Dear Excel Investor,

Excel is poised to benefit from the unprecedented period of growth in emerging markets over the next several years.

We have recently introduced three new funds bringing our total number of mutual fund offerings to 11; more emerging markets mutual funds offered compared to any other company in Canada.

• The Excel Emerging Markets Fund – The two most important factors to consider when investing in an emerging market equity fund are country allocation and stock selection. Excel Funds has developed unique models which identify the optimal country allocation to derive maximum returns while minimizing risk. Once the country allocation has been identified, we have the best managers on the ground in key countries to select globally competitive companies.
• The Excel EM High Income Fund – An actively managed, diversified portfolio of sovereign and corporate emerging markets fixed income instruments, for investors seeking an income stream from emerging market debt that have higher yield and currency appreciation potential.
• The Excel EM Capital Income Fund – A variation of its reference fund, the Excel EM High Income Fund that uses forward contracts to generate and pay out a tax–efficient monthly income which is treated as capital gains, essentially reducing taxes in half.

A key element of our strategy involves engaging the world’s best emerging markets asset managers. We continue to attract and partner with world class sub–advisers such as the major Indian mutual fund company, Birla SunLife AMC Ltd., Baring International Investment Limited and Itaú–Unibanco, the southern hemisphere’s largest bank.

The advantage of our growing reputation in emerging markets investing was underscored when we added Amundi Asset Management (‘Amundi’) to our roster of sub–advisers. Amundi, the sub–adviser for the Excel EM High Income Fund, was formed by combining the asset management expertise of two major banking groups: Crédit Agricole and Société Générale. With assets under management of approximately Cdn $1 trillion, Amundi ranks third in Europe and is one of the top 10 asset managers worldwide. Amundi has a corporate presence in more than 30 countries on five continents and has intimate knowledge of virtually every main market and investment region in the world.

Based on the continuously strengthening demographic and economic fundamentals among emerging markets, such as accelerating middle class growth and consumer spending, growing foreign direct investment, infrastructure spending and improvements, natural resource development, better fiscal management, improved monetary policies and corporate governance, stronger corporate balance sheets and the adoption of free market policies, along with steadily improving corporate and sovereign credit quality in emerging markets, The Economist predicts that about 70% of the world’s growth over the next few years will come from emerging markets. Goldman Sachs and others estimate that emerging equity capitalization could grow more than 470 per cent from the current US $14 trillion to US $80 trillion by 2030 and comprise 55 per cent of world market cap, up from less than one–third today.

While the economy experiences peaks and valleys over time, our focus is on steady and substantial long term growth. As we enter the most exciting and potentially prosperous period of our history, I want to thank all investors for choosing Excel Funds for your emerging market investments.

Best Regards,

Bhim D. Asdhir
President and Chief Executive Officer
Excel Funds