Chorus II Portfolio Annual Review

December 31, 2017

Hello and welcome to our annual review of the Chorus II Portfolios.

This is an overview of the elements that affected the results of the Chorus II portfolios in 2017. For a more detailed view of benchmark indexes and returns for each portfolio, see the document accompanying this video.

Strong global economic growth in 2017 and excellent financial results from companies supported the market's upward trend. Emerging markets stood out, thanks mainly to solid performance from the Asian markets.

The U.S. economy rebounded in the last quarter following the hurricanes and the rise of oil prices. The stock market kept up its momentum and benefited from the adoption of President Trump's tax reform initiative.

The Canadian market also did well, benefiting from higher oil and natural resource prices, and Canadian corporate earnings that generally exceeded analysts' expectations.

The markets did well and so did our Chorus II Portfolios. Since our portfolios are well-diversified, we were able to take advantage of a number of global financial market opportunities.

Our low-volatility portfolios benefited from diversification of the bond portion. We were therefore able to minimize the impact of the key rate hikes in Canada thanks, among other things, to tactical portfolio management. At the beginning of the year, our managers decided to reduce our exposure to Canadian bonds, which boded well for the portfolios. Returns for these portfolios ranged between 4.63% and 6.34% in 2017.

The growth portfolios benefited from the strong progression of the global economy through exposure to overseas equities and the notable performance of emerging markets. In 2017, returns ranged between 9.31% and 12.08%.

The outlook for 2018 is very good. Our economists anticipate that the global economy will continue its progression over the next year, which should be reflected in the global equity markets.

This solid economic growth should encourage the central banks to continue normalizing their monetary policies. Canada's key rate could go up again by the end of the year. However, inflation could influence the pace of rate increases.

Finally, our portfolio managers will be keeping a close eye on the NAFTA negotiations to stay on top of any impacts on the economy and equity markets. The expected solid economic growth and interest rate changes in some countries in 2018 will highlight the importance of having a well-diversified portfolio. Good diversification is essential for any investors who want to take advantage of opportunities stemming from the current economic situation.

For more in-depth information on the evolution of our Chorus II Portfolios, feel free to contact your representative.

Thank you.