets are not only much bigger than Canada, they also contain a much broader range of investment opportunities. The numbers paint an intriguing picture.

A total of 40,000 stocks trade in global markets. Compare that to 3,700 stocks that trade in Canada, with only about 250 companies making up the benchmark S&P/TSX Composite Index.

The MSCI World Index tracks more than 4,600 global stocks, with financials, energy and materials comprising about 40%, offering more than 10 times as many potential investment opportunities in these sectors versus the S&P/TSX Composite Index.

To gain diversity, look outside of Canada. Most leaders in industries such as health care, technology, consumer goods and manufacturing are based outside our borders. To provide just one example, 82% of the world’s drug sales are generated by 20 major pharmaceutical companies, with none of them headquartered in Canada.*

*Source: 2011 Pharmaceutical Executive, 2010 data.

Most leaders in industries such as health care, technology, consumer goods and manufacturing are based outside our borders.

76.2% 23.8%

36.0% 64.0%

S&P/TSX Composite Index

MSCI World Index

Financial, energy and materials

Consumer discretionary, consumer staples, health care, industrials, information technology, telecommunication services, utilities

0% 20% 40% 60% 80% 100%

Source: Mellon Analytics, as at June 30, 2012.

Tap into a new world of opportunity Developed markets like Canada, the U.S. and Europe do not have the same growth potential as emerging economies like China, India and many regions in the Pacific Rim. As people in less developed countries get more disposable income to buy previously unattainable items such as cars, appliances and mobile phones, demand for supporting industries like oil, gas and metals is poised to rise. This is why global markets are primed for growth.

Emerging market economies now account for 52% of the world’s motor vehicle sales and 82% of mobile phone subscriptions.

100

90

80

70

60

50

40

30

20

10

01990

Economies’ share of world GDP (%)At market exchange rates

Developed

Emerging

Forecast

1995 2000 2005 2010 2015 2020 0 25 50 75 100

Emerging economies’ world share (%)2010

Sources: AT Kearney; Bloomberg; BP; dotMobi; Fortune; IMF; UBS; UN; World Bank; World Steel Association; WTO.

*Purchasing-power parity. †Foreign direct investment.

100

90

80

70

60

50

40

30

20

10

01990

Economies’ share of world GDP (%)At market exchange rates

Developed

Emerging

Forecast

1995 2000 2005 2010 2015 2020 0 25 50 75 100

Emerging economies’ world share (%)2010

Powerful trends drive the case

for global investing:

• Emerging countries are rapidly

becoming the growth engines

of the world economy

• Global trade is rising as barriers fall

• Truly global companies are

increasingly deriving earnings

from regions beyond their home

headquarters

• Bond and stock markets, alongside

overall investment potential, in

less developed regions have much

more growth potential compared to

advanced economies like Canada

or China

Global markets outperformYou can’t predict the best performer, and Canadian markets have rarely been at the top...

Ranking 2007 2008 2009 2010 2011 2012*

#1 Peru

65.2%Morocco

11.5%Sri Lanka

147.5%Argentina

68.1%Ireland 17.1%

Egypt 34.6%

#2 Brazil 52.7%

Colombia -6.3%

Brazil 94.1%

Sri Lanka 65.0%

Indonesia 9.1%

Turkey 28.9%

#3Turkey 48.3%

Israel -11.0%

Indonesia 93.3%

Thailand 48.1%

New Zealand 9.0%

Philippines 26.8%

#4 India 46.8%

Japan -11.3%

Russia 74.0%

Peru 45.4%

USA 4.5%

Belgium 20.3%

#5 China 41.0%

Switzerland -12.3%

India 72.2%

Chile 37.3%

Malaysia 2.6%

Colombia 18.1%

#6 Egypt 34.4%

Jordan -18.3%

Turkey 68.6%

Colombia 35.9%

Philippines 2.6%

Pakistan 15.2%

#7 Czech Republic

32.3%Chile

-19.2%Pakistan

61.5%Malaysia

29.9%Thailand

0.0%Singapore

14.9%

#8 Indonesia

31.5%USA

-21.4%Norway 60.2%

Philippines 28.4%

United Kingdom -0.1%

Denmark 14.8%

#9 Finland 27.3%

South Africa -22.3%

Chile 58.6%

Sweden 27.8%

Colombia -2.7%

Thailand 14.7%

#10 Morocco

25.7%Spain -25.0%

Colombia 56.6%

Indonesia 27.6%

Switzerland -3.7%

Mexico 14.5%

10.5% (#21)

-31.4%(#16)

33.6%(#25)

14.9%(#20)

-10.0%(#20)

-1.4%(#36)

Source: MSCI supplied by Zephyr Associates, Inc. *As at June 30, 2012.

Ranking

On a typical day, the average Canadian could touch more than a dozen global economic regions. As the global economy continues to converge, the range of compelling investment opportunities keeps expanding.

You live in the global economy so why not invest in it?

6:30 p.m.

Arrive home from work in German-designed car

7:20 p.m.

Enjoy appetizer of imported French cheese and Italian wine

7:33 p.m.

Cook dinner on barbeque manufactured in the United States

8:25 p.m.

Place dishes into dishwasher designed in Switzerland

9:00 p.m.

Watch favourite show on Japanese-manufactured television

10:05 p.m.

Check for voicemail messages on Chinese-assembled smart phone

10:20 p.m.

Grab electric toothbrush designed in the Netherlands

10:42 p.m.

Set alarm clock manufactured in Malaysia

11:18 p.m.

Dream of upcoming family vacation to Australia

Benefit from our global solutionsWith our broad selection of mutual funds and

diversified portfolios, you and your investment

advisor can design a comprehensive solution that

can provide the global diversification you need.

To learn more, contact your investment advisor.

Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the Renaissance Investments family of funds simplified prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Renaissance Investments is offered by CIBC Asset Management Inc. ™ Renaissance Investments is a registered trademark of CIBC Asset Management Inc.

1 888 888 FUND (3863)www.renaissanceinvestments.ca

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