Clarica Mutual Funds

2003 Annual Report as at December 31, 2003 A look inside

A Message From The President...... 1

A Message From AIM Funds Management Inc...... 2 Altrinsic Advisors, LLC ...... 3 Harbour Funds Group ...... 4 J. Zechner Associates Inc...... 5 MFC Global Investment Management (Canada) ...... 6 Signature Funds Group...... 7 Sionna Investment Managers Inc...... 8 Steinberg Priest & Sloane Capital Management, LLC ...... 9 Trilogy Advisors, LLC ...... 10 UBS Global Asset Management (Canada) Co...... 11

Equity Funds Clarica Alpine Canadian Resources Fund...... 12 Clarica Alpine Growth Equity Fund...... 16 Clarica Canadian Blue Chip Fund ...... 20 Clarica Canadian Equity Fund...... 24 Clarica Canadian Large Cap Value Fund ...... 27 Clarica Canadian Small/Mid Cap Fund ...... 30 Clarica Global Large Cap Value Fund ...... 34 Clarica Premier International Fund...... 37 Clarica Summit Canadian Equity Fund ...... 41 Clarica Summit Dividend Growth Fund ...... 44 Clarica Summit Foreign Equity Fund...... 47 Clarica US Small Cap Fund...... 50

Balanced Funds Clarica Balanced Fund...... 53 Clarica Canadian Diversified Fund...... 57 Clarica Summit Growth and Income Fund...... 61

Income Funds Clarica Global Bond Fund...... 64 Clarica Premier Bond Fund...... 67 Clarica Premier Mortgage Fund...... 70

Notes to the Financial Statements (Clarica Mutual Funds)...... 73 Management and Audit Reports (Clarica Mutual Funds)...... 76

Trustee’s Letter and Legal Notice...... 77 CI Place, 151 Yonge Street, Eleventh Floor Telephone: 416-364-1145 Toronto, Ontario M5C 2W7 Toll Free: 1-800-268-9374 www.cifunds.com Facsimile: 416-364-6299

A Message from the President

Dear Client,

Investors saw a dramatic turnaround in 2003. The year started with a difficult first three months, marked by the beginning of the U.S.-led invasion of Iraq. However, global stock markets then rallied, as world economies began to improve and interest rates remained low.

While the Canadian stock market did well in 2003, the sharp rise in our dollar also affected investors by dampening the returns on global investments when reported in Canadian dollars. For example, the S&P 500 Index was up 29% in U.S. dollars for the year, but gained only 5% in Canadian dollars. Despite these currency changes, the overall outlook for global markets at the start of 2004 was much more positive than it had been for some time.

At CI Funds, we continued to build on our product lineup and our portfolio management expertise in 2003 by acquiring Synergy Asset Management Inc. and Skylon Capital Corp., manager of the VentureLink Group of Labour-Sponsored Funds and a series of structured products.

The acquisitions were a result of our goal of offering investors a wide choice of funds and portfolio managers, whether you are investing in mutual funds, segregated funds or another product.

Another important part of our business is providing an industry-leading level of service to our clients. One example is CI e-Service Centre, which allows you to view online the most up-to-date information about your CI account. You can also elect to receive statements, trade confirmations and tax receipts electronically. You can register for this convenient service at www.cifunds.com.

Over the past 30 years, this emphasis on innovation and choice has helped CI to grow into one of the largest investment fund companies in Canada. As one of two million Canadians who invest with CI Funds, you benefit from our strength, experience and diversity.

If you have any questions about your account or this annual report, please contact your advisor or CI Client Services at 1-800-563-5181 or [email protected]. Thank you for investing with CI Funds.

Sincerely,

Peter W. Anderson President and Chief Executive Officer CI Mutual Funds Inc.

January 30, 2004

2003 Annual Report as at December 31, 2003 – 1 – A Message from AIM Funds Management Inc.

Virtually every major equity index registered sharply positive With the impressive gains in virtually all equity markets in 2003, it returns in 2003. should not be surprising that the abundance of investment opportunities is not as plentiful. In 2004 and beyond, astute stock picking will reward In the U.S., the Nasdaq Composite Index, the S&P 500 Index and investors – great investment ideas are not as obvious as in the past. We the Dow Jones Industrial Average snapped three-year losing streaks believe our portfolios remain attractive and equity returns over the next with near-record returns. The 50% return for the Nasdaq was the few years will compare favourably to government bonds or cash. third best ever result, the 26% return for the S&P 500 was the fifth However, it is our expectation that returns will not be as strong as those best return since 1980 and the Dow had its strongest return since witnessed in 2003. 1996, posting a positive 25.3% (all returns in U.S. dollars). AIM FUNDS MANAGEMENT INC. The story was much the same in Canada with the S&P/TSX Composite Index returning 26.7%, the seventh best return in the January 30, 2004 past 35 years, and breaking a two-year losing streak.

These returns are certainly quite impressive, and highlights just how resilient the equity markets can be and how important equities are for growth in a portfolio. At the beginning of 2003, many people were thinking that cash was the best place to park their money until there were some clear signs that the bear market was over. It is never that simple. Not only did Canadian equities outperform a T-bill investment by over eight times in 2003, but the past two years show that Canadian equities have also outperformed cash by almost twice as much, despite posting a negative return in 2002.

Investment success is measured over long periods of time, and we truly believe that an equity investment offers investors the opportunity for long-term growth in their portfolios.

The backdrop for these impressive gains included continued expansion in the North American economies, led by consumer spending, low inflation, low interest rates and evidence that the “growth torch” was being passed from the consumer to the corporate sector late in the year.

It is our view that these broad trends will continue in North America and even begin to gain momentum around the globe, offering investors a reasonably optimistic backdrop for investing over the next few years.

2003 Annual Report as at December 31, 2003 – 2 – A Message from Altrinsic Advisors, LLC

A year that began burdened by concerns about war in Iraq, SARS Accordingly, we added to our holdings in several European industrials and weak global economic conditions proved rewarding for investors in 2003, such as BASF Group, a German chemical company that in global equities. Narrowing credit spreads and increased appetite trades at 40% discount to Dow Chemical while providing a 3.4% for risk, coupled with prospects for a synchronized global economic dividend yield. Additionally, we purchased Sandvik, a leading recovery and improving corporate profits, contributed to strong gains Scandinavian capital goods company, which provides a 4% dividend in global equity markets. yield and attractive valuation discounts of over 30% to its U.S. peers. SCA, a European consumer products and packaging company, is The outperformance of Altrinsic’s global and international funds was attractively valued at 12 times earnings with a dividend yield of 3.2%. primarily attributable to their overweight exposure to companies domiciled outside of the United States, as they benefited from both Financial stocks have meaningful exposure in the portfolios, but stock and currency appreciation. Domestic-oriented Japanese hold- regional exposures vary considerably versus the benchmark. We ings and European restructuring plays were notable contributors to remain significantly underweight North American financials, where performance. In North America, holdings in the industrial, consumer valuations appear rich, expectations remain high, and earning power cyclical, energy and health-care sectors performed well. Overall, the is under pressure. We prefer retail banking franchises and leading funds’ outperformance was generated during a challenging environ- Asian financials, which trade at discounts to their U.S. counterparts ment for our investment approach, as lower-quality, highly leveraged, and have better earnings prospects. and highly valued stocks led the markets. Although recent corporate earnings and economic indicators have We continue to search for undervalued companies with a focus on been positive, significant risks remain. Concerns include the high those with healthy, sustainable, and/or improving fundamentals, as valuations and overly optimistic earnings growth expectations among well as companies that are misperceived in the marketplace. We many stocks that led the markets in 2003, as well as the ballooning remain concerned that many of the stocks that were leading equity U.S. budget and current account deficits. China deserves close markets are trading at unsustainably high valuations with fragile monitoring in the coming year given its role as an economic locomo- underlying fundamentals. It is likely that 2004 will see a return to tive in the global economy. We are quite optimistic about the outlook more company-specific factors as drivers of performance. Higher- for our holdings, but we see growing risk among last year’s market quality companies have seen their stocks significantly underperform, leaders. This bifurcated condition presents both risk and ample thus providing attractive purchase points for us in leading consumer opportunities for disciplined investors. companies such as Unilever (a leading Anglo-Dutch consumer products company) and Heineken (a Dutch-based global brewer). ALTRINSIC ADVISORS, LLC

We have added to positions in health-related stocks. Pharmaceutical John Hock stocks have suffered from concerns over patent expirations, increased John DeVita competition from generics, and health-care reform. We see opportunities in a few names, such as Bristol-Myers Squibb, where investors January 30, 2004 have yet to recognize the underlying long-term earnings power of its product pipeline.

European industrial stocks significantly lagged the strong rally experienced by their North American counterparts, leading to valuation disparities in excess of 30%. Less robust economic conditions in Europe and the strength of the euro account for much of this gap. However, we believe that restructuring undertaken by certain European cyclicals will lead to earnings growth not discounted in current stock prices.

2003 Annual Report as at December 31, 2003 – 3 – A Message from the Harbour Funds Group

While all Harbour Funds achieved positive returns in 2003, results companies that we hold in each portfolio. To illustrate, our two nonetheless were unfavourably affected by three principal factors. equity funds, Harbour Fund and Harbour Foreign Equity Fund, each The first factor was the one-time sharp increase in the foreign exchange held precisely 34 individual names at year-end. value of the Canadian dollar. This restrained results, as all Harbour Overall our outlook is one of optimism at this point for two very basic portfolios have significant foreign investment content – chiefly reasons. First, the underlying business and profit outlook for our through U.S. and European investment holdings. We do not expect companies seems very upbeat as we head into 2004. Additionally, we this will again be the case in 2004. Secondly, due to a dearth of foresee rising valuation levels for our holdings as other investors also attractively priced investment opportunities, we held significant cash begin to appreciate their strong business fundamentals and attractive and equivalent positions for a good part of 2003. With short-term investment characteristics. A few individual examples in this regard money market instruments at historically low levels, consequently, would include: Bank of Nova Scotia, Potash Corporation, Cameco, Toronto-Dominion Bank, Petro-Canada, Alcan and Suncor. In the they earned modest returns. And last, but certainly not least, the United States, we would cite Berkshire Hathaway, TJX Companies, overall stock market climate in 2003 strongly favoured small capital- Wendy’s International, Diebold, Jones Apparel and Pfizer. ization, speculative and junior issues, particularly technology shares. International companies include Diageo, Total-Fina, Nestle, Royal As we do not invest in speculative or junior issues, this turned out to Bank of Scotland, Air Liquide, Toyota Motor and Novartis. be a party that we declined to attend. It seems unlikely that this party will continue uninterrupted during 2004 and we fully expect Our continuing goal and focus is to provide long-term growth seasoned companies, whether medium or larger capitalization, to and value for Harbour investors, while delivering superior risk-adjusted returns. turn in a much better account of themselves in the stock market. All Harbour portfolios are currently well situated to benefit. CI MUTUAL FUNDS INC. HARBOUR FUNDS We continue to hold a large cash position in our balanced funds due to our negative outlook toward the bond market. In recent Gerald Coleman months, forward inflation indicators, including broadly based Stephen Jenkins representative commodities, point to rising inflation in the period ahead. In the not too distant future, we anticipate that interest rates January 30, 2004 will rise throughout the maturity spectrum and bond prices will accordingly decline. In such an environment, capital protection is paramount and a strong short-term cash position provides maximum safety as well as excellent flexibility.

While there are selective opportunities within the overall stock market, the market as a whole seems fully priced to us and a discriminating approach to individual stock choice seems prudent. Despite our concerns on the valuation front, the financial backdrop of expanding world economies and rising corporate earnings will likely remain in the forefront of investor thinking and continue to fuel higher stock prices over the near term.

We continue to follow a rigorous investment research process and hold an unwavering view that price does in fact matter. In recent months, we have succeeded in boosting our invested stock positions and meaningfully reduced our cash reserve position in the process. As always, we remain very focused in terms of the number of individual

2003 Annual Report as at December 31, 2003 – 4 – A Message from J. Zechner Associates Inc.

The Canadian bond market, as measured by the Scotia Capital Universe The economic outlook, particularly in the U.S., is quite good. The pace Bond Index, returned 6.7% in 2003. The returns were unevenly of growth in the fourth quarter slowed from the extraordinary 8.2% distributed through the year, with bond prices falling in three of the rate of the third quarter, but probably still exceeded 4%. From that four quarters. And for the first time since 1999, equity returns exceeded base, growth should again accelerate in the first quarter of 2004 those of bonds. as further income tax cuts boost consumers’ disposable income. In addition, the stimulative effect of the 2003 fall in the U.S. dollar Two themes dominated global fixed-income markets in 2003: the exchange rate will take several quarters to be fully felt. Further declines continued decline of the U.S. dollar versus other currencies and the in the U.S. dollar in 2004 are expected, and they should provide even strength and timing of the U.S. economic recovery. Since the begin- more stimulus. As well, economic activity globally is improving and ning of 2002, the U.S. has been unable to attract enough foreign that will benefit North American economies. In Canada, economic investment to offset its massive current account deficit and, as a growth will lag that of the U.S. because of the absence of massive tax result, the U.S. dollar has been falling versus most other currencies. cuts. Also, exporters are suffering from the appreciation of the Canadian In 2003, some Asian central banks tried to limit the appreciation of dollar, although that is being partially offset by rising commodity their respective currencies because of the potential damage to their prices. Should the Bank of Canada continue to cut rates, we believe export industries. The central banks sold their currencies and bought that the Canadian dollar appreciation may be capped. Canadian other currencies, particularly the U.S. dollar. These massive new domestic demand appears to be good and recent growth in employment holdings of dollars were then invested in U.S. Treasury bonds. bodes well for continued growth. On balance, Canadian economic Central bank purchases were estimated to have been close to $200 growth will lag that of the U.S., but should show significant improve- billion, an amount that would have raised bond prices and lowered ment from 2003. yields significantly. Canadian yields followed U.S. yields lower. We are cautious regarding the Canadian bond market. While the The U.S. economy finally began to recover, three years after the Bank of Canada may continue to cut rates, longer-term Canadian investment bubble burst. The combination of very low interest rates, bond yields are less likely to decline. The spread between Canadian large tax cuts, and the falling exchange rate resulted in a surge in and U.S. government bond yields is already narrow (e.g. only 11 basis American economic growth in the second half of 2003. With points for long-term bonds), and is unlikely to attract foreign investor inflation remaining subdued, the Federal Reserve indicated that it interest. The U.S. bond market, which often leads the Canadian planned to leave rates low in 2004 until much of the existing market, seems headed to higher yields and lower prices. We also economic slack is taken up. The timing of when the Fed would believe that the strong equity returns of 2003 will lead many individ- actually begin to tighten monetary policy was the source of consider- ual investors to favour stocks over bonds. Investors are becoming more able speculation by investors and led to considerable fluctuations confident about the economic recovery and the “flight-to-quality” bid in the yield curve. Interestingly, the angst over the durability of the for bonds will recede. In addition, the U.S. Treasury will have to issue economic recovery that was experienced by fixed-income investors massive amounts of bonds to finance a federal 2004 budget deficit was completely ignored by equity investors, who sensed strong growth expected to be close to $500 billion. The foreign exchange operations and bid stock prices higher. of the Asian central banks will remain a wild card in the bond market. The current account and fiscal deficits of the U.S. are In Canada, our economy was hurt by a number of catastrophes. SARS, sufficiently massive that, in our opinion, the Asian central banks’ mad-cow disease, forest fires, storms and a major blackout combined purchases of Treasuries will ultimately be abandoned. Without their to slow growth substantially. Of more lasting importance was the demand, the price of Treasuries and Canada bonds should fall. appreciation of the Canadian dollar versus the U.S. currency. The record 22% increase in our exchange rate in 2003 made Canadian J. ZECHNER ASSOCIATES INC. business less competitive in export markets abroad and against imports domestically. Interest rate cuts by the Bank of Canada in Jeffrey Herold 2004 will be designed to stimulate the Canadian economy and offset the ongoing drag of the higher exchange rate. January 30, 2004

2003 Annual Report as at December 31, 2003 – 5 – A Message from MFC Global Investment Management (Canada)

It was a stellar year for small-cap stocks in Canada in 2003. The year Overall, 2003 was a very good year for equity returns. The environment

started with many concerns that depressed prices. The economic and continues to provide support for equity prices. Interest rates are low and

political situations provided much uncertainty. Returns were negative are expected to remain so. Earnings are growing and Canada’s resource

in the first quarter. But by the end of the first quarter, the war in Iraq based economy is benefiting from the rise in commodities. The

had begun and U.S. victory was in sight. The uncertainty surrounding Canadian dollar has strengthened due to the commodity markets, the

this event was resolved positively. Canada faced a number of budget surplus and the current account surplus. The markets will

challenges in 2003, including mad-cow disease, the rising Canadian remain volatile; however, many opportunities will exist. Overall, we

dollar, SARS and the power outage in Ontario. All three slowed down expect small-cap companies to perform well in 2004.

economic growth in the second half of 2003. The stock market,

however, began to move up in the second quarter and accelerated MFC GLOBAL INVESTMENT MANAGEMENT (CANADA)

into the year-end. The enthusiasm in the market is forecasting an

improved economy in Canada in 2004. The best-performing sectors Ted Whitehead

in 2003 were materials and information technology. We expect the

environment to remain favourable for small-cap stocks through 2004. January 30, 2004

This past year saw a number of changes in the portfolio, including

a reduction in the number of holdings. The small-cap market saw

an increase in the number of security offerings after two years of

decline. The offerings provided an opportunity for companies to

raise money and investors to buy in at depressed prices. Some of

the successful offerings we participated in were Global Railway, Tusk

Energy, Trinidad Drilling and Cardiome Pharma. A theme, which

gathered steam as the year progressed, was the “China factor.” The

China factor refers to the increased importance China is

beginning to play in the world economy. China has become a

net importer of most basic materials. This has contributed to the

significant increase in commodity prices and stock prices of

resource companies. We continue to believe China will play an

increasingly important role in the markets.

2003 Annual Report as at December 31, 2003 – 6 – A Message from the Signature Funds Group

The markets in 2003 rewarded risk-taking. Small caps outperformed The gold sector was critical to our performance in 2003, as the large caps, emerging markets outdid developed markets, junk bonds falling U.S. dollar and negative real interest rates attracted more surpassed government bonds and weak companies beat strong investors to this asset class. Our resource exposure also included companies. Our cautious view toward stock valuations and the uranium and agricultural commodities, which performed well. While economy was evident in our high cash levels early in the year, resource valuations have appreciated significantly, the under- which we gradually reduced as signs of recovery emerged. investment in certain commodity industries over the years will likely result in an elongated price cycle – to the detriment of consumers The funds delivered solid returns while generally taking on a level and the benefit of shareholders. of risk considerably below that of the overall market. Our stock selection favoured companies that generate free cash flow and have The most important development of the year was the resiliency of solid balance sheets because of our view that preserving clients’ risk-taking in credit markets. Low-quality borrowers had access to capital comes first. funds again after the credit crunch of 2002. Record issuance of high- yield bonds resolved liquidity concerns and allowed companies to The funds were insulated from the effects of the falling U.S. dollar in contemplate investment, hiring and mergers. Surging equities and 2003 through simple currency hedges. For the second year in a row, corporate confidence will bring a transition from a consumer-led over 75% of our U.S. dollar exposure was hedged back into Canadian economy to a business-led economy. After a long period of balance dollars. Currency cycles are long and have tendencies to overshoot. sheet repair, the corner has been turned and the corporate sector can Given the Canada-U.S. interest rate differential and the trade and move ahead in search of growth once more. fiscal surpluses in Canada, it is probable that the Canadian dollar will rise higher in 2004. In all likelihood, we are at the beginning of a multi-year business cycle that will be charged by strength in emerging markets. Global The appreciation in the dollar represents a threat to the profitability growth rates should recover, propelling earnings higher while central of many exporters. This factor has weighed heavily in our stock banks keep interest rates low. Clearly, risks and structural imbalances selection. The counterpoint is that the weaker U.S. dollar is helping remain in the global economy, but on balance this backdrop augers all U.S.-based producers of goods competing with imports. Higher well for equity returns in 2004. shipping costs, along with the currency advantage and economic recovery are generating a unique profit upswing. For example, our CI MUTUAL FUNDS INC. successful investment in integrated U.S. steelmakers in the fourth SIGNATURE FUNDS quarter was largely based on this premise. Eric Bushell Interest rates in Canada will stay low for longer than usual into Robert Lyon the economic recovery due to the strength of the dollar. This may Benedict Cheng lend support to financials and utilities in 2004, but both groups are Andrew Waight fully valued and our portfolios remain underweight in these sectors Peter Hodson relative to their benchmarks. As global growth recovers and James Dutkiewicz economies absorb spare capacity, mild inflationary pressures will surface. Accordingly, towards the end of 2004, we expect short and January 30, 2004 long rates to revert to the mean and head higher.

The resource sector made an important contribution to a number of our portfolios in the fourth quarter. The Signature Funds combined are the second-largest shareholder in Fording Coal, which rose 50% in the fall as the markets recognized that Chinese steelmaking demand would fuel large price increases in metallurgical coal. Our positions in the Brazilian iron ore miner CVRD and Australia’s WMC Resources benefited from the same dynamic. In fact, all base metal stocks surged on the prospects of a synchronized global increase in industrial production.

2003 Annual Report as at December 31, 2003 – 7 – A Message from Sionna Investment Managers Inc.

A rising tide lifts all ships. It was a strong year for the equity markets that the overall market is expensive, stocks that represent good value in 2003, with the S&P/TSX Composite Index posting a total return are constantly appearing. Our performance should be defined by of 26.7%. Overall, we were surprised by the magnitude of outperfor- our discipline in selling names that have moved above their intrinsic mance of lower-quality stocks during the year and by the intensive value and investing in a contrarian manner in companies that have macroeconomic or top-down focus. Speculators invested heavily in fallen out of favour. the technology sector during the year, pushing valuations to unrealistic levels. The economic recovery drove returns across all sectors, regard- At Sionna, we are seeing select value opportunities in the stock less of fundamental performance. We anticipate that in 2004, the market, despite overall valuation levels. We continue to invest in markets will be more fickle; quality and stock-picking should matter quality companies that are trading below their long-term intrinsic much more for performance. value. These companies offer value through the traditional measures of price to earnings, price to cash flow, price to book value and The year began with a weak first quarter. Following the Iraq war, higher-than-average dividend yields. We are sticking with our proven however, renewed optimism about the economy propelled stock investment approach by focusing on investing for dividend yield markets to new heights for the balance of the year. The information and reinvesting that yield over a long time horizon. technology sector led performance in the second and third quarters, recording impressive double-digit returns as investors gambled on SIONNA INVESTMENT MANAGERS INC. a corporate spending recovery. By the second half of 2003, investors focused on China in anticipation that its tremendous growth Kim Shannon would drive demand for basic materials. The materials sector rallied significantly and led the Toronto market in the fourth quarter. January 30, 2004

During the year, the markets were influenced significantly by macroeconomic factors such as unprecedented stimulative fiscal and monetary policies, abnormally large moves in the commodity markets and significant weakness in the U.S. dollar. That the top-down view drove market returns is demonstrated by the double-digit performance of all sectors in our benchmark (with the exception of health care), regardless of the fundamentals of the respective industries.

We believe that 2004 will be driven more by bottom-up analysis as the market begins to differentiate between quality companies and the more speculative names. As we consider consensus expectations for our portfolio of companies, we struggle to find a balance between the positive outlook and the valuations imputed in those expectations. Our challenge going forward continues to be replacing the stocks in our portfolio that have outperformed.

However, we are optimistic as we begin 2004. We view the new year as an opportunity to take advantage of our proven bottom-up investment process to pick good companies. While our model is telling us

2003 Annual Report as at December 31, 2003 – 8 – A Message from Steinberg Priest & Sloane Capital Management, LLC

Equity market returns for 2003 were extraordinary around the world, rate of 8% (not outrageous if one adds population growth of 1% to reflecting a better economic climate for growth and massive stimulus in productivity growth of 7%) and the U.S. grows at 3%, the two the U.S. from both monetary and fiscal policies. In 2004, economic economies will be the same size in two generations (just over 40 growth is expected to be the best in years for most of the world. years). China is the most powerful story unfolding in the world today, with India not far behind. The drivers of equity returns are three in number : price to earnings (P/E) ratios, earnings, and dividends. The sum of the changes in P/E Investing requires a global perspective as economics is truly border- ratios and earnings growth rates plus the dividend yield determines less. This is has become even more true today because of technology. the return for any stock or index. With a dividend yield of 2% in Productivity and capital can be changed with the click of a mouse. the U.S., a forecasted growth rate in earnings of nearly 10%, the total What a fascinating time to be in the investment business, and it is return from equities before taking into account any change in P/E our task to see that our clients prosper in this environment. ratios should be 10% to 12% in 2004. STEINBERG PRIEST & SLOANE Is it likely we will witness a change in P/E ratios in 2004? P/E ratios CAPITAL MANAGEMENT, LLC are intertwined with interest rates. A rise in rates results in a lowering of P/E ratios and vice versa. With the 10-year U.S. Treasury note at William Priest 4% in late 2003, what is the likelihood of a decline? In our view, the David Pearl answer is very little, implying that P/E ratios overall will be flat to declining in 2004. January 30, 2004

The enormous trade and fiscal deficits run by the U.S. now total almost 10% of GNP and require the U.S. to consume 85% of world savings to fund these deficits. The U.S. effectively must borrow in excess of $2 billion per day. It is inconceivable to us to expect interest rates to decline further under the combined circumstances of better growth around the world and growing deficits in the U.S. Therfore, our market outlook is positive, but tempered by this reality.

A second positive for the world’s future growth rate is China and India. With one-third of the world’s population in these two countries and a rising GNP per capita, we are witnessing the birth of a middle class in both nations. This will have tremendous impact on economic sectors such as consumer durables and metals and mining. Much like the 1950s in the U.S., this decade will see the growth of a new middle class, as tens of millions of people experience rising living standards in these two countries.

China in 2004 will see its GNP surpass that of Great Britain, after passing France in 2003. That will leave only the U.S., Japan, and Germany ahead of it. If the Chinese economy can sustain a growth

2003 Annual Report as at December 31, 2003 – 9 – A Message from Trilogy Advisors, LLC

Global equity markets experienced a healthy rebound in 2003 after result, we expect foreign bonds to outperform U.S. bonds and have three years of dismal performance. But for Canadian investors, the tilted our portfolios away from U.S. dollar exposure. rebound was muted because of the Canadian dollar’s strong rally against most foreign currencies during the year. In terms of regional exposure, in our global equity portfolios we have roughly 50% exposure to the U.S. market, 30% to Europe, 10% to In U.S. dollar terms, the MSCI World Index rose 33.8% last year. Japan, and the remainder to the emerging markets and Asia. That said, In Canadian dollars, however, the index was up only 9.4%, with the we have hedged about one-third of our U.S. dollar exposure back into currency changes accounting for the difference. Non-U.S. developed other strong currencies like the Canadian dollar and the euro. markets did somewhat better in Canadian dollar terms, with the MSCI EAFE index up by 13.9%. The emerging markets did even In our sector exposure, we continue to be tilted away from defensive better, posting a gain of 24% in Canadian dollars for the year. sectors like consumer staples and utilities, which tend to underperform during rising markets. We have raised our energy exposure recently in Our outlook for 2004 is quite consistent with consensus forecasts. view of prospects for strong global demand supporting energy prices. We expect improving global economic performance, which drove We have also recently begun to trim our holdings in interest-rate- markets in 2003, to continue into 2004 as a synchronized global sensitive areas like consumer discretionary and financial services. expansion gains momentum. Against that backdrop, corporate profits should post double-digit gains in most markets, while capital spending We remain tilted toward sectors that should benefit from cyclical continues to pick up and corporate pricing power improves modestly. expansion and a pickup in capital spending, including industrials and technology. Two major trends from 2003, the weakness in the U.S. dollar and rising commodity prices, seem likely to continue this year. Those trends TRILOGY ADVISORS, LLC should significantly benefit the prospects for exports from emerging markets. We expect the U.S. Federal Reserve to begin tightening William Sterling monetary policy in the second half of the year, although we believe Robert Beckwitt it will tread gingerly so as not to derail the global expansion. André Desautels Max Jacobs Although equity markets rose substantially in 2003, the “Fed model” François Campeau still shows U.S. equities to be nearly 25% undervalued relative to U.S. Treasury bonds. Price-earnings ratios in Europe, Asia excluding January 30, 2004 Japan, and the emerging markets remain in the mid-teens, suggesting that equity valuations around the world are quite reasonable given the environment of low interest rates. We continue to believe that equities are likely to outperform bonds this year and maintain a target of 70% equities and 30% fixed income in CI International Balanced Fund. We also maintain lower-than-average duration in our bond portfolios because we believe that both short- and long-term interest rates will rise this year as markets first anticipate and then respond to modest tightening by the Fed. We would not be surprised to see the Fed funds rate rise to the range of 2.0% to 2.5% by the end of the year, with U.S. 10-year government bond yields rising to 5.0% to 5.25%. As a

2003 Annual Report as at December 31, 2003 – 10 – A Message from UBS Global Asset Management (Canada) Co.

Small-cap stocks revelled in the strong economic environment of We have added to our holdings in the energy sector. The outlook for 2003. Small-cap stocks typically outperform large-cap stocks in the the group is favourable given that the supply/demand situation in both early stages of an economic recovery and 2003 was true to form. oil and natural gas is expected to remain tight for some time. Activity in both the health-care and information technology sectors is limited. We increased our holdings in Canadian small-cap stocks earlier in the Stocks in both sectors are either priced for perfection or are of too low year, while reducing Canadian mid-cap and U.S. small-cap names, quality to merit investment by the fund at this time. In information to increase the exposure to cyclical companies (companies that rise as technology, our largest holding is Research In Motion; however, we the economy recovers). Performance in the fund was driven by the have taken some profits recently. materials sector (golds, metals) and an emphasis on economically sensitive stocks. Prices for commodities such as nickel, copper, zinc, UBS GLOBAL ASSET MANAGEMENT (CANADA) CO. lead, and aluminum moved to multi-year highs. The U.S. currency exposure was hedged during the second quarter to protect the Michael Chan fund from further dollar depreciation. Some of our top-performing stocks included: Coolbrands, First Quantum Minerals, Research In January 30, 2004 Motion, Extendicare, Cinram, Rona, Wheaton River Minerals and Intertape Polymer.

We believe that opportunities still exist in small-cap stocks in spite of the stellar returns of last year. In contrast to 2003, where investors bid up the prices of lesser-quality stocks, we expect higher-quality stocks to outperform in 2004. To that end, our strategy is focused on raising the overall market capitalization of the fund by eliminating or taking profits in several smaller stocks.

In 2004, stock selection will be especially important. As a result, we are focused on companies that rank high on earnings per share growth, return on equity, quality of management, and balance sheet strength. Based on our view that a global cyclical rebound is in the making, our strategy is also focused on emphasizing economically sensitive areas of the market and stocks with the best earnings recovery potential.

Turning to sector strategy, our largest overweight relative to the benchmark is materials. In the sector, we continue to emphasize stocks with good leverage to commodity prices. We are also emphasizing golds to take advantage of any further weakness in the U.S. dollar. Although these stocks are expensive, their longer-term outlook is favourable. In the short-term, we would not be surprised to see some profit taking and will use this as an opportunity to add to our holdings.

2003 Annual Report as at December 31, 2003 – 11 – Clarica Alpine Canadian Resources Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 7.85 6.76 6.51 5.59 5.22 7.92 6.78 6.52 5.60 5.87 Distribution per unit From net income ------From net realized gain ------Return of capital ------Net income (loss) per unit (0.11) (0.19) (0.12) (0.16) (0.15) (0.11) (0.18) (0.11) (0.19) (0.01) Net realized and unrealized appreciation (depreciation) of investments per unit 2.54 1.30 0.37 1.08 0.52 2.56 1.31 0.37 1.11 (0.26) 2.43 1.11 0.25 0.92 0.37 2.45 1.13 0.26 0.92 (0.27) Surplus (deficiency) of capital transactions over original cost per unit (a) 0.06 (0.02) - - - 0.07 0.01 - - -

Net asset value per unit, end of year 10.34 7.85 6.76 6.51 5.59 10.44 7.92 6.78 6.52 5.60

Ratios & Supplemental Data Total return (%) (b) 31.72 16.14 3.75 16.42 7.25 31.82 16.76 3.99 16.43 (4.60) Average net assets ($000’s) (c) 45,703 44,869 40,133 35,317 22,865 912 531 363 291 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.41 3.39 3.50 3.63 3.06 3.29 3.26 3.38 3.55 2.77 Management and operating expenses (%) 3.19 3.04 3.00 3.00 2.86 3.08 2.93 2.83 2.84 2.59 Goods and services tax expenses (%) 0.22 0.21 0.21 0.21 0.20 0.21 0.20 0.20 0.20 0.18 Total management expense ratio (%) 3.41 3.25 3.21 3.21 3.06 3.29 3.13 3.03 3.04 2.77 Portfolio turnover rate (e) 1.26 0.52 0.39 0.54 0.35 1.26 0.52 0.39 0.54 0.35

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 6,284,006 5,744,647 89,064 54,643 Units issued for cash including re-invested distributions 858,975 2,130,625 69,284 53,141 Units issued on fund merger (Note 1) -- -- Units redeemed (1,667,450) (1,591,266) (31,545) (18,720) Units issued (redeemed) on conversion (net) -- -- Balance end of year 5,475,531 6,284,006 126,803 89,064

Additional Fund Notes (in $000’s) Brokerage Commissions 354 130 Net capital loss carried forward 3,734 3,734 Non-capital loss carried forward (f) 1,330 1,775

(a) For the years prior to 2002, the amount is included in Net realized and unrealized appreciation (depreciation) of investments per unit. (b) Total return is the historical rate of return of an investment for the year, assuming reinvestment of all distributions at net asset value. (c) Average net assets are calculated based on the daily net assets outstanding. (d) Management expense information is calculated based on expenses charged directly to the fund plus, if applicable, expenses of the underlying funds, calculated on a weighted average basis based on the percentage weighting of each underlying fund and is expressed as an annualized percentage of average net assets for the year. (e) Portfolio turnover rate equals the lesser of purchases or sales divided by the average value of the portfolio securities of the fund, excluding short term securities. (f) Losses will expire within seven years.

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 12 – CIG - 9030 Clarica Alpine Canadian Resources Fund Investment Portfolio as at December 31, 2003

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

MATERIALS (49.6%) ENERGY (41.6%) (cont’d) 25,400 Agrium Inc. 518,115 543,306 53,400 Find Energy Ltd. 201,674 138,840 20,700 Alcan Inc. 895,754 1,253,799 110,100 Flowing Energy Corp. 288,462 287,361 239,800 AMT International Mining 160,724 5,995 64,300 Great Northern Exploration Ltd. 149,176 298,995 81,500 Armada Gold Corp., Class A 20,538 1 279,500 High Point Resources Inc. 466,206 721,110 117,100 Aston Mining, Restricted 175,650 173,308 139,134 Luke Energy Ltd. 201,744 244,876 164,100 AUR Resources Inc. 563,955 1,107,675 23,290 Mercantile International Petroleum Inc. 82,036 - 56,400 Barrick Gold Corp. 1,403,596 1,653,084 74,600 Midnight Oil & Gas Ltd. 348,941 511,010 69,809 BHP Billiton PLC 510,050 789,040 413,400 Milagro Energy Inc. 330,720 483,678 40,800 Bolivar Gold Corp. 77,190 88,128 16,900 Nabors Industries Ltd. 856,604 909,580 132,900 Cambior Inc. 332,250 530,271 51,250 Nexen Inc. 1,828,520 2,404,650 12,200 Cameco Corp. 521,553 911,950 59,900 NuVista Energy Ltd. 418,537 476,205 34,900 Canfor Corp. 313,133 393,323 9,700 Penn West Petroleum Ltd. 372,023 467,249 48,100 Canico Resource Corp. 721,500 627,705 16,200 Petro-Canada 621,870 1,035,342 18,400 Cascades Inc. 260,360 227,792 12,300 Precision Drilling Corp. 621,236 698,025 164,500 Cleansoils Ltd. 132,767 2 14,000 Progress Energy Ltd. 129,889 175,000 48,800 Domtar Inc. 725,582 793,000 10,200 Shell Canada Ltd. 394,497 624,750 347,900 Dynatec Corp. 307,312 612,304 14,900 Spinnaker Exploration Co. 705,271 623,579 415,300 Eldorado Gold Corp. 647,539 1,681,965 39,400 Starpoint Energy Ltd. 118,200 177,694 49,800 Falconbridge Ltd. 860,058 1,561,728 9,000 Suncor Energy Inc. 174,089 292,500 29,700 Fording Canadian Coal Trust 968,020 1,366,200 15,900 Talisman Energy Inc. 830,594 1,168,968 66,600 Gabriel Resources Ltd. 207,552 326,340 40,900 Trican Well Service Ltd. 832,478 1,132,930 18,700 GoldCorp Inc. 123,290 385,594 16,200 Vintage Petroleum Inc. 263,844 252,747 63,900 Golden Star Resources Ltd. 249,210 578,934 16,283 Western Oil Sands Inc., Class A 305,764 480,348 76,400 Great Basin Gold Ltd. 122,335 259,760 19,565,813 24,089,648 220,400 High River Gold Mines Ltd. 397,196 429,780 INDUSTRIALS (2.3%) 49,318 Iamgold Corp. 153,120 444,848 27,100 A&E Capital Funding Inc., Class B 47,899 2,710 24,500 IMC Global Inc. 235,819 315,516 243,700 Ice Drilling Enterprises Inc. 203,389 2 5,500 Inco Ltd. 164,725 284,075 184,200 KAP Resources Ltd. 48,362 2 47,966 Kinross Gold Corp. 338,461 495,009 406,200 Resolute Energy Inc. 1,012,157 1,312,026 38,200 Lionore Mining International Ltd. 140,305 304,454 8,040 St Genevieve Resources Ltd. 27,225 - 25,800 Meridian Gold Inc. 402,019 488,394 1,864 Virtual Resources Inc. 186 - 19,300 Nexfor Inc. 149,430 209,405 1,339,218 1,314,740 36,700 Noranda Inc. 596,283 754,185 HEALTH CARE (1.4%) 97,300 Norske Skog Canada Ltd. 318,171 405,741 158,000 Hawker Resources Inc. 550,171 805,801 5,800 Peabody Energy Corp. 249,161 313,743 55,200 Placer Dome Inc. 880,053 1,278,984 WARRANTS (0.8%) 102,300 RIO Narcea Gold Mines Ltd. 369,532 409,200 58,550 Aston Mining, Purchase Warrants (20Nov05) - 1 31,600 Rio Tinto PLC 936,495 1,129,329 1,299,222 Biogan International Inc., Warrants 60,887 8,425 9,320 Riphean Platinum Corp. 1,212 - 69,800 Cambior Inc., Warrants (12Aug08) - 122,150 111,700 Sherritt International Corp. 566,424 793,070 24,050 Canico Resource Corp., Purchase Warrants - 51,467 172,900 Superior Diamonds Inc. 206,229 131,404 281,000 MAXIM Power Corp., Warrants (26Apr04) - 3 86,720 Teck Cominco Ltd., Class B 1,082,182 1,901,770 3,073 Mercantile International, Warrants (28Jun07) - - 104,600 Tembec Inc. 809,318 986,378 124,212 Wheaton River Minerals Ltd., Warrants (30May07) - 285,688 360,750 Wheaton River Minerals Ltd. 523,088 1,396,102 60,887 467,734 81,600 WMC Resources Ltd. 409,882 448,553 93,200 World Wide Mineral Ltd. 19,522 1 Total Bonds & Equities (95.7%) 41,282,749 55,469,068 19,766,660 28,791,145 ENERGY (41.6%) Short Term Notes (3.5%) 2,000,452 2,000,452 283,600 Argo Energy Ltd. 567,200 709,000 84,600 Atlas Energy Ltd. 300,330 338,400 DERIVATIVE INSTRUMENTS (Capital) 48,410 Aventura Energy Inc. 199,896 222,686 171,100 Bear Creek Energy Ltd. 668,804 675,845 Foreign Currency Forward Contracts 272,400 Benz Energy Inc. 259,208 3 (Capital) (0.1%) (see Schedule 1) 56,497 140,800 Blue Mountain Energy Ltd. 449,105 899,712 20,200 Bonavista Energy Trust 332,290 423,998 Total Investments (99.3%) 43,283,201 57,526,017 196,350 Clear Energy Inc. 522,779 697,042 8,200 ConocoPhillips 613,546 697,309 Other Assets (net) (0.7%) 439,308 20,100 Crescent Point Energy Trust 237,835 266,325 391,300 Crispin Energy Inc. 430,430 449,995 Total Net Assets (100.0%) 57,965,325 44,163 EnCana Corp. 1,992,443 2,252,313 46,900 Ensign Resource Service Group 921,367 966,140 4,300 EOG Resources Inc. 227,689 257,475 585,600 Esprit Exploration Ltd. 1,300,516 1,627,968

The accompanying notes are an integral part of these financial statements. All common shares unless otherwise noted. Percentages shown in brackets relate investments at market value to total net assets of the fund.

2003 Annual Report as at December 31, 2003 – 13 – Clarica Alpine Canadian Resources Fund Investment Portfolio as at December 31, 2003

Schedule 1 Foreign Currency Forward Contracts (Capital) (0.1%) Due Credit Market Contracts Pay Receive Date Rating Value $

1 (460,000) US$ 609,380 Canadian$ 27-Jan-04 A-1 12,065 * 1 (400,000) US$ 529,764 Canadian$ 29-Jan-04 A-1 10,312 * 1 (2,291,000) US$ 3,009,091 Canadian$ 11-Feb-04 A-1 32,354 * 1 (300,000) US$ 393,360 Canadian$ 25-Feb-04 A-1+ 3,345 * 2 (100,000) US$ 131,323 Canadian$ 10-Mar-04 A-1+ 1,243 * 2 (600,000) US$ 788,376 Canadian$ 24-Mar-04 A-1+ 7,442 * 1 (2,349,036) Canadian$ 1,800,000 US$ 11-Feb-04 A-1 (10,264)* Total Foreign Currency Forward Contracts Value 56,497

*Hedge The accompanying notes are an integral part of these financial statements. All common shares unless otherwise noted. Percentages shown in brackets relate investments at market value to total net assets of the fund.

2003 Annual Report as at December 31, 2003 – 14 – Clarica Alpine Canadian Resources Fund Financial Statements

Statements of Net Assets Statements of Operations Statements of Changes in Net Assets as at December 31 (in 000’s except for per unit for the years ended December 31 (000’s) for the years ended December 31 (000’s) amounts and units outstanding)

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 50,057 39,182 Investments at market value (Note 2) 57,526 49,647 Dividends 733 280 Cash 306 413 Interest 227 87 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 7,773 16,319 Receivable for unit subscriptions 66 4 Less foreign withholding taxes (25) (4) Amounts paid for units redeemed (13,629) (12,106) Receivable for securities sold -- 935 363 Return of capital -- Dividends and accrued interest receivable 80 25 Expenses (5,856) 4,213 57,978 50,089 Management fees (Note 4) 1,280 1,247 Distributions to investors Liabilities Administrative (Note 4) 198 118 Distribution from realized gains -- Bank overdraft --Custody 411Distribution from net income -- Payable for securities purchased 121Legal 13 -- Payable for unit redemptions 12 11 Audit 12Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 103 95 fund merger (Note 1) -- Distributions payable -- 1,587 1,476 Increase (decrease) in net assets 13 32 Net income (loss) for the year (652) (1,113) from operations 13,764 6,662 Net assets and unitholders’ equity 57,965 50,057 Net assets, end of year 57,965 50,057 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 10.34 7.85 Realized gain (loss) on investments (a) 6,742 1,150 DSC 10.44 7.92 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 7,674 6,625 Front End 5,475,531 6,284,006 Net gain (loss) on investments 14,416 7,775 DSC 126,803 89,064 Increase (decrease) in net assets from operations 13,764 6,662 Security Lending (Note 5) Loaned --(a) Realized gain (loss) on investments Collateral --Proceeds from sale of investments including Income 10 2 foreign exchange gain (loss) (b) (c) 59,978 23,469 Investments at cost, beginning of year 43,079 38,948 Investments purchased 55,440 22,749 Change in cost of short-term notes held (2,000) 3,701 Approved on behalf of the Board of Directors: 96,519 65,398 Investments at cost, end of year 43,283 43,079 Cost of investments sold 53,236 22,319 William T. Holland Realized gain (loss) on investments 6,742 1,150 Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 229,051 394,526 Director

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

2003 Annual Report as at December 31, 2003 – 15 – Clarica Alpine Growth Equity Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 9.72 10.63 10.80 10.72 8.56 9.84 10.71 10.87 10.72 9.48 Distribution per unit From net income ------From net realized gain ------Return of capital ------Net income (loss) per unit (0.22) (0.27) (0.23) (0.35) (0.23) (0.22) (0.26) (0.23) (0.36) (0.03) Net realized and unrealized appreciation (depreciation) of investments per unit 3.45 (0.69) 0.06 0.43 2.39 3.46 (0.70) 0.07 0.51 1.27 3.23 (0.96) (0.17) 0.08 2.16 3.24 (0.96) (0.16) 0.15 1.24 Surplus (deficiency) of capital transactions over original cost per unit (a) (0.05) 0.05 - - - - 0.09 - - -

Net asset value per unit, end of year 12.90 9.72 10.63 10.80 10.72 13.08 9.84 10.71 10.87 10.72

Ratios & Supplemental Data Total return (%) (b) 32.72 (8.56) (1.58) 0.73 25.17 32.93 (8.12) (1.42) 1.40 13.08 Average net assets ($000’s) (c) 55,228 57,072 55,985 57,197 23,834 1,051 782 587 419 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.39 3.40 3.50 3.50 3.05 3.27 3.27 3.39 3.42 2.66 Management and operating expenses (%) 3.17 3.07 3.05 2.96 2.85 3.06 2.95 2.91 2.81 2.49 Goods and services tax expenses (%) 0.22 0.21 0.21 0.21 0.20 0.21 0.20 0.20 0.20 0.17 Total management expense ratio (%) 3.39 3.28 3.26 3.17 3.05 3.27 3.15 3.11 3.01 2.66 Portfolio turnover rate (e) 1.21 0.30 0.27 0.27 0.46 1.21 0.30 0.27 0.27 0.46

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 5,349,701 5,289,694 80,917 62,854 Units issued for cash including re-invested distributions 1,393,825 623,203 25,995 25,986 Units issued on fund merger (Note 1) 1,046,283 - 48,339 - Units redeemed (1,642,120) (563,196) (21,780) (7,923) Units issued (redeemed) on conversion (net) -- -- Balance end of year 6,147,689 5,349,701 133,471 80,917

Additional Fund Notes (in $000’s) Brokerage Commissions 386 109 Net capital loss carried forward 7,391 4,408 Non-capital loss carried forward (f) 4,651 3,492

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 16 – CIG - 9022 Clarica Alpine Growth Equity Fund Investment Portfolio as at December 31, 2003

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

MATERIALS (27.0%) INDUSTRIALS (11.7%) (cont’d) 84,449 Acetex Corp. 437,780 558,208 40,100 Wajax Ltd. 258,172 320,800 38,360 Agrium Inc. 718,749 820,520 32,800 Xantrex Technology 138,389 116,980 192,200 AUR Resources Inc. 702,938 1,297,350 10,700 YBM Magnex International Inc. - - 217,745 Cambior Inc. 787,910 868,803 30,469 Zenon Environmental Inc. 442,001 571,598 93,286 Canfor Corp. 926,475 1,051,333 6,954,215 9,474,303 30,290 CCL Industries Inc., Class B 568,432 569,452 CONSUMER DISCRETIONARY (8.1%) 29,016 Corriente Resource Inc., Restricted 72,540 95,753 38,088 Alliance Atlantis Communications Inc., Class B 676,737 754,904 146,450 Corriente Resources Inc. 305,970 483,285 30,690 Decoma International Inc., Class A 419,811 407,563 79,560 Cumberland Resources Ltd. 260,749 343,699 21,778 Forzani Group Ltd., Class A 179,732 353,892 290,130 Dynatec Corp. 367,959 510,629 18,900 Gildan Activewear Inc., Class A 737,122 756,567 248,345 Eldorado Gold Corp. 490,216 1,005,797 74,900 Jumbo Entertainment Inc. 11,072 4,120 33,230 Glamis Gold Ltd. 630,666 740,364 30,960 Mega Bloks Inc. 683,208 712,080 218,970 Great Basin Gold Ltd. 471,847 744,498 20,900 Paragon Entertainment Corp. 30,618 - 131,000 Iamgold Corp. 1,010,371 1,181,620 42,435 RONA Inc. 768,036 1,323,548 108,900 Inmet Mining Corp. 785,972 1,900,305 29,580 Torstar Corp., Class B 781,469 858,116 75,800 Intertape Polymer Group Inc. 880,398 1,249,942 49,188 TVA Group Inc., Class B 806,518 1,031,964 69,400 IPSCO Inc. 1,120,489 1,669,070 1,597 Visual Bible International Inc. 83,500 3,883 500 Jaguar Nickel Inc. 808 825 139,770 Visual Bible International Inc., Interrestricted 182,501 339,877 1 Kinross Gold Corp. 10 10 5,360,324 6,546,514 156,700 Krystal Bond Inc. 80,647 2 FINANCIALS (8.0%) 8,800 Major Drilling Group International Inc. 87,188 85,360 21,950 Book4Golf.com Corp. 221,019 439 53,438 Methanex Corp. 751,643 776,454 13,370 Canadian Western Bank 461,067 525,842 90,030 RIO Narcea Gold Mines Ltd. 234,480 360,120 26,923 CCS Income Trust 524,069 821,152 275,850 Sherritt International Corp. 1,344,217 1,958,535 45,000 Davis + Henderson Income Fund 596,607 785,250 22,300 Slocan Forest Products Ltd. 191,884 328,256 39,007 Dundee BanCorp Inc., Class A 775,935 875,707 9,580 Southwestern Resources Corp. 110,569 382,242 11,900 GMP Capital Corp. 130,900 198,492 21,950 St Lawrence Cement Group Inc., Class A 448,299 458,974 44,430 Home Capital Group Inc., Class B 759,379 1,477,298 54,490 Teck Cominco Ltd., Class B 774,410 1,194,966 29,880 Morguard Corp. 609,248 732,060 318,250 Wheaton River Minerals Ltd. 527,367 1,231,628 16,800 Simmonds Capital Ltd. 28,728 504 15,090,983 21,868,000 19,900 Swisslink Financial Corp. 25,818 199 ENERGY (11.8%) 14,280 TSX Group Inc. 429,497 612,612 129,720 Baytex Energy Trust 1,355,101 1,407,462 46,590 VFC Inc. 333,146 457,980 113,260 Cequel Energy Inc. 594,354 1,025,003 4,895,413 6,487,535 101,533 Clear Energy Inc. 333,427 360,442 INFORMATION TECHNOLOGY (7.2%) 227,530 Compton Petroleum Corp. 1,205,245 1,365,180 47,000 Certicom 7.25% 8/30/2005 47,000 47,000 43,273 Crew Energy Inc. 176,735 164,005 31,480 Cinram International Inc. 411,932 892,458 36,150 Ensign Resource Service Group 682,767 744,690 41,040 Creo Inc. 541,452 546,653 67,858 Great Northern Exploration Ltd. 301,552 315,540 600 EFTIA OSS Solution Com. 230,498 230,498 78,450 Major Drilling Group International Inc. Restricted 449,152 760,965 38,000 Enghouse Systems Ltd. 552,520 615,600 54,800 Peyto Energy Trust 929,013 1,493,300 75,800 Essential Reality Inc. 122,219 10,814 54,600 Storm Energy Ltd. 327,990 305,760 185,250 Geac Computer Corp., Ltd. 883,861 1,244,880 140,576 Thunder Energy Inc. 877,256 1,175,215 5,000 King Products Inc. 5,666 300 18,800 Tusk Energy Inc. 79,144 71,064 181,383 MKS Inc. 347,883 281,144 107,370 Tusk Energy Inc., Subscription Receipt, 9/23/03 360,971 405,859 44,144 Open Text Corp. 1,024,524 1,089,474 7,672,707 9,594,485 22,800 Segami Images Inc. 61,772 - INDUSTRIALS (11.7%) 101,420 Tengtu International Corp. 70,582 205,900 6,318 AFCAN Mining Corp. 195,861 3,728 25,280 Tundra Semiconductor Corp. 570,119 681,296 24,038 CML Healthcare Inc. 747,140 1,159,834 4,870,028 5,846,017 199,580 Desert Sun Mining Corp. 339,399 343,278 CONSUMER STAPLES (5.3%) 118,860 Fortune Minerals Ltd. 148,665 223,457 72,800 Blue Gold International Inc. 61,143 1 160,900 Galaxy Online Inc. 182,483 2 48,790 Coolbrands International Inc. 420,298 826,990 169,570 Global Railway Industries Ltd. 403,592 669,802 5,250 Corby Distilleries Ltd., Class A 310,575 330,750 4,700 Isleinvest Ltd. 19,924 - 561,700 Delicious Alternative Desserts Ltd. 178,047 6 5,500 Lynx Golf Inc. 5,931 - 24,100 Empire Co., Ltd., Class A 669,344 647,085 21,370 Mullen Transportation Inc. 664,127 844,115 121,300 Golden Maritime Resources Ltd. 60,999 1 33,620 Richelieu Hardware Ltd. 540,725 639,789 38,550 International Menu Solutions Corp. 149,663 5 11,200 Rompus Interactive Corp. 57,208 2 15,950 Rothmans Inc. 437,318 464,942 87,100 Russel Metals Inc. 514,781 765,609 32,300 Stake Technology Ltd. 95,304 386,643 36,900 Stantec Inc. 353,851 815,490 43,974 Sunopta Inc. 438,172 523,291 115,750 Terra Payments Inc. 434,062 428,275 39,350 VIncor International Inc. 739,052 1,082,125 565 Terra Payments Inc. 2,147 2,090 3,559,915 4,261,839 45,880 Toromont Industries Ltd. 904,720 1,516,334 43,880 Transcontinental Inc., Class A 601,037 1,053,120

2003 Annual Report as at December 31, 2003 – 17 – Clarica Alpine Growth Equity Fund Investment Portfolio as at December 31, 2003

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

HEALTH CARE (5.3%) 192,500 Bioniche Life Sciences Inc. 461,458 404,250 126,300 Cardiome Pharma Corp. 513,381 583,506 141,100 Extendicare Inc., Class A 745,017 1,869,575 66,530 IMI International Medical Innovations Inc. 281,717 262,128 230,200 Lorus Therapeutics Inc. 283,031 241,710 42,830 Patheon Inc. 623,393 498,541 44,200 Stressgen Biotechnologies Corp., Class A 121,226 72,930 140,700 Veris Biotechnology Corp. 23,660 547 429,913 Xillix Technology Corp. 267,580 322,435 3,320,463 4,255,622 UTILITIES (2.5%) 23,532 ATCO Ltd., Class I 1,081,961 1,129,536 14,700 Fortis Inc. 790,955 865,830 1,872,916 1,995,366 TELECOMMUNICATION SERVICES (1.8%) 25,900 Global Light Telecommunications Inc. 442,736 3 113,234 Stratos Global Corp. 1,249,053 1,465,248 1,691,789 1,465,251 WARRANTS (0.8%) 3,159 Afcan Mining Corp., Purchase Warrants (01Oct04) - 916 8,575 Cardiome Pharma Corp., Warrants (03Mar04) - 16,035 16,764 Cogient, Special Warrants - - 7,254 Corriente Resource Inc., Purchase Warrants - 2,176 59,580 Cumberland Resources Ltd., Warrant - 33,961 99,440 Desert Sun Mining Corp., Purchase Warrants - 1 59,430 Fortune Minerals Ltd., Purchase Warrants - 22,583 320,660 Jaguar Nickel Inc., S/W 400,825 529,089 115,200 Lorus Therapeutics Inc., Purchase Warrants - 1 26,800 MSU Devices Inc., Warrants 15,839 3 50,710 Tengtu International Corp., Warrants (30Nov03) - 53,928 57,875 Terra Payments Inc. Purchase Warrants - 1 416,664 658,694 PRIVATE PLACEMENT (0.7%) 167,642 Cogient Corp. 55,322 2 167,642 Cogient Corp. Rights 01/30/2004 - 2 42,447 Futureway Communications Inc. 163,999 180,400 10,000 Gateway Telecom Canada, Class A - - 62,080 Great Northern Exploration Ltd. (Private Placement) 257,157 288,672 16,150 Stake Technology Ltd., Restricted Units - 143,054 476,478 612,130 FUNDS (0.6%) 82,730 Trinidad Energy Services Units 409,514 563,391

Total Bonds & Equities (90.8%) 56,591,409 73,629,147

Short Term Notes (8.9%) 7,177,669 7,177,669

Total Investments (99.7%) 63,769,078 80,806,816

Other Assets (net) (0.3%) 241,108

Total Net Assets (100.0%) 81,047,924

2003 Annual Report as at December 31, 2003 – 18 – Clarica Alpine Growth Equity Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 52,771 56,883 Investments at market value (Note 2) 80,807 50,650 Dividends 429 341 Cash 124 2,094 Interest 306 69 Capital Transactions Cash collateral received for securities on loan 650 - Income distribution from investments --Proceeds from units issued Income taxes recoverable --Gain (loss) on derivative investments --(including reinvested distributions) 16,119 7,130 Daily variation margin --Less foreign withholding taxes - (2) Amounts paid for units redeemed (17,442) (5,949) Receivable for unit subscriptions 90 6 735 408 Return of capital -- Receivable for securities sold - 285 Expenses (1,323) 1,181 Dividends and accrued interest receivable 54 51 Management fees (Note 4) 1,545 1,591 Distributions to investors 81,725 53,086 Administrative (Note 4) 232 168 Distribution from realized gains -- Liabilities Custody 512Distribution from net income -- Bank overdraft --Legal 13 -- Payable for securities purchased 1 305 Audit 22Acquisition of net assets on Payable for cash collateral under security lending 650 - Goods and services tax 124 123 fund merger (Note 1) 12,289 - Payable for unit redemptions 26 10 1,909 1,899 Increase (decrease) in net assets Foreign withholding tax payable --Net income (loss) for the year (1,174) (1,491) from operations 17,311 (5,293) Distributions payable -- Net assets, end of year 81,048 52,771 677 315 Realized and unrealized Net assets and unitholders’ equity 81,048 52,771 gain (loss) on investments Realized gain (loss) on investments (a) 1,874 (8,095) Net asset value per unit Capital gain distribution from investments -- Front End 12.90 9.72 Change in unrealized appreciation DSC 13.08 9.84 (depreciation) of investments 16,611 4,293 Net gain (loss) on investments 18,485 (3,802) Number of units outstanding Increase (decrease) in net assets Front End 6,147,689 5,349,701 from operations 17,311 (5,293) DSC 133,471 80,917 (a) Realized gain (loss) on investments Security Lending (Note 5) Proceeds from sale of investments including Loaned 3,129 3,613 foreign exchange gain (loss) (b) (c) 63,803 18,719 Collateral 3,350 3,860 Investments at cost, beginning of year 50,224 60,596 Income 10 3 Investments purchased 68,296 17,142 Change in cost of short-term notes held 7,178 (700) 125,698 77,038 Investments at cost, end of year 63,769 50,224 Approved on behalf of the Board of Directors: Cost of investments sold 61,929 26,814 Realized gain (loss) on investments 1,874 (8,095)

William T. Holland (b) Proceeds on sales of short-term Director notes sold during the year not included above 39,708 167,400

Peter W. Anderson (c) Foreign exchange gain (loss) Director included above (43) (23)

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

2003 Annual Report as at December 31, 2003 – 19 – Clarica Canadian Blue Chip Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC Class Z 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $

Net asset value per unit, beginning of year 13.48 16.17 18.58 20.42 17.04 13.60 16.28 18.69 20.42 18.94 10.00 Distribution per unit From net income ------From net realized gain ------Return of capital ------Net income (loss) per unit (0.10) (0.13) (0.17) (0.21) (0.07) (0.08) (0.11) (0.15) (0.14) (0.04) - Net realized and unrealized appreciation (depreciation) of investments per unit 2.82 (2.58) (2.24) (1.63) 3.45 2.84 (2.60) (2.26) (1.59) 1.52 1.28 2.72 (2.71) (2.41) (1.84) 3.38 2.76 (2.71) (2.41) (1.73) 1.48 1.28 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.07 0.02 - - - 0.07 0.03 - - - 0.01

Net asset value per unit, end of year 16.27 13.48 16.17 18.58 20.42 16.43 13.60 16.28 18.69 20.42 11.29

Ratios & Supplemental Data Total return (%) (b) 20.70 (16.64) (12.99) (9.01) 19.83 20.81 (16.46) (12.86) (8.47) 7.81 12.90 Average net assets ($000’s) (c) 489,903 603,184 774,244 989,029 811,752 8,600 8,507 7,053 4,083 10 46,370 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.87 2.74 2.69 2.61 2.42 2.76 2.62 2.59 2.50 2.32 2.30 Management and operating expenses (%) 2.68 2.56 2.50 2.38 2.26 2.58 2.44 2.41 2.21 2.17 2.15 Goods and services tax expenses (%) 0.19 0.18 0.18 0.17 0.16 0.18 0.17 0.17 0.16 0.15 0.15 Total management expense ratio (%) 2.87 2.74 2.68 2.55 2.42 2.76 2.61 2.58 2.37 2.32 2.30 Portfolio turnover rate (e) 1.29 0.37 0.81 0.74 0.57 1.29 0.37 0.81 0.74 0.57 1.29

Front End DSC Class Z 2003 2002 2003 2002 2003 Units Issued and Outstanding Balance beginning of year 38,277,318 44,031,703 609,266 487,770 - Units issued for cash including re-invested distributions 1,227,758 2,061,480 113,248 192,256 32,288 Units issued on fund merger (Note 1) - - - - 4,529,894 Units redeemed (6,437,047) (7,815,865) (111,799) (70,760) (157,862) Units issued (redeemed) on conversion (net) -- -- - Balance end of year 33,068,029 38,277,318 610,715 609,266 4,404,320

Additional Fund Notes (in $000’s) Brokerage Commissions 1,740 946 Net capital loss carried forward 129,102 64,399 Non-capital loss carried forward (f) 7,567 5,747

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 20 – CIG - 9014 Clarica Canadian Blue Chip Fund Investment Portfolio as at December 31, 2003

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

MATERIALS (27.1%) INDUSTRIALS (6.1%) (cont’d) 33,000 Aber Diamond Corp. 1,093,778 1,551,330 115,700 CP Ships Ltd. 2,853,818 3,112,330 268,600 Agrium Inc. 5,555,658 5,745,354 133,970 Exel PLC 2,342,640 2,291,531 20,078 Air Liquide 4,303,434 4,585,663 250,000 Greater Toronto Airport Authority 3.37286% 5/20/2005 250,479 250,000 333,750 Alcan Inc. 17,122,269 20,215,238 270,085 Laidlaw International Inc. (USD) 3,808,322 4,844,276 602,200 Barrick Gold Corp. 15,340,946 17,650,482 139,000 Plug Power Inc. 1,089,220 1,306,950 515,400 Cambior Inc. 1,313,894 2,056,446 37,900 YBM Magnex International Inc. - - 141,100 Cameco Corp. 6,105,038 10,547,225 31,653,776 36,552,177 198,400 Canfor Corp. 1,935,583 2,235,968 CONSUMER DISCRETIONARY (5.2%) 68,500 Cia Vale do Rio Doce, Sponsored ADR 3,639,535 4,576,024 22,900 Adidas-Salomon AG 2,864,097 3,384,678 471,600 Domtar Inc. 7,063,029 7,663,500 130,700 Alliance Atlantis Communications Inc., Class B 1,868,224 2,590,474 77,900 Du Pont EI de Nemours & Co. 4,401,459 4,636,195 92,200 Astral Media Inc. 2,224,581 2,586,210 725,395 Eldorado Gold Corp. 2,281,529 2,937,850 26,500 Thomson Corp. 1,097,734 1,247,620 196,000 Fording Canadian Coal Trust 5,949,397 9,016,000 247,100 Torstar Corp., Class B 4,979,515 7,168,371 207,900 Glamis Gold Ltd. 3,997,649 4,632,012 113,700 Viacom Inc., Class B 5,830,497 6,544,161 128,900 IMC Global Inc. 1,297,621 1,660,001 287,200 Wolters Kluwer NV 5,566,234 5,809,782 48,400 Inco Ltd. 1,392,892 2,499,860 174,900 Yellow Pages Income Fund 1,769,712 2,028,840 88,900 International Forest Products, Class A 520,065 533,400 26,200,594 31,360,136 278,700 Kinross Gold Corp. 3,124,504 2,876,184 HEALTH CARE (4.9%) 48,400 Newmont Mining Corp. 1,999,849 3,051,246 288,400 Bristol-Myers Squibb Co. 9,887,253 10,697,135 760,400 Norske Skog Canada Ltd. 5,008,031 3,170,868 58,900 ImClone Systems Inc. 3,234,603 3,029,523 46,300 Peabody Energy Corp. 2,019,022 2,504,537 142,600 IVAX Corp. 2,559,837 4,416,315 506,200 Placer Dome Inc. 8,572,798 11,728,654 122,800 King Pharmaceuticals Inc. 2,139,209 2,430,296 86,987 Rio Tinto PLC 2,930,363 3,108,765 244,800 MDS Inc. 4,655,113 4,891,104 77,100 Syngenta AG 5,554,606 6,714,932 183,900 Tenet Healthcare Corp. 3,537,072 3,827,921 367,100 Teck Cominco Ltd., Class B 6,140,642 8,050,503 26,013,087 29,292,294 297,100 Tembec Inc. 3,463,034 2,801,653 CONSUMER STAPLES (4.5%) 263,600 United States Steel Corp. 8,214,776 11,972,028 696,400 Agricore United 4,514,288 6,337,240 467,500 WMC Resources Ltd. 2,348,303 2,569,835 422,400 Alimentation Couche Tard Inc., Class B 6,969,600 10,095,360 132,689,704 161,291,753 26,100 Bunge Ltd. 1,053,644 1,114,311 FINANCIALS (22.5%) 106,200 Interbrew 2,932,545 3,666,012 406,955 Amvescap PLC 3,807,555 3,824,482 84,700 Loblaw Cos Ltd. 5,267,386 5,657,960 56,000 Bank of America Corp. 5,522,201 5,841,337 20,737,463 26,870,883 170,400 Bank of Montreal 6,162,230 9,116,400 TELECOMMUNICATION SERVICES (3.5%) 348,400 Bank of Nova Scotia 17,315,087 22,924,720 542,300 BCE Inc. 17,380,542 15,672,470 197,900 Boardwalk Equities Inc. 2,862,288 3,546,368 139,500 Telus Corp. 3,655,781 3,620,025 186,100 Citigroup Inc. 9,213,901 11,715,271 66,300 Telus Corp. (Non-Voting) 1,526,944 1,604,460 57,400 Deutsche Bank AG, Registered Shares 5,697,362 6,170,935 22,563,267 20,896,955 415,000 Manulife Financial Corp. 15,347,752 17,367,750 INFORMATION TECHNOLOGY (1.3%) 112,300 National Bank Of Canada 3,580,991 4,844,622 246,500 Nokia OYJ, ADR 5,378,142 5,434,656 338,400 Royal Bank of Canada 13,707,925 20,913,120 474,561 Nortel Networks Corp. 3,936,123 2,605,340 323,481 Toronto-Dominion Bank 10,166,229 14,003,492 9,314,265 8,039,996 297,400 Trizec Canada Inc. 3,386,661 5,296,694 UTILITIES (0.5%) 78,600 Wells Fargo & Co. 5,553,230 6,003,027 553,000 Snam Rete Gas SpA 2,883,093 3,031,225 67,500 Willis Group Holdings Ltd. 2,719,759 2,982,511 105,043,171 134,550,729 WARRANTS (0.1%) ENERGY (17.1%) 421,350 Cambior Inc., Warrants (12Aug08) 48,442 737,362 186,100 BP PLC, ADR 11,013,063 11,910,767 362,697 Eldorado Gold Corp., Warrants - 4 307,493 EnCana Corp. 14,048,774 15,682,143 48,442 737,366 711,800 Esprit Exploration Ltd. 1,735,122 1,978,804 332,300 Inter Pipeline Fund 1,961,419 2,578,648 Total Bonds & Equities (92.8%) 461,981,696 555,039,833 215,700 Nexen Inc. 8,398,799 10,120,644 109,100 Penn West Petroleum Ltd. 4,280,434 5,255,347 Short Term Notes (6.2%) 37,144,727 37,144,727 198,800 Petro-Canada 7,900,421 12,705,308 143,500 Precision Drilling Corp. 6,645,769 8,143,625 DERIVATIVE INSTRUMENTS (Capital) 127,300 Royal Dutch Petroleum Co. ADR 7,953,321 8,649,341 156,000 Suncor Energy Inc. 3,699,100 5,070,000 Foreign Currency Forward Contracts 173,200 Talisman Energy Inc. 10,686,338 12,733,664 (Capital) (0.3%) (see Schedule 1) 1,576,480 122,500 Unocal Corp. 4,804,190 5,851,187 28,900 Valero Energy Inc. 1,708,084 1,736,841 Total Investments (99.3%) 499,126,423 593,761,040 84,834,834 102,416,319 INDUSTRIALS (6.1%) Other Assets (net) (0.7%) 4,137,715 69,600 Canadian National Railway Co. 4,240,108 5,707,200 520,500 CP Railway Ltd. 17,069,189 19,039,890 Total Net Assets (100.0%) 597,898,755

2003 Annual Report as at December 31, 2003 – 21 – Clarica Canadian Blue Chip Fund Investment Portfolio as at December 31, 2003

Schedule 1 Foreign Currency Forward Contracts (Capital) (0.3%) Due Credit Market Contracts Pay Receive Date Rating Value $

1 (3,100,000) US$ 4,105,671 Canadian$ 29-Jan-04 A-1 79,917 * 3 (22,868,000) US$ 30,315,552 Canadian$ 4-Feb-04 A-1+ 611,125 * 1 (1,002,000) US$ 1,316,067 Canadian$ 11-Feb-04 A-1 14,150 * 3 (9,630,000) US$ 12,693,321 Canadian$ 25-Feb-04 A-1 173,833 * 2 (7,900,000) US$ 10,374,478 Canadian$ 10-Mar-04 A-1+ 98,158 * 2 (10,600,000) US$ 13,927,976 Canadian$ 24-Mar-04 A-1 131,482 * 1 (11,200,000) US$ 14,758,800 Canadian$ 7-Apr-04 A-1 173,513 * 1 (17,300,000) US$ 22,829,080 Canadian$ 14-Apr-04 A-1+ 294,302 * Total Foreign Currency Forward Contracts Value 1,576,480

2003 Annual Report as at December 31, 2003 – 22 – Clarica Canadian Blue Chip Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 524,333 719,754 Investments at market value (Note 2) 593,761 523,812 Dividends 8,519 11,256 Cash 3,893 - Interest 2,714 557 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments 239 - (including reinvested distributions) 19,142 33,869 Receivable for unit subscriptions 99 83 Less foreign withholding taxes (353) (275) Amounts paid for units redeemed (91,736) (116,920) Receivable for securities sold - 1,085 11,119 11,538 Return of capital -- Dividends and accrued interest receivable 1,091 1,011 Expenses (72,594) (83,051) 598,844 525,991 Management fees (Note 4) 11,473 13,767 Distributions to investors Liabilities Administrative (Note 4) 2,181 1,788 Distribution from realized gains -- Bank overdraft - 224 Custody 14 50 Distribution from net income -- Payable for securities purchased 761 1,293 Legal 832 -- Payable for unit redemptions 184 137 Audit 16 18 Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 949 1,093 fund merger (Note 1) 45,299 - Distributions payable -4 14,641 16,748 Increase (decrease) in net assets 945 1,658 Net income (loss) for the year (3,522) (5,210) from operations 100,861 (112,370) Net assets and unitholders’ equity 597,899 524,333 Net assets, end of year 597,899 524,333 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 16.27 13.48 Realized gain (loss) on investments (a) (58,916) 1,588 DSC 16.43 13.60 Capital gain distribution from investments -- Class Z 11.29 N/A Change in unrealized appreciation (depreciation) of investments 163,299 (108,748) Number of units outstanding Net gain (loss) on investments 104,383 (107,160) Front End 33,068,029 38,277,318 Increase (decrease) in net assets DSC 610,715 609,266 from operations 100,861 (112,370) Class Z 4,404,320 N/A (a) Realized gain (loss) on investments Security Lending (Note 5) Proceeds from sale of investments including Loaned 38,060 45,294 foreign exchange gain (loss) (b) (c) 624,952 296,551 Collateral 40,710 48,450 Investments at cost, beginning of year 592,476 679,697 Income 67 41 Investments purchased 563,932 214,972 Change in cost of short-term notes held 26,586 (7,230) 1,182,994 887,439 Investments at cost, end of year 499,126 592,476 Approved on behalf of the Board of Directors: Cost of investments sold 683,868 294,963 Realized gain (loss) on investments (58,916) 1,588

William T. Holland (b) Proceeds on sales of short-term Director notes sold during the year not included above 9,537,754 322,628

Peter W. Anderson (c) Foreign exchange gain (loss) Director included above (1,161) (242)

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

2003 Annual Report as at December 31, 2003 – 23 – Clarica Canadian Equity Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 10.57 12.63 12.81 10.89 10.00 10.58 12.62 12.82 10.88 10.00 Distribution per unit From net income - - - (0.03) - - - - (0.05) - From net realized gain - - (0.01) - - - - (0.04) - - Return of capital ------(0.01) (0.03) - - - (0.04) (0.05) - Net income (loss) per unit (0.09) (0.12) (0.16) (0.25) (0.01) (0.07) (0.11) (0.15) (0.21) (0.01) Net realized and unrealized appreciation (depreciation) of investments per unit 2.06 (1.99) (0.01) 2.20 0.90 2.06 (1.98) (0.01) 2.20 0.89 1.97 (2.11) (0.17) 1.95 0.89 1.99 (2.09) (0.16) 1.99 0.88 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.11 0.05 - - - 0.09 0.05 - - -

Net asset value per unit, end of year 12.65 10.57 12.63 12.81 10.89 12.66 10.58 12.62 12.82 10.88

Ratios & Supplemental Data Total return (%) (b) 19.68 (16.31) (1.33) 17.91 8.90 19.66 (16.16) (1.21) 18.29 8.80 Average net assets ($000’s) (c) 74,938 82,984 68,536 37,764 2,987 5,613 5,415 4,032 1,928 103 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.35 3.36 3.49 3.55 2.89 3.24 3.25 3.37 3.46 2.78 Management and operating expenses (%) 3.13 3.01 2.95 2.91 2.70 3.03 2.93 2.86 2.77 2.60 Goods and services tax expenses (%) 0.22 0.21 0.21 0.20 0.19 0.21 0.20 0.20 0.19 0.18 Total management expense ratio (%) 3.35 3.22 3.16 3.11 2.89 3.24 3.13 3.06 2.96 2.78 Portfolio turnover rate (e) 0.11 0.77 0.52 0.36 - 0.11 0.77 0.52 0.36 -

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 7,493,828 6,002,978 511,768 379,185 Units issued for cash including re-invested distributions 548,949 2,144,321 94,030 188,401 Units issued on fund merger (Note 1) -- -- Units redeemed (1,590,320) (653,471) (98,312) (55,818) Units issued (redeemed) on conversion (net) -- -- Balance end of year 6,452,457 7,493,828 507,486 511,768

Additional Fund Notes (in $000’s) Brokerage Commissions 41 228 Net capital loss carried forward 18,721 18,721 Non-capital loss carried forward (f) 741 741

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 24 – CIG - 9013 Clarica Canadian Equity Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (34.1%) CONSUMER STAPLES (3.3%) 84,613 Bank of Montreal 3,038,806 4,526,796 26,800 Empire Co., Ltd., Class A 699,913 719,580 77,013 Bank of Nova Scotia 3,550,833 5,067,455 59,712 Rothmans Inc. 1,780,515 1,740,605 24,177 Brascan Corp. 644,945 960,552 12,452 Sobeys Inc. 428,258 414,650 12,600 Brookfield Properties Corp. 268,692 469,980 2,908,686 2,874,835 7,326 Fairfax Financial Holdings Ltd. 922,111 1,656,482 36,600 Investors Group Inc. 831,357 1,136,430 Total Bonds & Equities (90.0%) 61,141,979 79,221,778 153,000 Legacy Hotels Real Estate Investment Trust 1,136,773 1,098,540 55,271 National Bank Of Canada 1,600,693 2,384,391 Short Term Notes (9.1%) 8,001,815 8,001,815 46,835 Power Corp. Of Canada 1,569,010 2,266,814 16,100 Power Financial Corp. 525,526 797,433 Total Investments (99.1%) 69,143,794 87,223,593 108,108 Royal Bank of Canada 5,208,355 6,681,074 55,800 Sun Life Financial Inc. 1,622,386 1,802,340 Other Assets (net) (0.9%) 809,779 28,300 Toronto-Dominion Bank 1,113,472 1,225,107 22,032,959 30,073,394 Total Net Assets (100.0%) 88,033,372 ENERGY (16.7%) 41,303 Canadian Natural Resources Ltd. 1,922,881 2,699,977 34,198 Canadian Oil Sands Trust 1,172,145 1,562,507 46,044 EnCana Corp. 2,020,841 2,348,244 52,870 Imperial Oil Ltd. 2,354,500 3,041,611 43,138 Petro-Canada 1,635,259 2,756,950 36,939 Shell Canada Ltd. 1,776,375 2,262,514 10,882,001 14,671,803 MATERIALS (15.6%) 56,489 Alcan Inc. 2,481,631 3,421,539 94,600 Barrick Gold Corp. 2,408,483 2,772,726 80,698 Cascades Inc. 870,750 999,041 26,957 Dofasco Inc. 741,755 971,261 30,600 Domtar Inc. 441,640 497,250 9,714 Inco Ltd. 254,913 501,728 56,055 IPSCO Inc. 935,785 1,348,123 34,969 Noranda Inc. 557,579 718,613 6,000 Potash Corp. Of Saskatchewan 590,078 673,380 83,906 Teck Cominco Ltd., Class B 1,116,199 1,840,059 10,398,813 13,743,720 INDUSTRIALS (10.0%) 29,300 Canadian National Railway Co. 1,744,664 2,402,600 76,766 CP Ships Ltd. 1,321,321 2,065,005 84,000 Quebecor World Inc. 2,889,424 2,247,000 82,400 Superior Plus Income Fund 1,646,515 2,114,384 7,601,924 8,828,989 UTILITIES (5.4%) 31,500 ATCO Ltd., Class I 1,449,924 1,512,000 14,958 Terasen Inc. 591,767 717,236 54,522 TransCanada Corp. 1,249,470 1,520,073 26,500 TransCanada Power LP 885,328 961,950 4,176,489 4,711,259 CONSUMER DISCRETIONARY (4.9%) 38,928 Canadian Tire Corp. 1,109,972 1,535,710 24,447 Magna International Inc., Class A 1,723,988 2,543,466 6,279 Wescast Industries Inc., Class A 307,147 238,602 3,141,107 4,317,778

2003 Annual Report as at December 31, 2003 – 25 – Clarica Canadian Equity Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 84,640 80,603 Investments at market value (Note 2) 87,224 84,189 Dividends 1,610 1,699 Cash 537 362 Interest 461 250 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 6,986 28,340 Receivable for unit subscriptions 65 24 Less foreign withholding taxes --Amounts paid for units redeemed (18,095) (8,276) Receivable for securities sold 128 - 2,071 1,949 Return of capital -- Dividends and accrued interest receivable 123 139 Expenses (11,109) 20,064 88,077 84,714 Management fees (Note 4) 2,169 2,381 Distributions to investors Liabilities Administrative (Note 4) 339 264 Distribution from realized gains -- Bank overdraft --Custody 46Distribution from net income -- Payable for securities purchased 271Legal 15 -- Payable for unit redemptions 42 3 Audit 23Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 175 185 fund merger (Note 1) -- Distributions payable -- 2,690 2,844 Increase (decrease) in net assets 44 74 Net income (loss) for the year (619) (895) from operations 14,502 (16,027) Net assets and unitholders’ equity 88,033 84,640 Net assets, end of year 88,033 84,640 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 12.65 10.57 Realized gain (loss) on investments (a) 2,929 (18,662) DSC 12.66 10.58 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 12,192 3,530 Front End 6,452,457 7,493,828 Net gain (loss) on investments 15,121 (15,132) DSC 507,486 511,768 Increase (decrease) in net assets from operations 14,502 (16,027) Security Lending (Note 5) Loaned 4,057 730 (a) Realized gain (loss) on investments Collateral 4,340 780 Proceeds from sale of investments including Income 25 3 foreign exchange gain (loss) (b) (c) 21,396 61,708 Investments at cost, beginning of year 78,301 77,740 Investments purchased 8,309 84,630 Change in cost of short-term notes held 1,001 (3,699) Approved on behalf of the Board of Directors: 87,611 158,671 Investments at cost, end of year 69,144 78,301 Cost of investments sold 18,467 80,370 William T. Holland Realized gain (loss) on investments 2,929 (18,662) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 830,469 2,124,850 Director

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

2003 Annual Report as at December 31, 2003 – 26 – Clarica Canadian Large Cap Value Fund Statements of Financial Highlights (for the years ended December 31)

2003 $ 2002 $ 2001 $

Net asset value per unit, beginning of year 8.97 10.20 10.00 -- Distribution per unit From net income ----- From net realized gain ----- Return of capital ------Net income (loss) per unit (0.11) (0.14) (0.01) -- Net realized and unrealized appreciation (depreciation) of investments per unit 1.69 (1.31) 0.21 -- 1.58 (1.45) 0.20 -- Surplus (deficiency) of capital transactions over original cost per unit (a) (0.01) 0.22 - --

Net asset value per unit, end of year 10.54 8.97 10.20 --

Ratios & Supplemental Data Total return (%) (b) 17.50 (12.06) 2.00 -- Average net assets ($000’s) (c) 14,646 11,548 5,020 -- Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.23 3.28 5.25 -- Management and operating expenses (%) 3.02 2.86 4.15 -- Goods and services tax expenses (%) 0.21 0.20 0.29 -- Total management expense ratio (%) 3.23 3.06 4.44 -- Portfolio turnover rate (e) 0.38 0.38 - --

2003 2002 Units Issued and Outstanding Balance beginning of year 1,544,571 500,000 Units issued for cash including re-invested distributions 326,195 1,161,122 Units issued on fund merger (Note 1) -- Units redeemed (277,680) (116,551) Units issued (redeemed) on conversion (net) -- Balance end of year 1,593,086 1,544,571

Additional Fund Notes (in $000’s) Brokerage Commissions 812 Net capital loss carried forward 452 452 Non-capital loss carried forward (f) 277 167

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 27 – CIG - 9015 Clarica Canadian Large Cap Value Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (24.5%) INFORMATION TECHNOLOGY (0.7%) 10,300 Bank of Nova Scotia 532,936 677,740 4,400 Hummingbird Ltd. 131,608 122,232 8,000 Canadian Imperial Bank of Commerce 377,214 512,000 9,000 Investors Group Inc. 223,074 279,450 Total Investments (90.2%) 13,480,155 15,146,138 4,800 Manulife Financial Corp. 185,326 200,880 6,700 Marsh & McLennan Co., Inc. 416,891 416,127 Other Assets (net) (9.8%) 1,649,401 7,300 Mellon Financial Corp. 363,677 303,997 10,100 Power Corp. Of Canada 388,764 488,840 Total Net Assets (100.0%) 16,795,539 6,700 Royal Bank of Canada 359,268 414,060 19,200 Toronto-Dominion Bank 738,273 831,168 3,585,423 4,124,262 INDUSTRIALS (16.3%) 19,700 Bombardier Inc., Class B 67,687 107,759 7,200 CP Railway Ltd. 232,400 263,376 3,300 Emerson Electric Co. 279,869 277,115 1,300 General Dynamics Corp. 150,944 152,395 42,200 Husky Injection Molding Systems Ltd. 218,992 236,742 6,600 MacDonald Dettwiler & Associates Ltd. 149,627 157,080 5,700 Molex Inc., Class A 206,729 216,669 13,800 Moore Wallace Inc. 222,996 334,098 4,800 Pall Corp. 157,038 167,020 18,200 Quebecor World Inc. 550,507 486,850 10,100 Toromont Industries Ltd. 219,386 333,805 2,456,175 2,732,909 CONSUMER DISCRETIONARY (13.6%) 35,000 CanWest Global Communications Corp. 378,514 484,750 3,200 Koninklijke Philips Electronics NV 114,297 120,852 18,476 Liberty Media Corp., Class A 288,585 284,902 17,000 Matsushita Electric Industrial Co., Ltd. 316,358 304,313 19,500 Reed Elsevier PLC 205,280 211,034 14,500 Thomson Corp. 663,485 682,660 3,700 Wendy's International Inc. 138,251 188,294 2,104,770 2,276,805 MATERIALS (13.1%) 9,900 Alcan Inc. 459,860 599,643 17,800 Barrick Gold Corp. 473,582 521,718 20,500 Domtar Inc. 299,275 333,125 7,100 Kinross Gold Corp. 60,726 73,272 7,400 Nova Chemicals Corp. 218,356 259,296 4,900 Placer Dome Inc. 70,256 113,533 1,700 Potash Corp. Of Saskatchewan 161,015 190,791 2,700 West Fraser Timber Co., Ltd. 89,425 102,600 1,832,495 2,193,978 ENERGY (7.5%) 4,000 Canadian Oil Sands Trust 149,937 182,760 4,900 EnCana Corp. 224,733 249,900 4,200 Nexen Inc. 142,862 197,064 8,700 Suncor Energy Inc. 218,823 282,750 4,700 Talisman Energy Inc. 273,839 345,544 1,010,194 1,258,018 TELECOMMUNICATION SERVICES (6.5%) 25,300 BCE Inc. 728,820 731,170 14,800 Telus Corp. (Non-Voting) 276,826 358,160 1,005,646 1,089,330 CONSUMER STAPLES (6.0%) 1,400 Alimentation Couche Tard Inc., Class B 31,622 33,460 6,500 Kimberly-Clark Corp. 582,179 498,120 6,000 Metro Inc., Class A 121,839 131,400 9,600 Molson Inc., Class A 296,317 346,560 1,031,957 1,009,540 HEALTH CARE (2.0%) 7,400 Pfizer Inc. 321,887 339,064

2003 Annual Report as at December 31, 2003 – 28 – Clarica Canadian Large Cap Value Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 13,857 5,099 Investments at market value (Note 2) 15,146 12,701 Dividends 263 179 Cash 1,499 1,119 Interest 43 12 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 2,982 11,564 Receivable for unit subscriptions 51 9 Less foreign withholding taxes (8) (5) Amounts paid for units redeemed (2,536) (1,065) Receivable for securities sold 100 - 298 186 Return of capital -- Dividends and accrued interest receivable 35 30 Expenses 446 10,499 16,831 13,859 Management fees (Note 4) 373 293 Distributions to investors Liabilities Administrative (Note 4) 65 23 Distribution from realized gains -- Bank overdraft --Custody 413Distribution from net income -- Payable for securities purchased 24 1 Legal -1 -- Payable for unit redemptions 11 1 Audit --Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 31 23 fund merger (Note 1) -- Distributions payable -- 473 353 Increase (decrease) in net assets 35 2 Net income (loss) for the year (175) (167) from operations 2,493 (1,741) Net assets and unitholders’ equity 16,796 13,857 Net assets, end of year 16,796 13,857 Realized and unrealized Net asset value per unit 10.54 8.97 gain (loss) on investments Realized gain (loss) on investments (a) 1 (465) Number of units outstanding 1,593,086 1,544,571 Capital gain distribution from investments -- Change in unrealized appreciation Security Lending (Note 5) (depreciation) of investments 2,667 (1,109) Loaned 552Net gain (loss) on investments 2,668 (1,574) Collateral 10 50 Increase (decrease) in net assets Income 1-from operations 2,493 (1,741)

(a) Realized gain (loss) on investments Proceeds from sale of investments including Approved on behalf of the Board of Directors: foreign exchange gain (loss) (b) (c) 5,181 3,951 Investments at cost, beginning of year 13,702 4,479 Investments purchased 4,958 13,639 William T. Holland Change in cost of short-term notes held -- Director 18,660 18,118 Investments at cost, end of year 13,480 13,702 Cost of investments sold 5,180 4,416 Peter W. Anderson Realized gain (loss) on investments 1 (465) Director

(b) Proceeds on sales of short-term notes sold during the year not included above --

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

2003 Annual Report as at December 31, 2003 – 29 – Clarica Canadian Small/Mid Cap Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 14.00 14.51 15.68 19.17 18.15 15.97 16.52 17.82 19.42 18.76 Distribution per unit From net income - - - (0.10) (0.09) - - - (0.05) - From net realized gain - - - (3.41) (0.21) - - - (1.59) (0.05) Return of capital ------(3.51) (0.30) - - - (1.64) (0.05) Net income (loss) per unit (0.26) (0.23) (0.21) (0.23) (0.27) (0.28) (0.02) (0.23) (0.20) (0.04) Net realized and unrealized appreciation (depreciation) of investments per unit 3.82 (0.26) (0.96) 0.25 1.59 4.36 (0.02) (1.07) 0.24 0.75 3.56 (0.49) (1.17) 0.02 1.32 4.08 (0.04) (1.30) 0.04 0.71 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.14 (0.02) - - - 0.16 (0.51) - - -

Net asset value per unit, end of year 17.70 14.00 14.51 15.68 19.17 20.21 15.97 16.52 17.82 19.42

Ratios & Supplemental Data Total return (%) (b) 26.43 (3.51) (7.43) 0.11 7.28 26.55 (3.33) (7.28) (2.68) 3.78 Average net assets ($000’s) (c) 529,286 583,425 644,879 872,689 854,739 5,047 3,969 2,600 1,438 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.86 2.73 2.70 2.62 2.42 2.75 2.57 2.60 2.51 2.31 Management and operating expenses (%) 2.67 2.54 2.51 2.37 2.26 2.57 2.38 2.42 2.21 2.16 Goods and services tax expenses (%) 0.19 0.18 0.18 0.17 0.16 0.18 0.17 0.17 0.16 0.15 Total management expense ratio (%) 2.86 2.72 2.69 2.54 2.42 2.75 2.55 2.59 2.37 2.31 Portfolio turnover rate (e) 0.83 0.72 1.26 0.89 0.79 0.83 0.72 1.26 0.89 0.79

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 38,446,375 42,661,329 265,460 188,300 Units issued for cash including re-invested distributions 1,273,706 1,979,112 97,898 106,345 Units issued on fund merger (Note 1) -- -- Units redeemed (5,642,125) (6,194,066) (50,304) (29,185) Units issued (redeemed) on conversion (net) -- -- Balance end of year 34,077,956 38,446,375 313,054 265,460

Additional Fund Notes (in $000’s) Brokerage Commissions 1,956 1,976 Net capital loss carried forward 127,538 127,538 Non-capital loss carried forward (f) 15,296 17,778

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 30 – CIG - 9023 Clarica Canadian Small/Mid Cap Fund Investment Portfolio as at December 31, 2003

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

MATERIALS (19.4%) CONSUMER DISCRETIONARY (14.2%) 163,000 Aber Diamond Corp. 3,891,223 7,662,630 378,900 Alliance Atlantis Communications Inc., Class B 6,034,259 7,509,798 185,000 Agnico-Eagle Mines Ltd. 3,283,497 2,891,550 234,400 Astral Media Inc. 5,258,089 6,574,920 660,700 AUR Resources Inc. 2,486,731 4,459,725 7,500 Bally Total Fitness Holding Corp. 70,461 68,087 1,620,000 Bema Gold Corp. 6,237,483 7,808,400 31,300 CBRL Group Inc. 1,372,873 1,553,898 1,450,000 Cambior Inc. 3,625,000 5,785,500 359,200 CFM Corp. 3,391,376 3,929,648 338,700 Canfor Corp. 3,389,706 3,817,149 207,000 Corus Entertainment Inc., Class B 4,203,894 5,692,500 300,000 Cascades Inc. 3,492,458 3,714,000 266,000 Decoma International Inc., Class A 3,610,158 3,532,480 116,300 CCL Industries Inc., Class B 2,135,041 2,186,440 119,700 Department 56 Inc. 2,142,808 2,033,629 1,900,000 Eldorado Gold Corp. 4,765,446 7,695,000 221,700 Dorel Industries, Class B 7,497,364 7,872,567 210,700 Falconbridge Ltd. 4,327,607 6,607,552 39,900 Dover Downs Gaming & Entertainment Inc. 562,083 489,520 300,000 First Quantum Minerals Ltd. 2,779,298 4,221,000 123,300 Forzani Group Ltd., Class A 1,813,316 2,003,625 350,000 Glamis Gold Ltd. 5,970,600 7,798,000 61,800 Furniture Brands International Inc. 2,124,685 2,350,752 600,000 Iamgold Corp. 4,316,089 5,412,000 236,600 Gildan Activewear Inc., Class A 6,340,673 9,471,098 225,000 Inmet Mining Corp. 2,501,123 3,926,250 100,000 Intrawest Corp. 2,342,207 2,390,000 405,000 Intertape Polymer Group Inc. 4,050,000 6,678,450 49,000 Linens 'N Things Inc. 1,562,932 1,911,526 100,000 Ivanhoe Mines Ltd. 1,385,698 1,030,000 190,000 Mega Bloks Inc. 3,761,910 4,370,000 1,515,000 Lionore Mining International Ltd. 8,281,524 12,074,550 26,600 Michaels Stores Inc. 968,184 1,524,790 44,100 Lubrizol Corp. 2,369,894 1,859,925 86,400 Party City Corp. 1,630,938 1,444,351 264,000 Meridian Gold Inc. 4,950,908 4,997,520 5,700 Pulte Homes Inc. 397,727 692,069 231,000 Methanex Corp. 2,877,452 3,356,430 93,800 Radio One Inc. 1,956,456 2,347,828 300,000 RIO Narcea Gold Mines Ltd. 1,190,930 1,200,000 31,650 Rent-A-Center Inc. 936,337 1,231,406 627,200 Sherritt International Corp. 2,800,822 4,453,120 212,600 RONA Inc. 2,870,100 6,630,994 2,196,400 Wheaton River Minerals Ltd. 4,737,822 8,500,068 52,375 Saga Communications Inc., Class A 1,470,479 1,258,652 85,846,352 118,135,259 23,000 Sharper Image Corp. 922,723 970,924 FINANCIALS (15.0%) 53,000 Snap-On Inc. 2,733,270 2,216,037 444,300 AGF Management Ltd., Class B 5,528,514 7,775,250 28,300 Stanley Furniture Co., Inc. 1,062,172 1,156,121 55,100 Allied Capital Corp. 1,801,904 1,992,281 31,400 Superior Industries International Inc. 1,917,270 1,772,249 78,900 AmerUs Group Co. 4,123,934 3,578,317 90,000 Tesma International Inc., Class A 2,487,600 2,632,500 191,000 Canadian Western Bank 5,775,093 7,512,030 50,000 TVA Group Inc., Class B 1,033,193 1,049,000 27,800 City National Corp. 1,898,373 2,239,662 72,475,537 86,680,969 111,000 Colonial BancGroup Inc. 2,479,540 2,493,314 INDUSTRIALS (13.4%) 31,700 Cullen/Frost Bankers Inc. 1,632,835 1,667,902 64,100 Allete Inc. 2,413,330 2,543,816 23,000 Eastgroup Properties 911,717 965,853 53,000 Apogee Enterprises Inc. 885,646 780,150 75,600 Equity Inns Inc. 696,894 887,312 250,000 ATS Automation Tooling Systems 3,355,255 3,187,500 25,000 Fairfax Financial Holdings Ltd. 5,532,844 5,652,750 7,000 Bennett Environmental Inc. 189,630 187,460 28,912 Fidelity National Financial Inc. 780,522 1,454,093 20,800 EMCOR Group Inc. 1,489,648 1,184,225 22,100 First Bancorp (Puerto Rico) 1,002,920 1,133,561 72,100 Esterline Technologies Corp. 2,002,698 2,493,816 45,867 FNB Corp. 1,980,919 2,108,739 47,100 Federal Signal Corp. 1,559,185 1,070,191 24,000 Greater Bay BanCorp 750,706 886,456 120,300 Flint Energy Services Ltd. 2,785,106 2,526,300 192,000 Great-West Lifeco Inc. 7,139,912 8,736,000 48,300 Genesee & Wyoming Inc., Class A 1,242,270 1,973,167 80,200 Hibernia Corp., Class A 2,222,075 2,445,306 521,100 GSI Lumonics Inc. 5,841,171 7,920,720 55,600 Industrial-Alliance Life Insurance Co. 1,217,859 2,435,280 36,500 Harland John H. Co. 1,238,536 1,292,295 49,300 IndyMac BanCorp Inc. 1,791,132 1,904,687 51,300 Intercept Inc. 725,281 749,138 99,100 Innkeepers USA Trust 1,165,478 1,075,735 95,000 MacDonald Dettwiler & Associates Ltd. 2,253,270 2,261,000 62,400 Kilroy Realty Corp. 2,496,297 2,650,343 66,000 Mcgrath RentCorp. 2,066,069 2,332,473 352,000 Kingsway Financial Services Inc. 5,098,566 5,139,200 59,300 Mesa Air Group Inc. 921,137 966,710 10,500 National Financial Partners 362,841 375,160 75,800 Methode Electronics Inc., Class A 1,067,110 1,202,270 37,800 Parkway Properties Inc. 2,004,797 2,039,348 51,800 Mobile Mini Inc. 1,168,763 1,324,777 196,500 Power Corp. Of Canada 7,387,249 9,510,600 45,400 New England Business Service Inc. 1,455,454 1,736,937 162,900 Power Financial Corp. 6,161,223 8,068,437 84,200 Park Electrochemical Corp. 2,173,931 2,892,679 34,400 Selective Insurance Group Inc. 1,394,954 1,443,687 64,700 Regal-Beloit Corp. 1,753,751 1,846,006 37,500 Thornburg Mortgage Inc. 1,322,985 1,322,837 20,000 School Specialty Inc. 729,662 882,151 69,900 Trustmark Corp. 2,652,404 2,653,421 185,000 SNC-Lavalin Group Inc. 5,540,143 9,435,000 25,000 TSX Group Inc. 1,071,100 1,072,500 190,000 Toromont Industries Ltd. 3,882,166 6,279,500 78,385,587 91,220,061 532,000 Transcontinental Inc., Class A 5,992,038 12,768,000 27,800 Triumph Group Inc. 962,220 1,312,358 36,400 Werner Enterprises Inc. 871,198 920,067 269,050 Westjet Airlines Ltd. 4,573,305 7,654,472 1,107,800 YBM Magnex International Inc. - 11 36,700 Yellow Roadway Corp. 1,376,775 1,721,554 60,514,748 81,444,743

2003 Annual Report as at December 31, 2003 – 31 – Clarica Canadian Small/Mid Cap Fund Investment Portfolio as at December 31, 2003

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

INFORMATION TECHNOLOGY (9.2%) CONSUMER STAPLES (6.3%) 105,000 Aastra Technologies Ltd. 1,998,044 1,785,000 50,000 Agricore United 431,726 455,000 101,500 American Management Systems 1,858,385 1,985,060 385,900 Alimentation Couche Tard Inc., Class B 5,234,462 9,223,010 45,600 BearingPoint Inc. 477,496 596,708 49,300 Chattem Inc. 940,964 1,144,475 9,600 Black Box Corp. 562,431 573,458 239,500 Coolbrands International Inc. 1,365,176 4,059,525 184,000 Cinram International Inc. 1,375,602 5,216,400 150,000 Rothmans Inc. 4,252,164 4,372,500 366,700 Creo Inc. 3,585,635 4,884,444 17,300 Sensient Technologies Corp. 502,842 443,567 29,500 Dupont Photomasks Inc. 864,660 923,561 271,000 Shoppers Drug Mart Corp. 6,840,472 8,124,580 636,100 Geac Computer Corp., Ltd. 3,766,642 4,274,592 389,200 VIncor International Inc. 9,420,409 10,703,000 58,100 Harris Corp. 2,393,116 2,859,526 28,988,215 38,525,657 62,500 Integrated Silicon Solutions Inc. 705,050 1,268,529 UTILITIES (1.9%) 68,600 Mentor Graphics Corp. 1,876,668 1,293,584 44,700 Equitable Resources Inc. 2,429,126 2,488,132 157,600 MSC.Software Corp. 1,774,970 1,931,498 110,100 Fortis Inc. 5,471,966 6,484,890 40,400 Newport Corp. 828,016 870,800 40,000 Fortis Inc., Instalment Receipts 2,220,000 2,356,000 302,600 Open Text Corp. 7,490,263 7,468,168 10,121,092 11,329,022 7,700 Photronics Inc. 170,775 198,924 TELECOMMUNICATION SERVICES (1.0%) 367,800 Quantum Corp. 1,736,052 1,488,238 324,000 Stratos Global Corp. 3,046,397 4,192,560 150,000 Research In Motion Ltd. 9,162,283 13,008,000 201,100 Telesystem International Wireless Inc. 2,187,704 2,181,935 67,700 Reynolds & Reynolds Co., Class A 2,458,118 2,550,592 5,234,101 6,374,495 33,500 Tekelec Inc. 444,200 666,898 WARRANTS (0.1%) 558,300 Zarlink Semiconductor Inc. 4,044,225 2,445,354 655,300 Cambior Inc., Warrants (12Aug08) - 1,146,775 47,572,631 56,289,334 ENERGY (8.2%) Total Bonds & Equities (96.2%) 464,638,022 586,547,761 220,000 AltaGas Services Inc. 2,063,998 3,491,400 355,000 Cequel Energy Inc. 1,872,085 3,212,750 Short Term Notes (2.2%) 13,501,010 13,501,010 80,000 CHC Helicopter Corp., Class A 2,267,795 2,640,000 30,600 Cimarex Energy Co. 882,542 1,059,196 DERIVATIVE INSTRUMENTS (Capital) 330,000 First Calgary Petroleums Ltd. 1,238,622 2,574,000 100,000 InterOil Corp. 3,125,000 3,150,000 Foreign Currency Forward Contracts 71,400 Oceaneering International Inc. 2,372,004 2,592,761 (Capital) (0.2%) (see Schedule 1) 973,457 68,200 Offshore Logistics Inc. 2,101,536 2,168,758 105,000 Penn West Petroleum Ltd. 4,571,588 5,057,850 Total Investments (98.6%) 478,139,032 601,022,228 360,000 PetroKazakhstan Inc., Class A 7,950,833 10,537,200 497,500 Progress Energy Ltd. 3,210,376 6,218,750 Other Assets (net) (1.4%) 8,430,854 26,200 Stone Energy Corp. 1,411,016 1,442,398 99,800 Trican Well Service Ltd. 2,447,848 2,764,460 Total Net Assets (100.0%) 609,453,082 98,500 Western Oil Sands Inc., Class A 2,354,629 2,905,750 37,869,872 49,815,273 HEALTH CARE (7.5%) 53,000 Angiotech Pharmaceuticals Inc. 1,795,874 3,153,500 Schedule 1 18,100 Apria Healthcare Group Inc. 696,311 668,301 Foreign Currency Forward Contracts (Capital) (0.2%) 525,000 Axcan Pharma Inc. 9,945,269 10,631,250 Due Credit Market 18,000 Cooper Cos Inc. 670,160 1,100,211 Contracts Pay Receive Date Rating Value $ 23,900 Coventry Health Care Inc. 1,041,176 1,998,925 380,000 Extendicare Inc., Class A 3,319,229 5,035,000 1 (100,357,764) US$ 131,000,000 Canadian$ 5-Jan-04 A-1+ 815,888 * 53,000 Haemonetics Corp. 1,392,971 1,642,095 1 (103,320,368) US$ 137,600,000 Canadian$ 5-Feb-04 A-1+ 3,380,943 * 26,500 ICU Medical Inc. 1,098,866 1,178,473 1 (131,000,000) Canadian$ 98,501,425 US$ 5-Jan-04 A-1+ (3,223,374)* 42,400 KV Pharmaceutical Co., Class A 1,100,157 1,402,207 Total Foreign Currency Forward Contracts Value 973,457 41,400 Mentor Corp. 1,163,805 1,291,820 10,000 Neurochem Inc. 299,527 306,000 73,800 Ocular Sciences Inc. 2,158,686 2,747,867 283,000 Patheon Inc. 3,533,557 3,294,120 189,000 QLT Inc. 3,438,839 4,630,500 55,600 RehabCare Group Inc. 1,617,174 1,533,007 64,100 Renal Care Group Inc. 3,134,761 3,425,007 19,400 Sunrise Senior Living Inc. 694,522 974,692 80,800 Theragenics Corp. 529,003 573,198 37,629,887 45,586,173

2003 Annual Report as at December 31, 2003 – 32 – Clarica Canadian Small/Mid Cap Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 542,598 622,211 Investments at market value (Note 2) 601,022 538,084 Dividends 5,137 6,471 Cash 11,036 3,609 Interest 1,200 594 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 20,489 30,457 Receivable for unit subscriptions 88 57 Less foreign withholding taxes (411) (360) Amounts paid for units redeemed (82,400) (90,119) Receivable for securities sold 4,028 2,643 5,926 6,705 Return of capital -- Dividends and accrued interest receivable 521 628 Expenses (61,911) (59,662) 616,695 545,021 Management fees (Note 4) 12,013 13,248 Distributions to investors Liabilities Administrative (Note 4) 2,240 1,603 Distribution from realized gains -- Bank overdraft --Custody 931Distribution from net income -- Payable for securities purchased 7,164 2,243 Legal 833 -- Payable for unit redemptions 78 180 Audit 16 19 Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 992 1,041 fund merger (Note 1) -- Distributions payable -- 15,278 15,975 Increase (decrease) in net assets 7,242 2,423 Net income (loss) for the year (9,352) (9,270) from operations 128,766 (19,951) Net assets and unitholders’ equity 609,453 542,598 Net assets, end of year 609,453 542,598 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 17.70 14.00 Realized gain (loss) on investments (a) 39,310 (18,454) DSC 20.21 15.97 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 98,808 7,773 Front End 34,077,956 38,446,375 Net gain (loss) on investments 138,118 (10,681) DSC 313,054 265,460 Increase (decrease) in net assets from operations 128,766 (19,951) Security Lending (Note 5) Loaned 67,026 31,215 (a) Realized gain (loss) on investments Collateral 71,700 33,390 Proceeds from sale of investments including Income 216 45 foreign exchange gain (loss) (b) (c) 516,986 482,494 Investments at cost, beginning of year 514,008 603,189 Investments purchased 428,306 411,767 Change in cost of short-term notes held 13,501 - Approved on behalf of the Board of Directors: 955,815 1,014,956 Investments at cost, end of year 478,139 514,008 Cost of investments sold 477,676 500,948 William T. Holland Realized gain (loss) on investments 39,310 (18,454) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 2,566,698 2,903,452 Director

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

2003 Annual Report as at December 31, 2003 – 33 – Clarica Global Large Cap Value Fund Statements of Financial Highlights (for the years ended December 31)

2003 $ 2002 $ 2001 $

Net asset value per unit, beginning of year 9.28 10.20 10.00 -- Distribution per unit From net income ----- From net realized gain ----- Return of capital ------Net income (loss) per unit (0.15) (0.20) (0.01) -- Net realized and unrealized appreciation (depreciation) of investments per unit 0.80 (1.16) 0.21 -- 0.65 (1.36) 0.20 -- Surplus (deficiency) of capital transactions over original cost per unit (a) (0.13) 0.44 - --

Net asset value per unit, end of year 9.80 9.28 10.20 --

Ratios & Supplemental Data Total return (%) (b) 5.60 (9.02) 2.00 -- Average net assets ($000’s) (c) 26,577 18,655 5,006 -- Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.24 3.26 4.86 -- Management and operating expenses (%) 3.03 2.89 3.45 -- Goods and services tax expenses (%) 0.21 0.20 0.24 -- Total management expense ratio (%) 3.24 3.09 3.69 -- Portfolio turnover rate (e) 0.26 0.35 - --

2003 2002 Units Issued and Outstanding Balance beginning of year 2,489,816 500,000 Units issued for cash including re-invested distributions 1,190,243 2,200,086 Units issued on fund merger (Note 1) -- Units redeemed (518,752) (210,270) Units issued (redeemed) on conversion (net) -- Balance end of year 3,161,307 2,489,816

Additional Fund Notes (in $000’s) Brokerage Commissions 230 32 Net capital loss carried forward 609 104 Non-capital loss carried forward (f) 837 399

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 34 – CIG - 9021 Clarica Global Large Cap Value Fund Investment Portfolio as at December 31, 2003

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

U.S.A. (57.3%) 18,500 American Express Co. 1,053,804 1,157,165 18,100 Becton Dickinson & Co. 935,613 965,715 16,900 Engelhard Corp. 694,403 656,432 21,100 Equity Residential 879,468 807,528 15,800 Harrah's Entertainment Inc. 957,720 1,019,837 27,700 IMS Health Inc. 741,561 893,073 11,200 InterActive Corp. 405,421 492,842 9,000 Knight-Ridder Inc. 891,484 903,070 9,700 Manpower Inc. 529,309 592,263 6,300 Marsh & McLennan Co., Inc. 364,193 391,284 9,600 Meredith Corp. 587,911 607,696 21,000 Molex Inc., Class A 744,171 798,254 11,400 Moody's Corp. 744,808 895,211 28,500 Oracle Corp. 430,827 489,002 12,500 Progressive Corp. 1,038,278 1,355,097 27,900 RadioShack Corp. 1,111,238 1,110,109 19,500 Sabre Holdings Corp. 830,763 546,001 10,400 Sigma-Aldrich Corp. 733,393 771,230 13,200 State Street Corp. 813,392 891,561 5,700 Tennant Co. 318,548 320,088 11,100 Vulcan Materials Co. 740,256 684,798 23,800 Walt Disney Co. 706,382 720,108 11,100 WW Grainger Inc. 861,864 682,207 17,114,807 17,750,571 U.K. (13.5%) 62,700 Amersham PLC 708,276 1,111,682 119,700 Kidde PLC 197,529 295,265 96,100 Reed Elsevier PLC 1,055,118 1,040,017 40,800 Smiths Group PLC 695,692 624,639 87,200 WPP Group PLC 1,046,032 1,107,798 3,702,647 4,179,401 JAPAN (6.4%) 16,000 Canon Inc. 909,454 964,370 14,000 Matsushita Electric Industrial Co., Ltd. 254,643 250,611 11,000 Murata Manufacturing Co., Ltd. 817,337 769,298 1,981,434 1,984,279 MEXICO (3.6%) 24,082 Cemex SA de CV., ADR 872,426 818,276 91,200 Grupo Modelo SA, Series C 297,027 284,030 1,169,453 1,102,306 IRELAND (2.0%) 26,100 Kerry Group PLC, Class A 554,415 634,425

ITALY (2.0%) 27,800 Luxottica Group SpA, ADR 622,304 627,336

FRANCE (1.7%) 8,600 Societe BIC SA 461,917 514,053

SINGAPORE (1.4%) 30,000 Singapore Press Holdings Ltd. 527,350 433,049

DENMARK (0.6%) 3,800 Novozymes A/S, Class B 150,619 179,505

Total Investments (88.5%) 26,284,946 27,404,925

Other Assets (net) (11.5%) 3,572,787

Total Net Assets (100.0%) 30,977,712

2003 Annual Report as at December 31, 2003 – 35 – Clarica Global Large Cap Value Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 23,097 5,098 Investments at market value (Note 2) 27,405 22,117 Dividends 409 232 Cash 3,252 921 Interest 58 13 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 10,642 22,564 Receivable for unit subscriptions 59 34 Less foreign withholding taxes (58) (34) Amounts paid for units redeemed (4,660) (2,041) Receivable for securities sold 283 2 409 211 Return of capital -- Dividends and accrued interest receivable 36 44 Expenses 5,982 20,523 31,035 23,118 Management fees (Note 4) 677 474 Distributions to investors Liabilities Administrative (Note 4) 122 33 Distribution from realized gains -- Bank overdraft --Custody 430Distribution from net income -- Payable for securities purchased 52 21 Legal -1 -- Payable for unit redemptions 5-Audit 11Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 56 37 fund merger (Note 1) -- Distributions payable -- 860 576 Increase (decrease) in net assets 57 21 Net income (loss) for the year (451) (365) from operations 1,899 (2,524) Net assets and unitholders’ equity 30,978 23,097 Net assets, end of year 30,978 23,097 Realized and unrealized Net asset value per unit 9.80 9.28 gain (loss) on investments Realized gain (loss) on investments (a) (561) (233) Number of units outstanding 3,161,307 2,489,816 Capital gain distribution from investments -- Change in unrealized appreciation Security Lending (Note 5) (depreciation) of investments 2,911 (1,926) Loaned - 3,590 Net gain (loss) on investments 2,350 (2,159) Collateral - 3,840 Increase (decrease) in net assets Income 3-from operations 1,899 (2,524)

(a) Realized gain (loss) on investments Proceeds from sale of investments including Approved on behalf of the Board of Directors: foreign exchange gain (loss) (b) (c) 6,382 6,160 Investments at cost, beginning of year 23,907 4,622 Investments purchased 9,321 25,678 William T. Holland Change in cost of short-term notes held -- Director 33,228 30,300 Investments at cost, end of year 26,285 23,907 Cost of investments sold 6,943 6,393 Peter W. Anderson Realized gain (loss) on investments (561) (233) Director

(b) Proceeds on sales of short-term notes sold during the year not included above --

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

2003 Annual Report as at December 31, 2003 – 36 – Clarica Premier International Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 9.93 13.60 17.06 22.53 19.42 10.21 13.95 17.47 22.54 20.76 Distribution per unit From net income - - - (0.16) - - - - (0.10) - From net realized gain - - - (1.37) - - - - (1.10) - Return of capital ------(1.53) - - - - (1.20) - Net income (loss) per unit (0.01) (0.14) (0.16) (0.24) (0.13) - (0.13) (0.18) (0.23) (0.06) Net realized and unrealized appreciation (depreciation) of investments per unit 1.31 (3.54) (3.30) (3.70) 3.24 1.35 (3.61) (3.34) (3.64) 1.84 1.30 (3.68) (3.46) (3.94) 3.11 1.35 (3.74) (3.52) (3.87) 1.78 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.09 0.01 - - - 0.08 - - - -

Net asset value per unit, end of year 11.32 9.93 13.60 17.06 22.53 11.64 10.21 13.95 17.47 22.54

Ratios & Supplemental Data Total return (%) (b) 14.00 (26.99) (20.25) (17.50) 15.89 14.01 (26.81) (20.11) (17.17) 8.57 Average net assets ($000’s) (c) 92,600 118,131 155,869 175,716 111,136 3,859 3,588 2,474 986 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.93 2.96 3.04 2.93 2.46 2.82 2.81 2.91 2.86 2.42 Management and operating expenses (%) 2.74 2.53 2.58 2.45 2.30 2.64 2.44 2.48 2.29 2.26 Goods and services tax expenses (%) 0.19 0.18 0.18 0.17 0.16 0.18 0.17 0.17 0.16 0.16 Total management expense ratio (%) 2.93 2.71 2.76 2.62 2.46 2.82 2.61 2.65 2.45 2.42 Portfolio turnover rate (e) 0.31 1.38 0.93 0.96 0.40 0.31 1.38 0.93 0.96 0.40

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 10,024,548 10,449,992 355,724 213,174 Units issued for cash including re-invested distributions 642,303 1,267,648 114,396 182,014 Units issued on fund merger (Note 1) -- -- Units redeemed (1,604,215) (1,693,092) (74,624) (39,464) Units issued (redeemed) on conversion (net) -- -- Balance end of year 9,062,636 10,024,548 395,496 355,724

Additional Fund Notes (in $000’s) Brokerage Commissions 239 453 Net capital loss carried forward 79,758 79,758 Non-capital loss carried forward (f) 2,587 3,028

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 37 – CIG - 9020 Clarica Premier International Fund Investment Portfolio as at December 31, 2003

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

U.K. (20.1%) NETHERLANDS (3.3%) 459,496 BAE Systems PLC 2,866,350 1,790,624 33,000 Heineken NV 1,561,987 1,625,290 38,000 BP PLC, ADR 2,336,292 2,432,075 36,000 ING Groep NV 916,999 1,085,908 247,000 Cadbury Schweppes PLC 2,485,704 2,347,001 42,000 OCE NV 577,890 832,490 81,000 Celltech Group PLC 743,416 709,160 3,056,876 3,543,688 35,000 Diageo PLC 503,359 595,831 SPAIN (3.3%) 54,000 GlaxoSmithKline PLC 1,582,988 1,600,926 44,000 Altadis SA 1,417,745 1,615,061 296,348 Kingfisher PLC 1,841,126 1,911,590 135,000 Enagas SA 1,176,710 1,894,026 143,000 Lloyds TSB Group PLC 1,948,737 1,483,822 2,594,455 3,509,087 272,000 Scottish & Newcastle PLC 2,930,005 2,382,953 SWEDEN (3.2%) 149,000 Scottish & Southern Energy PLC 2,123,430 2,322,571 192,000 Nordea AB (SEK) 1,193,187 1,868,287 73,000 Standard Chartered PLC 1,271,438 1,559,757 12,000 Sandvik AB 469,590 536,267 143,000 Trinity Mirror PLC 1,235,631 1,874,650 20,000 Svenska Cellulosa AB, Class B 1,028,622 1,059,561 12,000 Unilever PLC, ADR 522,525 585,161 2,691,399 3,464,115 22,391,001 21,596,121 AUSTRALIA (3.0%) JAPAN (16.6%) 100,000 BHP Billiton Ltd. 841,760 1,190,197 184,000 Daiwa Securities Group Inc. 1,221,104 1,620,200 42,000 National Australia Bank Ltd. 1,207,355 1,228,178 219 Fuji Television Network Inc. 1,055,563 1,534,247 21,000 Rio Tinto Ltd. 589,238 762,742 50,000 Ito-Yokado Co., Ltd. 2,271,471 2,035,275 2,638,353 3,181,117 35,000 Kirin Beverage Corp. 740,589 819,727 FINLAND (2.9%) 46,000 Nihon Unisys Ltd. 449,034 503,395 71,000 Nokia OYJ 1,520,430 1,587,996 161 Nippon Telegraph & Telephone Corp. 953,161 1,005,402 86,000 Stora Enso OYJ, Class R 1,409,554 1,495,458 140,000 Nipponkoa Insurance Co., Ltd. 755,403 1,002,781 2,929,984 3,083,454 43,300 Omron Corp. 1,164,518 1,137,550 SOUTH KOREA (2.5%) 62,400 Ricoh Co., Ltd. 1,474,533 1,594,110 19,000 Kookmin Bank, ADR 981,647 932,419 5,000 Rohm Co., Ltd. 912,955 758,548 48,000 KT Corp., ADR 1,504,077 1,187,130 8,000 SFCG Co., Ltd. 946,959 1,327,700 9,000 LG Chem Ltd. 493,076 538,335 149,000 Sumitomo Trust & Banking Co., Ltd. 999,792 1,133,835 2,978,800 2,657,884 61,000 Suzuki Motor Corp. 1,048,118 1,168,574 DENMARK (1.5%) 95 UFJ Holdings Inc. 188,375 590,955 26,000 Carlsberg A/S, Class B 1,938,418 1,550,197 38,000 Yamanouchi Pharmaceutical Co., Ltd. 1,496,990 1,528,449 15,678,565 17,760,748 THAILAND (1.4%) FRANCE (11.0%) 410,000 Bangkok Bank PCL, Foreign Registered Shares 869,150 1,543,226 21,000 Aventis SA 1,485,314 1,795,165 9,900 BNP Paribas SA 721,086 806,238 AUSTRIA (1.3%) 8,000 Galeries Lafayette 1,400,906 1,602,662 9,000 Erste Bank der Oesterreichischen Sparkassen AG 835,313 1,438,432 32,200 Schneider Electric SA 2,355,221 2,726,321 16,000 Technip SA 1,449,944 2,239,551 NORWAY (1.0%) 82,000 Vivendi Universal SA 1,609,351 2,577,800 35,000 Orkla ASA, Class A 870,558 1,013,704 9,021,822 11,747,737 ITALY (9.0%) SINGAPORE (0.7%) 90,000 Alleanza Assicurazioni SpA 959,332 1,274,430 69,000 DBS Group Holdings Ltd. 721,399 774,677 241,000 Arnoldo Mondadori Editore SpA 2,162,436 2,793,804 63,500 Banco Popolare di Verona e Novara Scrl 985,583 1,390,519 BELGIUM (0.5%) 120,000 ENI-Ente Nazionale Idrocarburi SpA 2,091,428 2,928,644 5,000 Solvay SA 529,708 560,785 491,137 Telecom Italia SpA 1,217,987 1,293,984 7,416,766 9,681,381 BRAZIL (0.5%) SWITZERLAND (4.2%) 63,000 Telesp Celular Participacoes SA, ADR 399,440 537,616 30,000 Converium Holding AG 2,039,889 2,062,335 22,200 Credit Suisse Group 1,162,534 1,050,301 Total Bonds & Equities (98.0%) 93,902,265 105,024,891 10,800 Roche Holding AG 1,188,240 1,408,661 4,390,663 4,521,297 DERIVATIVE INSTRUMENTS (Capital) PORTUGAL (4.1%) 515,000 Electricidade de Portugal SA 1,233,074 1,755,930 Foreign Currency Forward Contracts 206,000 Portugal Telecom SGPS SA, Registered Shares 1,973,284 2,681,784 (Capital) (-0.1%) (see Schedule 1) (110,868) 3,206,358 4,437,714 HONG KONG (4.1%) Total Investments (97.9%) 93,902,265 104,914,023 198,000 Hutchison Whampoa Ltd. 3,141,916 1,893,580 373,000 Television Broadcasts Ltd. 2,004,503 2,442,519 Other Assets (net) (2.1%) 2,274,610 5,146,419 4,336,099 GERMANY (3.8%) Total Net Assets (100.0%) 107,188,633 17,500 BASF AG 1,083,424 1,272,717 14,700 E.ON AG 1,015,131 1,245,344 15,500 Henkel KGaA Non-Voting PFD. 1,498,263 1,567,751 3,596,818 4,085,812

2003 Annual Report as at December 31, 2003 – 38 – Clarica Premier International Fund Investment Portfolio as at December 31, 2003

Schedule 1 Foreign Currency Forward Contracts (Capital) (-0.1%) Due Credit Market Contracts Pay Receive Date Rating Value $

1 (561,070,000) Japanese Yen 5,158,790 US$ 20-Apr-04 A-1+ (110,868)* Total Foreign Currency Forward Contracts Value (110,868)

2003 Annual Report as at December 31, 2003 – 39 – Clarica Premier International Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 103,213 145,114 Investments at market value (Note 2) 104,914 95,477 Dividends 3,084 2,007 Cash 2,120 7,458 Interest 154 118 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 7,164 17,387 Receivable for unit subscriptions 23 28 Less foreign withholding taxes (488) (299) Amounts paid for units redeemed (16,160) (20,145) Receivable for securities sold -- 2,750 1,826 Return of capital -- Dividends and accrued interest receivable 164 267 Expenses (8,996) (2,758) 107,221 103,230 Management fees (Note 4) 2,166 2,738 Distributions to investors Liabilities Administrative (Note 4) 447 274 Distribution from realized gains -- Bank overdraft --Custody 21 59 Distribution from net income -- Payable for securities purchased 813Legal 16 -- Payable for unit redemptions 24 4 Audit 34Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 183 214 fund merger (Note 1) -- Distributions payable -- 2,821 3,295 Increase (decrease) in net assets 32 17 Net income (loss) for the year (71) (1,469) from operations 12,972 (39,143) Net assets and unitholders’ equity 107,189 103,213 Net assets, end of year 107,189 103,213 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 11.32 9.93 Realized gain (loss) on investments (a) 2,620 (50,828) DSC 11.64 10.21 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 10,423 13,154 Front End 9,062,636 10,024,548 Net gain (loss) on investments 13,043 (37,674) DSC 395,496 355,724 Increase (decrease) in net assets from operations 12,972 (39,143) Security Lending (Note 5) Loaned 20,273 14,430 (a) Realized gain (loss) on investments Collateral 21,690 15,430 Proceeds from sale of investments including Income 122 56 foreign exchange gain (loss) (b) (c) 32,310 166,965 Investments at cost, beginning of year 94,888 152,429 Investments purchased 28,704 160,252 Change in cost of short-term notes held -- Approved on behalf of the Board of Directors: 123,592 312,681 Investments at cost, end of year 93,902 94,888 Cost of investments sold 29,690 217,793 William T. Holland Realized gain (loss) on investments 2,620 (50,828) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above -- Director

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

2003 Annual Report as at December 31, 2003 – 40 – Clarica Summit Canadian Equity Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 13.38 14.06 13.81 11.55 11.24 13.48 14.15 13.87 11.55 11.23 Distribution per unit From net income ------(0.06) - From net realized gain - (0.09) - - - - (0.10) - - - Return of capital ------(0.09) - - - - (0.10) - (0.06) - Net income (loss) per unit (0.17) (0.20) (0.16) (0.13) (0.02) (0.16) (0.19) (0.14) (0.08) (0.01) Net realized and unrealized appreciation (depreciation) of investments per unit 1.48 (0.43) 0.41 2.39 0.33 1.49 (0.43) 0.42 2.46 0.33 1.31 (0.63) 0.25 2.26 0.31 1.33 (0.62) 0.28 2.38 0.32 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.14 0.04 - - - 0.14 0.05 - - -

Net asset value per unit, end of year 14.83 13.38 14.06 13.81 11.55 14.95 13.48 14.15 13.87 11.55

Ratios & Supplemental Data Total return (%) (b) 10.84 (4.23) 1.85 19.51 2.82 10.91 (4.00) 2.02 20.59 2.85 Average net assets ($000’s) (c) 102,038 108,253 87,757 66,634 59,213 2,332 1,932 1,221 526 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.24 3.15 3.18 3.27 2.82 3.13 3.08 3.05 3.19 2.64 Management and operating expenses (%) 3.03 2.91 2.85 2.81 2.64 2.93 2.84 2.73 2.66 2.47 Goods and services tax expenses (%) 0.21 0.20 0.20 0.20 0.18 0.20 0.20 0.19 0.19 0.17 Total management expense ratio (%) 3.24 3.11 3.05 3.01 2.82 3.13 3.04 2.92 2.85 2.64 Portfolio turnover rate (e) 0.20 0.86 0.17 0.55 0.11 0.20 0.86 0.17 0.55 0.11

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 8,398,872 7,039,889 165,216 110,623 Units issued for cash including re-invested distributions 986,461 2,223,031 45,901 75,992 Units issued on fund merger (Note 1) -- -- Units redeemed (2,383,302) (864,048) (35,942) (21,399) Units issued (redeemed) on conversion (net) -- -- Balance end of year 7,002,031 8,398,872 175,175 165,216

Additional Fund Notes (in $000’s) Brokerage Commissions 67 235 Net capital loss carried forward 139 - Non-capital loss carried forward (f) 1,097 -

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 41 – CIG - 9012 Clarica Summit Canadian Equity Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (22.8%) 110,000 AGF Management Ltd., Class B 1,449,142 1,925,000 70,000 Bank of Nova Scotia 3,160,500 4,606,000 20 Berkshire Hathaway Inc., Class A 1,998,387 2,185,275 575 Berkshire Hathaway Inc., Class B 1,948,752 2,099,193 60,000 Canadian Imperial Bank of Commerce 2,400,000 3,840,000 85,000 Royal Bank of Canada 3,526,993 5,253,000 100,000 Toronto-Dominion Bank 3,365,798 4,329,000 17,849,572 24,237,468 MATERIALS (22.6%) 10,000 Air Liquide 2,022,896 2,283,924 65,000 Alcan Inc. 3,171,982 3,937,050 60,000 Cameco Corp. 1,965,000 4,485,000 80,000 IPSCO Inc. 1,283,600 1,924,000 215,000 Nexfor Inc. 1,707,100 2,332,750 300,000 Norske Skog Canada Ltd. 1,481,640 1,251,000 50,000 Potash Corp. Of Saskatchewan 4,760,569 5,611,500 30,000 Sigma-Aldrich Corp. 2,242,954 2,224,701 18,635,741 24,049,925 ENERGY (19.1%) 60,000 EnCana Corp. 2,583,075 3,060,000 130,000 Ensign Resource Service Group 2,194,998 2,678,000 50,000 Petro-Canada 1,758,367 3,195,500 70,000 ShawCor Ltd., Class A 913,150 1,091,300 130,000 Suncor Energy Inc. 2,096,303 4,225,000 50,000 Talisman Energy Inc. 2,699,500 3,676,000 20,000 Total Fina Elf S.A., ADR 2,136,310 2,399,523 14,381,703 20,325,323 CONSUMER DISCRETIONARY (6.3%) 30,000 Darden Restaurants Inc. 912,351 818,603 30,000 Jones Apparel Group Inc. 1,680,442 1,370,693 45,000 Koninklijke Philips Electronics NV, ADR 1,217,653 1,697,706 100,000 TJX Companies Inc. 3,141,552 2,859,663 6,951,998 6,746,665 CONSUMER STAPLES (5.2%) 120,000 Cadbury Schweppes PLC 1,024,798 1,140,243 195,000 Diageo PLC 3,090,235 3,319,629 3,500 Nestle SA, Registered Shares 1,029,984 1,130,756 5,145,017 5,590,628 INDUSTRIALS (3.3%) 35,000 Canadian National Railway Co. 2,118,669 2,870,000 35,000 Kemet Corp. 499,254 621,409 2,617,923 3,491,409 HEALTH CARE (2.4%) 55,000 Pfizer Inc. 2,916,128 2,520,069

Total Bonds & Equities (81.7%) 68,498,082 86,961,487

Short Term Notes (17.7%) 18,898,300 18,898,300

Total Investments (99.4%) 87,396,382 105,859,787

Other Assets (net) (0.6%) 633,687

Total Net Assets (100.0%) 106,493,474

2003 Annual Report as at December 31, 2003 – 42 – Clarica Summit Canadian Equity Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 114,644 100,566 Investments at market value (Note 2) 105,860 113,470 Dividends 1,386 1,225 Cash 454 1,083 Interest 715 691 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 13,441 31,911 Receivable for unit subscriptions 83 25 Less foreign withholding taxes (43) (38) Amounts paid for units redeemed (31,847) (12,140) Receivable for securities sold -- 2,058 1,878 Return of capital -- Dividends and accrued interest receivable 104 83 Expenses (18,406) 19,771 106,501 114,661 Management fees (Note 4) 2,712 2,862 Distributions to investors Liabilities Administrative (Note 4) 442 319 Distribution from realized gains - (739) Bank overdraft --Custody 516Distribution from net income -- Payable for securities purchased 26Legal 17 - (739) Payable for unit redemptions 611Audit 34Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 220 223 fund merger (Note 1) -- Distributions payable -- 3,383 3,431 Increase (decrease) in net assets 817Net income (loss) for the year (1,325) (1,553) from operations 10,255 (4,954) Net assets and unitholders’ equity 106,493 114,644 Net assets, end of year 106,493 114,644 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 14.83 13.38 Realized gain (loss) on investments (a) (3) 6,488 DSC 14.95 13.48 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 11,583 (9,889) Front End 7,002,031 8,398,872 Net gain (loss) on investments 11,580 (3,401) DSC 175,175 165,216 Increase (decrease) in net assets from operations 10,255 (4,954) Security Lending (Note 5) Loaned 396 509 (a) Realized gain (loss) on investments Collateral 420 550 Proceeds from sale of investments including Income 23foreign exchange gain (loss) (b) (c) 21,600 76,438 Investments at cost, beginning of year 106,590 83,794 Investments purchased 16,194 78,296 Change in cost of short-term notes held (13,785) 14,450 Approved on behalf of the Board of Directors: 108,999 176,540 Investments at cost, end of year 87,396 106,590 Cost of investments sold 21,603 69,950 William T. Holland Realized gain (loss) on investments (3) 6,488 Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 148,564 163,927 Director

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

2003 Annual Report as at December 31, 2003 – 43 – Clarica Summit Dividend Growth Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 13.40 15.71 15.14 12.50 13.26 13.17 15.42 14.86 12.50 12.69 Distribution per unit From net income - - - (0.02) - - - (0.02) (0.12) - From net realized gain (0.55) - - - - (0.55) - - (0.30) - Return of capital (0.05) (0.60) (0.60) (0.58) (0.60) (0.05) (0.60) (0.58) (0.55) (0.10) (0.60) (0.60) (0.60) (0.60) (0.60) (0.60) (0.60) (0.60) (0.97) (0.10) Net income (loss) per unit (0.03) (0.03) (0.02) 0.04 0.09 (0.02) (0.01) - 0.10 (0.05) Net realized and unrealized appreciation (depreciation) of investments per unit 2.43 (1.80) 1.19 3.20 (0.25) 2.39 (1.76) 1.16 3.23 (0.04) 2.40 (1.83) 1.17 3.24 (0.16) 2.37 (1.77) 1.16 3.33 (0.09) Surplus (deficiency) of capital transactions over original cost per unit (a) 0.02 0.12 - - - 0.01 0.12 - - -

Net asset value per unit, end of year 15.22 13.40 15.71 15.14 12.50 14.95 13.17 15.42 14.86 12.50

Ratios & Supplemental Data Total return (%) (b) 18.68 (11.18) 7.88 26.59 (1.21) 18.70 (10.97) 8.03 29.33 (0.71) Average net assets ($000’s) (c) 197,002 206,080 160,381 104,529 105,074 7,550 6,889 4,375 1,607 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.25 3.14 3.18 3.20 2.80 3.13 3.02 3.07 3.12 2.50 Management and operating expenses (%) 3.04 2.87 2.86 2.79 2.62 2.93 2.77 2.77 2.63 2.34 Goods and services tax expenses (%) 0.21 0.20 0.20 0.19 0.18 0.20 0.19 0.19 0.18 0.16 Total management expense ratio (%) 3.25 3.07 3.06 2.98 2.80 3.13 2.96 2.96 2.81 2.50 Portfolio turnover rate (e) 1.12 0.81 0.30 0.46 0.25 1.12 0.81 0.30 0.46 0.25

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 14,887,659 11,861,395 547,944 350,756 Units issued for cash including re-invested distributions 2,176,365 4,621,463 140,571 270,077 Units issued on fund merger (Note 1) -- -- Units redeemed (2,909,622) (1,595,199) (115,317) (72,889) Units issued (redeemed) on conversion (net) -- -- Balance end of year 14,154,402 14,887,659 573,198 547,944

Additional Fund Notes (in $000’s) Brokerage Commissions 509 517 Net capital loss carried forward 11,007 11,007 Non-capital loss carried forward (f) --

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 44 – CIG - 9011 Clarica Summit Dividend Growth Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (38.9%) HEALTH CARE (3.6%) 153,356 Amvescap PLC 1,434,830 1,441,209 182,000 Bristol-Myers Squibb Co. 6,435,606 6,750,619 23,600 Bank of America Corp. 2,327,777 2,461,706 21,500 Merck & Co., Inc. 1,233,587 1,288,210 138,200 Bank of Montreal 5,424,091 7,393,700 7,669,193 8,038,829 144,800 Bank of Nova Scotia 7,792,657 9,527,840 CONSUMER DISCRETIONARY (2.7%) 162,000 Boardwalk Equities Inc. 2,394,184 2,903,040 11,300 Thomson Corp. 471,362 532,004 79,780 Brascan Corp. 2,215,263 3,169,659 56,000 Torstar Corp., Class B 1,384,992 1,624,560 165,800 Chartwell Seniors Housing REIT 1,849,454 2,092,396 146,200 Wolters Kluwer NV 2,765,504 2,957,486 106,940 Citigroup Inc. 6,136,302 6,732,032 78,700 Yellow Pages Income Fund 803,427 912,920 197,300 Davis + Henderson Income Fund 2,658,857 3,442,885 5,425,285 6,026,970 21,700 Deutsche Bank AG, Registered Shares 2,151,037 2,332,915 CONSUMER STAPLES (1.4%) 207,500 InnVest Real Estate Investment Trust 1,832,502 2,365,500 74,000 Interbrew 2,421,336 2,554,472 399,850 Jannock Properties Ltd. 396,861 279,895 5,900 Loblaw Cos Ltd. 364,028 394,122 51,900 John Hancock Financial Services Inc. 2,374,100 2,524,090 2,785,364 2,948,594 204,400 Legacy Hotels Real Estate Investment Trust 1,290,096 1,467,592 186,200 Manulife Financial Corp. 7,202,724 7,792,470 Total Bonds & Equities (94.1%) 181,170,767 210,766,616 56,800 National Bank Of Canada 1,860,893 2,450,352 63,700 Power Financial Corp. 2,514,033 3,155,061 Short Term Notes (5.8%) 13,002,949 13,002,949 36,200 RioCan Real Estate Investment Trust 369,758 553,860 184,900 Royal Bank of Canada 9,217,136 11,426,820 DERIVATIVE INSTRUMENTS (Capital) 175,000 Toronto-Dominion Bank 6,427,284 7,575,750 198,257 Trizec Canada Inc. 4,108,776 3,530,957 Foreign Currency Forward Contracts 33,600 Wells Fargo & Co. 2,383,745 2,566,179 (Capital) (0.2%) (see Schedule 1) 483,628 74,362,360 87,185,908 MATERIALS (22.2%) Total Investments (100.1%) 194,173,716 224,253,193 11,219 Air Liquide 2,406,661 2,562,335 148,400 Alcan Inc. 7,448,928 8,988,588 Other Assets (net) (-0.1%) (247,082) 267,800 Barrick Gold Corp. 6,697,306 7,849,218 70,600 Cameco Corp. 2,970,015 5,277,350 Total Net Assets (100.0%) 224,006,111 119,200 CCL Industries Inc., Class B 2,056,175 2,240,960 15,400 Cia Vale do Rio Doce, Sponsored ADR 873,060 1,028,770 284,700 Domtar Inc. 4,250,942 4,626,375 32,600 Du Pont EI de Nemours & Co. 1,844,926 1,940,179 175,800 Falconbridge Ltd. 3,095,513 5,513,088 Schedule 1 59,900 Fording Canadian Coal Trust 1,818,651 2,755,400 Foreign Currency Forward Contracts (Capital) (0.2%) 25,600 Newmont Mining Corp. 1,115,269 1,613,882 Due Credit Market 36,189 Rio Tinto PLC 1,216,716 1,293,332 Contracts Pay Receive Date Rating Value $ 149,100 St Lawrence Cement Group Inc., Class A 2,801,533 3,117,681 11,800 Syngenta AG851,676 1,027,707 1 (1,380,000) US$ 1,828,141.20 Canadian$ 27-Jan-04 A-1 36,196 * 39,447,371 49,834,865 1 (620,000) US$ 821,345.00 Canadian$ 28-Jan-04 A-1 16,231 * ENERGY (12.0%) 1 (1,500,000) US$ 1,986,615.00 Canadian$ 29-Jan-04 A-1 38,670 * 95,900 BP PLC, ADR 5,848,989 6,137,789 2 (3,762,000) US$ 4,987,903.80 Canadian$ 4-Feb-04 A-1+ 101,248 * 112,500 EnCana Corp. 5,416,202 5,737,500 1 (875,000) US$ 1,149,260.00 Canadian$ 11-Feb-04 A-1 12,357 * 331,500 Inter Pipeline Fund 2,011,704 2,572,440 2 (1,494,000) US$ 1,968,319.80 Canadian$ 25-Feb-04 A-1 26,044 * 52,100 Nexen Inc. 2,098,874 2,444,532 2 (1,700,000) US$ 2,232,482.50 Canadian$ 10-Mar-04 A-1+ 21,123 * 15,900 Petro-Canada 806,354 1,016,169 1 (2,470,000) US$ 3,247,481.90 Canadian$ 17-Mar-04 A-1+ 33,572 * 63,800 Royal Dutch Petroleum Co. ADR 3,986,792 4,334,862 2 (2,660,000) US$ 3,495,133.60 Canadian$ 24-Mar-04 A-1 32,995 * 18,600 Suncor Energy Inc. 463,487 604,500 1 (3,500,000) US$ 4,618,600.00 Canadian$ 14-Apr-04 A-1+ 59,541 * 55,700 Talisman Energy Inc. 3,570,423 4,095,064 1 (3,100,000) US$ 4,144,700.00 Canadian$ 21-Apr-04 A-1+ 105,651 * 24,202,825 26,942,856 Total Foreign Currency Forward Contracts Value 483,628 INDUSTRIALS (4.8%) 40,000 Canadian National Railway Co. 2,586,424 3,280,000 202,200 CP Railway Ltd. 6,733,408 7,396,476 9,319,832 10,676,476 TELECOMMUNICATION SERVICES (4.6%) 358,000 BCE Inc. 10,456,175 10,346,200

UTILITIES (3.9%) 67,700 Enbridge Inc. 2,978,857 3,635,490 10,700 Fortis Inc., Subscription Receipts 593,850 621,777 231,000 Snam Rete Gas SpA 1,207,825 1,266,208 116,300 TransCanada Corp. 2,721,830 3,242,444 7,502,362 8,765,919

2003 Annual Report as at December 31, 2003 – 45 – Clarica Summit Dividend Growth Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 206,723 191,785 Investments at market value (Note 2) 224,253 203,813 Dividends 4,498 4,698 Cash - 2,679 Interest 1,817 1,581 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments 9-(including reinvested distributions) 31,357 74,064 Receivable for unit subscriptions 129 250 Less foreign withholding taxes (148) (128) Amounts paid for units redeemed (40,984) (24,238) Receivable for securities sold -- 6,176 6,151 Return of capital (734) (8,707) Dividends and accrued interest receivable 535 338 Expenses (10,361) 41,119 224,917 207,080 Management fees (Note 4) 5,311 5,529 Distributions to investors Liabilities Administrative (Note 4) 875 552 Distribution from realized gains (8,225) - Bank overdraft 537 - Custody 711Distribution from net income -- Payable for securities purchased 293 321 Legal 313 (8,225) - Payable for unit redemptions 73 26 Audit 67Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 430 426 fund merger (Note 1) -- Distributions payable 810 6,632 6,538 Increase (decrease) in net assets 911 357 Net income (loss) for the year (456) (387) from operations 35,869 (26,181) Net assets and unitholders’ equity 224,006 206,723 Net assets, end of year 224,006 206,723 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 15.22 13.40 Realized gain (loss) on investments (a) 14,809 (9,358) DSC 14.95 13.17 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 21,516 16,436 Front End 14,154,402 14,887,659 Net gain (loss) on investments 36,325 (25,794) DSC 573,198 547,944 Increase (decrease) in net assets from operations 35,869 (26,181) Security Lending (Note 5) Loaned 6,235 6,137 (a) Realized gain (loss) on investments Collateral 6,670 6,560 Proceeds from sale of investments including Income 18 12 foreign exchange gain (loss) (b) (c) 193,922 163,144 Investments at cost, beginning of year 195,250 167,117 Investments purchased 215,042 158,251 Change in cost of short-term notes held (37,005) 42,384 Approved on behalf of the Board of Directors: 373,287 367,752 Investments at cost, end of year 194,174 195,250 Cost of investments sold 179,113 172,502 William T. Holland Realized gain (loss) on investments 14,809 (9,358) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 4,229,861 1,237,836 Director

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

2003 Annual Report as at December 31, 2003 – 46 – Clarica Summit Foreign Equity Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 13.26 14.87 14.29 12.45 12.60 13.71 15.37 14.74 12.77 13.16 Distribution per unit From net income - - - - (0.14) - - - - - From net realized gain - - - - (0.35) - - - - (0.17) Return of capital ------(0.49) - - - - (0.17) Net income (loss) per unit (0.11) (0.22) (0.17) (0.12) (0.02) (0.10) (0.22) (0.18) (0.13) - Net realized and unrealized appreciation (depreciation) of investments per unit 0.29 (1.60) 0.75 1.96 0.36 0.30 (1.64) 0.81 2.10 (0.22) 0.18 (1.82) 0.58 1.84 0.34 0.20 (1.86) 0.63 1.97 (0.22) Surplus (deficiency) of capital transactions over original cost per unit (a) 0.15 0.21 - - - 0.14 0.20 - - -

Net asset value per unit, end of year 13.59 13.26 14.87 14.29 12.45 14.05 13.71 15.37 14.74 12.77

Ratios & Supplemental Data Total return (%) (b) 2.49 (10.83) 4.05 14.76 2.77 2.48 (10.80) 4.27 15.43 (2.96) Average net assets ($000’s) (c) 58,497 65,802 40,257 27,062 30,707 1,078 818 276 63 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.27 3.27 3.47 3.72 2.88 3.16 3.15 3.27 3.67 2.64 Management and operating expenses (%) 3.06 2.86 2.80 2.93 2.69 2.95 2.81 2.64 2.83 2.47 Goods and services tax expenses (%) 0.21 0.19 0.20 0.21 0.19 0.21 0.19 0.18 0.20 0.17 Total management expense ratio (%) 3.27 3.05 3.00 3.14 2.88 3.16 3.00 2.82 3.03 2.64 Portfolio turnover rate (e) 0.29 1.10 0.16 0.32 0.52 0.29 1.10 0.16 0.32 0.52

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 5,054,385 3,460,624 73,941 31,166 Units issued for cash including re-invested distributions 249,689 1,917,855 29,280 50,887 Units issued on fund merger (Note 1) -- -- Units redeemed (1,045,240) (324,094) (15,122) (8,112) Units issued (redeemed) on conversion (net) -- -- Balance end of year 4,258,834 5,054,385 88,099 73,941

Additional Fund Notes (in $000’s) Brokerage Commissions 88 308 Net capital loss carried forward 1,217 590 Non-capital loss carried forward (f) 1,630 1,019

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 47 – CIG - 9019 Clarica Summit Foreign Equity Fund Investment Portfolio as at December 31, 2003

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

U.S.A. (28.7%) MEXICO (0.5%) 18,666 Baldor Electric Co. 602,308 553,151 7,000 Telefonos de Mexico SA de CV, ADR 339,398 299,856 19 Berkshire Hathaway Inc., Class A 2,182,760 2,076,011 36,500 Darden Restaurants Inc. 977,409 995,967 Total Bonds & Equities (86.9%) 48,393,068 51,295,938 18,000 Diebold Inc. 1,065,566 1,257,551 20,000 Hormel Foods Corp. 728,792 669,459 Short Term Notes (12.8%) 7,589,495 7,589,495 43,500 Jones Apparel Group Inc. 2,144,247 1,987,504 18,600 Kimberly-Clark Corp. 1,549,344 1,425,388 Total Investments (99.7%) 55,982,563 58,885,433 13,000 Laboratory Corp. of America Holdings 562,762 622,965 22,000 Merck & Co., Inc. 1,501,809 1,318,168 Other Assets (net) (0.3%) 211,681 39,000 Pfizer Inc. 1,949,085 1,786,958 8,000 Sigma-Aldrich Corp. 601,854 593,254 Total Net Assets (100.0%) 59,097,114 66,500 TJX Companies Inc. 1,965,516 1,901,676 35,000 Wendy's International Inc. 1,665,691 1,781,161 17,497,143 16,969,213 FRANCE (20.3%) 14,300 Air Liquide 2,991,911 3,266,012 17,000 BNP Paribas SA 1,081,125 1,384,450 20,000 Renault SA 1,395,569 1,784,724 25,200 Schneider Electric SA 1,757,538 2,133,642 15,600 Total Fina Elf SA, ADR 1,725,382 1,871,628 14,700 Vinci SA 1,365,579 1,574,366 10,317,104 12,014,822 U.K. (12.5%) 266,000 Cadbury Schweppes PLC 2,514,887 2,527,539 179,601 Diageo PLC 2,743,946 3,057,481 46,500 Royal Bank of Scotland Group PLC 1,750,024 1,772,762 7,008,857 7,357,782 SWITZERLAND (6.8%) 8,300 Nestle SA, Registered Shares 2,657,697 2,681,506 23,000 Novartis AG, Registered Shares 1,158,948 1,350,268 3,816,645 4,031,774 JAPAN (3.3%) 22,000 Toyota Motor Corp., ADR 1,714,343 1,961,560

AUSTRALIA (3.2%) 30,000 BHP Billiton Ltd., ADR 527,048 710,441 32,000 Rio Tinto Ltd. 932,571 1,162,273 1,459,619 1,872,714 NETHERLANDS (2.9%) 24,800 Royal Dutch Petroleum Co. ADR 1,717,366 1,685,025

ITALY (2.6%) 54,000 Arnoldo Mondadori Editore SpA 571,943 625,998 40,000 Luxottica Group SpA, ADR 922,785 902,642 1,494,728 1,528,640 NORWAY (2.5%) 59,900 Norske Skogindustrier ASA 1,252,564 1,478,725

SPAIN (2.5%) 19,000 Banco Popular Espanol 1,181,606 1,466,116

IRELAND (1.1%) 40,000 IAWS Group PLC 593,695 629,711

2003 Annual Report as at December 31, 2003 – 48 – Clarica Summit Foreign Equity Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 68,019 51,943 Investments at market value (Note 2) 58,885 67,105 Dividends 1,202 847 Cash 232 842 Interest 364 292 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 3,473 29,159 Receivable for unit subscriptions 16 34 Less foreign withholding taxes (168) (113) Amounts paid for units redeemed (13,232) (4,701) Receivable for securities sold -- 1,398 1,026 Return of capital -- Dividends and accrued interest receivable 52 50 Expenses (9,759) 24,458 59,185 68,031 Management fees (Note 4) 1,548 1,730 Distributions to investors Liabilities Administrative (Note 4) 260 141 Distribution from realized gains -- Bank overdraft --Custody 827Distribution from net income -- Payable for securities purchased 17Legal 14 -- Payable for unit redemptions 87 5 Audit 22Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 126 128 fund merger (Note 1) -- Distributions payable -- 1,945 2,032 Increase (decrease) in net assets 88 12 Net income (loss) for the year (547) (1,006) from operations 837 (8,382) Net assets and unitholders’ equity 59,097 68,019 Net assets, end of year 59,097 68,019 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 13.59 13.26 Realized gain (loss) on investments (a) (806) (510) DSC 14.05 13.71 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 2,190 (6,866) Front End 4,258,834 5,054,385 Net gain (loss) on investments 1,384 (7,376) DSC 88,099 73,941 Increase (decrease) in net assets from operations 837 (8,382) Security Lending (Note 5) Loaned 9,968 1,356 (a) Realized gain (loss) on investments Collateral 10,660 1,450 Proceeds from sale of investments including Income 17 - foreign exchange gain (loss) (b) (c) 17,995 60,142 Investments at cost, beginning of year 66,392 44,316 Investments purchased 13,536 76,885 Change in cost of short-term notes held (5,144) 5,843 Approved on behalf of the Board of Directors: 74,784 127,044 Investments at cost, end of year 55,983 66,392 Cost of investments sold 18,801 60,652 William T. Holland Realized gain (loss) on investments (806) (510) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 81,716 304,092 Director

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

2003 Annual Report as at December 31, 2003 – 49 – Clarica US Small Cap Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 6.69 9.51 9.37 11.71 10.00 6.76 9.59 9.44 11.71 10.00 Distribution per unit From net income ------From net realized gain - - - - (0.31) - - - - (0.31) Return of capital ------(0.31) - - - - (0.31) Net income (loss) per unit (0.12) (0.22) (0.23) (0.36) (0.03) (0.12) (0.21) (0.24) (0.28) (0.03) Net realized and unrealized appreciation (depreciation) of investments per unit 1.14 (2.62) 0.37 (1.98) 2.05 1.15 (2.63) 0.39 (1.99) 2.05 1.02 (2.84) 0.14 (2.34) 2.02 1.03 (2.84) 0.15 (2.27) 2.02 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.04 0.02 - - - 0.04 0.01 - - -

Net asset value per unit, end of year 7.75 6.69 9.51 9.37 11.71 7.83 6.76 9.59 9.44 11.71

Ratios & Supplemental Data Total return (%) (b) 15.84 (29.65) 1.44 (19.98) 20.20 15.83 (29.51) 1.57 (19.39) 20.20 Average net assets ($000’s) (c) 37,903 42,960 33,967 21,295 3,131 2,428 2,268 1,448 645 108 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.37 3.62 4.14 4.48 2.89 3.25 3.49 3.99 4.39 2.78 Management and operating expenses (%) 3.15 2.98 2.89 3.11 2.70 3.04 2.90 2.79 3.01 2.60 Goods and services tax expenses (%) 0.22 0.21 0.20 0.22 0.19 0.21 0.20 0.19 0.21 0.18 Total management expense ratio (%) 3.37 3.19 3.09 3.33 2.89 3.25 3.10 2.98 3.22 2.78 Portfolio turnover rate (e) 0.68 1.99 2.41 2.27 0.19 0.68 1.99 2.41 2.27 0.19

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 5,836,680 4,345,945 332,913 206,645 Units issued for cash including re-invested distributions 435,548 2,029,491 84,950 163,334 Units issued on fund merger (Note 1) -- -- Units redeemed (1,032,280) (538,756) (61,912) (37,066) Units issued (redeemed) on conversion (net) -- -- Balance end of year 5,239,948 5,836,680 355,951 332,913

Additional Fund Notes (in $000’s) Brokerage Commissions 218 451 Net capital loss carried forward 17,850 17,563 Non-capital loss carried forward (f) 3,467 2,722

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 50 – CIG - 9024 Clarica US Small Cap Fund Investment Portfolio as at December 31, 2003

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

HEALTH CARE (17.3%) MATERIALS (4.2%) 17,000 Charles River Laboratories International Inc. 776,899 756,883 17,000 International Flavors & Fragrances Inc. 732,808 769,891 15,000 DaVita Inc. 567,707 758,686 70,000 Landec Corp. 541,770 600,075 38,300 Gentiva Health Services Inc. 506,073 627,844 30,000 Methanex Corp. (USD) 415,369 436,925 40,000 Hooper Holmes Inc. 352,364 320,593 1,689,947 1,806,891 15,000 ImClone Systems Inc. 451,607 771,525 INFORMATION TECHNOLOGY (3.9%) 14,000 IMS Health Inc. 328,553 451,373 40,000 Concur Technologies Inc. 526,696 503,716 35,000 IVAX Corp. 674,604 1,083,948 45,000 Sybase Inc. 879,455 1,201,058 22,000 Laboratory Corp. of America Holdings 850,119 1,054,249 1,406,151 1,704,774 75,000 WebMD Corp. 935,836 874,434 18,000 WellChoice Inc. 662,538 805,374 Total Bonds & Equities (92.9%) 35,599,145 40,289,710 6,106,300 7,504,909 FINANCIALS (16.9%) DERIVATIVE INSTRUMENTS (Capital) 18,500 Arch Capital Group Ltd. 788,851 956,346 44,000 Brookline BanCorp Inc. 821,123 875,355 Foreign Currency Forward Contracts 8,000 Everest Re Group Ltd. 724,291 877,741 (Capital) (0.3%) (see Schedule 1) 133,876 13,000 iStar Financial Inc. 533,458 655,842 13,500 Montpelier Re Holdings Ltd. 461,379 642,549 Total Investments (93.2%) 35,599,145 40,423,586 16,000 Newhall Land & Farming Co. 729,168 837,901 15,690 Texas Regional Bancshares Inc., Class A 737,838 752,889 Other Assets (net) (6.8%) 2,959,530 30,000 Ventas Inc. 529,812 855,953 20,000 Willis Group Holdings Ltd. 823,799 883,707 Total Net Assets (100.0%) 43,383,116 6,149,719 7,338,283 ENERGY (14.8%) 17,500 Buckeye Partners LP 954,892 1,029,252 30,000 Gulfmark Offshore Inc. 636,929 544,698 Schedule 1 10,000 Pogo Producing Co. 598,176 626,402 Foreign Currency Forward Contracts (Capital) (0.3%) 25,000 Premcor Inc. 833,560 842,984 Due Credit Market 17,000 Seacor Smit Inc. 904,107 926,647 Contracts Pay Receive Date Rating Value $ 17,000 TEPPCO Partners LP 778,296 888,506 22,000 Tom Brown Inc. 831,684 920,150 1 (15,900,000) US$ 21,005,808 Canadian$ 17-Mar-04 A-1 317,078 * 10,000 Valero LP 564,327 645,467 1 (6,819,210) Canadian$ 5,100,000 US$ 17-Mar-04 A-1 (183,202)* 6,101,971 6,424,106 Total Foreign Currency Forward Contracts Value 133,876 UTILITIES (11.2%) 30,500 Allegheny Energy Inc. 444,128 504,727 10,000 Constellation Energy Group Inc. 407,601 507,866 40,000 Duquesne Light Holdings Inc. 911,139 951,405 24,000 Great Plains Energy Inc. 886,918 990,416 11,000 NSTAR 697,156 691,896 25,200 Puget Energy Inc. 822,682 776,848 10,700 TC Pipelines LP 452,451 452,523 4,622,075 4,875,681 INDUSTRIALS (9.8%) 9,000 Alliant Techsystems Inc. 740,138 674,180 17,000 Arbitron Inc. 831,799 919,813 15,000 Chicago Bridge & Iron Co., NV 419,380 562,206 22,000 Florida East Coast Industries Inc., Class A 811,397 944,402 9,000 Iron Mountain Inc. 377,147 461,515 15,000 Washington Group International Inc. 404,424 660,835 3,584,285 4,222,951 CONSUMER DISCRETIONARY (8.4%) 20,000 Alliance Gaming Corp. 552,184 639,371 15,000 Electronics Boutique Holdings Corp. 581,264 445,290 100,000 Fedders Corp. 885,036 933,767 100,000 Fedders Corp. Rights - 7,781 70,000 Harris Interactive Inc. 739,093 753,498 43,000 Shaw Communications Inc., Class B (USD) 681,834 865,499 3,439,411 3,645,206 CONSUMER STAPLES (6.4%) 27,000 Bunge Ltd. 1,043,399 1,152,736 50,000 Del Monte Foods Co. 623,086 674,388 16,000 JM Smucker Co. 832,801 939,785 2,499,286 2,766,909

2003 Annual Report as at December 31, 2003 – 51 – Clarica US Small Cap Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 41,324 43,304 Investments at market value (Note 2) 40,424 35,925 Dividends 662 165 Cash 3,077 5,366 Interest 122 63 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 3,537 18,718 Receivable for unit subscriptions 23 16 Less foreign withholding taxes (150) (31) Amounts paid for units redeemed (7,427) (4,407) Receivable for securities sold 264 - 634 197 Return of capital -- Dividends and accrued interest receivable 41 35 Expenses (3,890) 14,311 43,829 41,342 Management fees (Note 4) 1,086 1,219 Distributions to investors Liabilities Administrative (Note 4) 174 110 Distribution from realized gains -- Bank overdraft --Custody 415Distribution from net income -- Payable for securities purchased 426 16 Legal 13 -- Payable for unit redemptions 20 2 Audit 11Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 88 93 fund merger (Note 1) -- Distributions payable -- 1,354 1,441 Increase (decrease) in net assets 446 18 Net income (loss) for the year (720) (1,244) from operations 5,949 (16,291) Net assets and unitholders’ equity 43,383 41,324 Net assets, end of year 43,383 41,324 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 7.75 6.69 Realized gain (loss) on investments (a) 1,530 (9,158) DSC 7.83 6.76 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 5,139 (5,889) Front End 5,239,948 5,836,680 Net gain (loss) on investments 6,669 (15,047) DSC 355,951 332,913 Increase (decrease) in net assets from operations 5,949 (16,291) Security Lending (Note 5) Loaned 1,794 3,169 (a) Realized gain (loss) on investments Collateral 1,920 3,390 Proceeds from sale of investments including Income 32foreign exchange gain (loss) (b) (c) 25,665 83,988 Investments at cost, beginning of year 36,239 35,403 Investments purchased 23,495 93,982 Change in cost of short-term notes held -- Approved on behalf of the Board of Directors: 59,734 129,385 Investments at cost, end of year 35,599 36,239 Cost of investments sold 24,135 93,146 William T. Holland Realized gain (loss) on investments 1,530 (9,158) Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above - 26,592 Director

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

2003 Annual Report as at December 31, 2003 – 52 – Clarica Balanced Fund Statements of Financial Highlights (for the years ended December 31)

2003 $ 2002 $ 2001 $

Net asset value per unit, beginning of year 10.18 10.26 10.00 -- Distribution per unit From net income (0.04) (0.02) - -- From net realized gain ----- Return of capital ----- (0.04) (0.02) - -- Net income (loss) per unit 0.04 0.05 (0.01) -- Net realized and unrealized appreciation (depreciation) of investments per unit 1.10 (0.22) 0.27 -- 1.14 (0.17) 0.26 -- Surplus (deficiency) of capital transactions over original cost per unit (a) (0.08) 0.11 - --

Net asset value per unit, end of year 11.20 10.18 10.26 --

Ratios & Supplemental Data Total return (%) (b) 10.39 (0.60) 2.60 -- Average net assets ($000’s) (c) 35,332 21,730 5,043 -- Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.21 3.12 4.50 -- Management and operating expenses (%) 3.00 2.79 3.44 -- Goods and services tax expenses (%) 0.21 0.19 0.24 -- Total management expense ratio (%) 3.21 2.98 3.68 -- Portfolio turnover rate (e) 0.53 0.29 0.11 --

2003 2002

Units Issued and Outstanding Balance beginning of year 2,975,279 500,000 Units issued for cash including re-invested distributions 1,373,415 2,809,636 Units issued on fund merger (Note 1) -- Units redeemed (610,765) (334,357) Units issued (redeemed) on conversion (net) -- Balance end of year 3,737,929 2,975,279

Additional Fund Notes (in $000’s) Brokerage Commissions 22 12 Net capital loss carried forward 156 156 Non-capital loss carried forward (f) --

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 53 – CIG - 9008 Clarica Balanced Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (19.1%) CONSUMER DISCRETIONARY (12.2%) (cont’d) 5,900 Arthur J Gallagher & Co. 219,910 248,604 85,000 Glacier Credit Card Trust 4.82% 12/20/2007 86,802 87,465 60,000 Bank of Montreal 8.15% 5/9/2011 67,006 66,372 11,500 Harrah's Entertainment Inc. 635,027 742,287 15,600 Bank of Nova Scotia 879,958 1,026,480 12,850 Harte-Hanks Inc. 382,686 362,467 45,000 Bank of Nova Scotia 5.65% 7/22/2013 44,932 47,671 3,000 Lagardere S.C.A. 165,349 224,004 247,000 Bank of Nova Scotia 5.75% 5/12/2014 251,147 262,025 21,900 Linamar Corp. 237,296 252,726 110,000 Brascan Financial Corp., 7.35% 10/5/2005 112,025 115,090 8,500 Liz Claiborne Inc. 398,442 390,898 80,000 Brascan Financial Corp., 8.35% 12/1/2006 83,980 87,160 9,300 Medion AG 500,748 470,325 220,000 Canada Housing Trust No.1 4.4% 3/15/2008 221,159 224,083 3,500 Polaris Industries Inc. 315,109 402,078 100,000 Canada Housing Trust No.1 4.75% 3/15/2007 99,140 103,598 40,000 Rogers Cable Inc., 7.6% 2/6/2007 38,300 42,067 313,000 Canada Housing Trust 4.1% 12/15/2008 310,055 312,875 195,000 Rogers Cablesystems Ltd., 9.65% 1/15/2014 195,402 205,107 200,000 Canada Mortgage & Housing Corp., 5.3% 12/3/2007 207,648 210,694 8,000 Ross Stores Inc. 221,262 274,528 12,000 Charter One Financial Inc. 495,843 537,694 17,000 Sears Canada Inc., 6.75% 3/15/2006 17,204 17,855 65,000 CNH Capital Canada Receivables 105,000 Starwood Hotels & Resorts Worldwide Inc., Trust 4.019% 11/15/2004 65,000 65,507 7.375% 5/1/2007 163,467 147,068 7,000 Dundee BanCorp Inc., 6.7% 9/24/2007 6,158 6,893 9,700 Thomson Corp. 404,456 456,676 200,000 Export Development Canada 6.2% 6/22/2010 226,297 219,610 40,000 Torstar Corp., 5.95% 7/27/2004 40,140 40,628 45,000 General Motors Acceptance Corp. 5,700 Yellow Pages Income Fund 56,601 66,120 of Canada Ltd., 5.8% 3/12/2004 45,724 45,215 4,750,435 5,088,599 147,000 General Motors Acceptance Corp. INDUSTRIALS (11.7%) of Canada Ltd., 6.1% 3/7/2005 146,838 152,013 11,000 Chemtrade Logistics Income Fund 149,919 198,550 25,000 Genesis Trust 6.869% 2/15/2005 26,880 26,093 43,000 Citic Pacific Ltd. 121,178 142,225 105,000 Hollis Receivables Term Trust 6.205% 9/21/2004 109,232 107,519 29,000 EPCOR Utilities Inc., 6.2% 6/2/2008 30,075 31,109 18,600 Investors Group Inc. 511,274 577,530 96,000 Finning International Inc., 7.4% 6/19/2008 98,087 106,517 295,000 Investors Group Inc., 6.75% 5/9/2011 308,333 323,202 70,000 Finning International Inc., 7.75% 11/1/2004 74,185 72,701 40,000 Lindsey Morden Group Inc., 7% 6/16/2008 26,800 26,000 60,000 Finning International Inc., 8.35% 3/22/2004 63,912 60,646 10,300 North Fork BanCorp Inc. 475,994 540,601 11,000 FirstService Corp. 346,277 291,500 18,900 Power Corp. of Canada 762,930 914,760 4,200 Manpower Inc. 191,803 256,444 8,200 Royal Bank of Canada 447,677 506,760 20,000 Merrill Lynch 2003 CAN 9 A 19,684 20,089 8,000 Royal Bank of Canada 5.6% 4/22/2008 8,039 8,471 60,000 Merrill Lynch 99-CAN2 D 9/15/2009 53,841 59,622 90,000 Royal Bank of Canada 6.1% 1/22/2013 96,597 96,704 205,000 Merrill Lynch Mortgage Loans Inc. 210,373 215,291 19,700 Toronto-Dominion Bank 734,250 852,813 11,200 Moore Wallace Inc. 250,907 271,152 269,000 Toronto-Dominion Bank 5.69% 6/3/2018 275,842 279,488 13,100 Moore Wallace Ltd. (USD) 292,406 318,211 7,266,668 7,991,525 51,500 Onex Corp. 756,284 756,535 GOVERNMENT BONDS (18.3%) 42,200 Quebecor World Inc. 1,067,640 1,128,850 200,000 Canada Government Bond 3% 12/01/2005 199,950 200,120 3,400 Republic Services Inc. 107,067 113,014 400,000 Canada Government Bond 3.5% 6/1/2004 394,240 401,480 100,000 TD Bank Pool #99008294 5.75% 9/1/2005 99,204 99,256 500,000 Canada Government Bond 5% 9/1/2004 508,480 507,820 9,000 Toromont Industries Ltd. 197,702 297,450 1,000,000 Canada Government Bond 5.25% 6/1/2013 1,020,690 1,044,300 19,400 Transcontinental Inc., Class A 332,452 465,600 400,000 Canada Government Bond 5.5% 6/1/2009 404,700 426,904 4,462,996 4,904,762 100,000 Canada Government Bond 5.5% 6/1/2010 105,025 106,557 MATERIALS (8.4%) 470,000 Canada Government Bond 5.75% 6/1/2029 496,678 505,955 21,000 Barrick Gold Corp. 528,598 615,510 900,000 Canada Government Bond 6% 6/1/2008 942,698 977,346 34,300 Domtar Inc. 548,006 557,375 50,000 Canada Government Bond 6% 6/1/2011 51,475 54,770 10,000 Domtar Inc., 10% 4/15/2011 11,501 12,317 1,340,000 Canada Government Bond 8% 6/1/2027 1,723,999 1,841,348 35,000 Domtar Inc., 10.85% 8/5/2017 41,496 48,861 175,989 Province of Alberta 5.93% 09/16/2016 188,960 147,869 41,000 Falconbridge Ltd., 8.5% 12/8/2008 42,724 46,413 90,000 Province of Newfoundland 5.7% 10/07/2008 96,543 96,152 5,000 Hoganas AB 140,551 138,752 473,000 Province of Newfoundland 6.4% 7/25/2011 491,049 521,648 22,933 Kinross Gold Corp. 163,305 236,669 100,000 Province of Newfoundland 6.5% 10/17/2029 114,193 111,309 12,500 Nova Chemicals Corp. 396,391 438,000 40,000 Province of Newfoundland 8.45% 2/5/2026 48,920 54,056 74,000 Nova Chemicals Corp., 7.85% 8/30/2010 65,582 76,960 90,000 Province of Newfoundland 9.15% 7/7/2025 119,460 128,756 8,300 Nucor Corp. 506,957 602,799 130,000 Province of Nova Scotia 6.25% 6/1/2011 136,465 142,288 12,000 Placer Dome Inc. 197,338 278,040 15,000 Province of Nova Scotia 6.4% 6/1/2005 16,004 15,744 38,407 Saskatchewan Wheat Pool 9% 11/30/2008 23,353 35,068 76,000 Province of Ontario 4.75% 06/02/2013 73,184 74,915 27,900 Sherritt International Corp. 114,154 198,090 130,000 Province of Ontario 5.9% 3/8/2006 137,696 137,362 5,700 West Fraser Timber Co., Ltd. 188,072 216,600 5,000 Province of Ontario 6.1% 11/19/2010 5,369 5,444 2,968,028 3,501,454 40,000 Province of Ontario 6.5% 3/8/2029 45,671 44,862 TELECOMMUNICATION SERVICES (6.5%) 100,000 Province of Ontario 7.6% 6/2/2027 116,720 126,310 36,400 BCE Inc. 1,062,664 1,051,960 7,438,169 7,673,315 80,000 Level 3 Communications Inc., 11% 3/15/2008 84,899 101,677 CONSUMER DISCRETIONARY (12.2%) 13,600 Manitoba Telecom Services Inc. 477,760 598,672 10,100 Astral Media Inc. 204,956 283,305 90,000 Telesat Canada Inc., 8.2% 11/7/2008 89,238 96,170 75,000 CanWest Media Inc., 10.625% 5/15/2011 123,645 110,885 23,300 Telus Corp. (Non-Voting) 523,780 563,860 109,000 DaimlerChrysler Canada Finance Inc., 6.6% 6/21/2004 111,491 110,821 300,000 Telus Corp., 7.5% 6/1/2006 297,136 321,000 285,000 Ford Motor Credit Co., 7.2% 6/15/2007 452,052 401,289 2,535,477 2,733,339

2003 Annual Report as at December 31, 2003 – 54 – Clarica Balanced Fund Investment Portfolio as at December 31, 2003

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

HEALTH CARE (5.0%) 48,000 Alderwoods Group Inc., 12.25% 1/2/2009 69,564 69,099 25,300 Cytyc Corp. 403,075 454,112 5,750 Dentsply International Inc. 309,960 336,840 9,800 WellPoint Health Networks Inc., Class A 1,061,878 1,232,705 1,844,477 2,092,756 ASSET BACKED (4.2%) 230,000 BNS MBS P#99008633 4.3% 11/01/2007 222,519 227,244 145,000 CCIC 2003-WEM A2 4.588% 10/15/2008 145,001 142,983 500,000 MBS Pool #99008617 4% 9/01/2007 479,175 486,283 75,000 N-45 First CMBS A2 5.667% 11/15/2020 74,999 76,124 890,000 NHA MBS TD Bank P#99007924 5.375% 798,487 823,447 1,720,181 1,756,081 ENERGY (3.8%) 237,834 Alliance Pipeline LP 7.181% 6/30/2023 248,981 265,958 95,444 Alliance Pipeline LP 7.23% 6/30/2015 98,942 106,053 133,000 AltaGas Services Inc., 7.28% 10/4/2005 136,518 139,008 73,000 Anderson Exploration Ltd., 7.25% 7/18/2005 76,600 76,496 5,100 Canadian Oil Sands Trust 186,731 233,019 37,000 Precision Drilling Corp., 6.85% 6/26/2007 38,963 39,946 21,500 Suncor Energy Inc. 543,525 698,750 20,000 Talisman Energy Inc., 9.8% 12/22/2004 22,466 21,282 1,352,726 1,580,512 CONSUMER STAPLES (2.0%) 53,200 Grupo Modelo SA, Series C 165,003 165,684 13,200 Molson Inc., Class A 431,729 476,520 22,593 Saskatchewan Wheat Pool 8% 11/29/2008 13,737 22,141 955 Saskatchewan Wheat Pool, Class B - 392 12,000 Swedish Match AB 117,248 158,934 727,717 823,671 UTILITIES (1.7%) 40,000 EPCOR Utilities Inc., 6.95% 6/28/2010 41,192 44,306 200,000 Ontario Electricity Financial Corp., 5.6% 6/2/2008 203,222 212,640 292,000 Ontario Electricity Financial Corp., 8.25% 6/22/2026 364,757 391,353 57,000 Westcoast Energy Inc., 7.2% 1/26/2010 60,309 63,536 669,480 711,835 INFORMATION TECHNOLOGY (1.5%) 80,000 Nfld & Labrador Hydro 10.25% 7/14/2017 116,000 114,853 6,400 Research In Motion Ltd. 193,282 555,004 309,282 669,857

Total Investments (94.4%) 36,045,636 39,527,706

Other Assets (net) (5.6%) 2,350,150

Total Net Assets (100.0%) 41,877,856

2003 Annual Report as at December 31, 2003 – 55 – Clarica Balanced Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 30,278 5,131 Investments at market value (Note 2) 39,528 28,541 Dividends 313 177 Cash 2,062 1,540 Interest 983 593 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 14,104 28,936 Receivable for unit subscriptions 62 43 Less foreign withholding taxes (17) (9) Amounts paid for units redeemed (6,276) (3,388) Receivable for securities sold 55 - 1,279 761 Return of capital -- Dividends and accrued interest receivable 183 163 Expenses 7,828 25,548 41,890 30,287 Management fees (Note 4) 900 552 Distributions to investors Liabilities Administrative (Note 4) 156 38 Distribution from realized gains -- Bank overdraft --Custody 314Distribution from net income (136) (54) Payable for securities purchased -2Legal 12 (136) (54) Payable for unit redemptions 12 7 Audit 11Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 74 42 fund merger (Note 1) -- Distributions payable -- 1,135 649 Increase (decrease) in net assets 12 9 Net income (loss) for the year 144 112 from operations 3,908 (347) Net assets and unitholders’ equity 41,878 30,278 Net assets, end of year 41,878 30,278 Realized and unrealized Net asset value per unit 11.20 10.18 gain (loss) on investments Realized gain (loss) on investments (a) 147 (245) Number of units outstanding 3,737,929 2,975,279 Capital gain distribution from investments -- Change in unrealized appreciation Security Lending (Note 5) (depreciation) of investments 3,617 (214) Loaned 2,192 1,175 Net gain (loss) on investments 3,764 (459) Collateral 2,340 1,260 Increase (decrease) in net assets Income 22from operations 3,908 (347)

(a) Realized gain (loss) on investments Proceeds from sale of investments including Approved on behalf of the Board of Directors: foreign exchange gain (loss) (b) (c) 17,114 6,001 Investments at cost, beginning of year 28,676 4,778 Investments purchased 24,337 30,144 William T. Holland Change in cost of short-term notes held -- Director 53,013 34,922 Investments at cost, end of year 36,046 28,676 Cost of investments sold 16,967 6,246 Peter W. Anderson Realized gain (loss) on investments 147 (245) Director

(b) Proceeds on sales of short-term notes sold during the year not included above --

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

2003 Annual Report as at December 31, 2003 – 56 – Clarica Canadian Diversified Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC Class Z 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $

Net asset value per unit, beginning of year 12.81 14.03 15.27 16.27 14.96 13.02 14.25 15.48 16.45 15.69 10.00 Distribution per unit From net income (0.04) (0.10) (0.12) (0.12) (0.17) (0.06) (0.11) (0.12) (0.08) - (0.09) From net realized gain - - - (0.12) - - - - (0.16) - - Return of capital ------(0.04) (0.10) (0.12) (0.24) (0.17) (0.06) (0.11) (0.12) (0.24) - (0.09) Net income (loss) per unit 0.09 0.07 0.10 0.11 0.18 0.10 0.01 0.13 0.23 0.01 0.04 Net realized and unrealized appreciation (depreciation) of investments per unit 1.74 (1.22) (1.22) (0.87) 1.30 1.77 (0.09) (1.24) (0.96) 0.75 0.85 1.83 (1.15) (1.12) (0.76) 1.48 1.87 (0.08) (1.11) (0.73) 0.76 0.89 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.06 0.03 - - - 0.07 (1.04) - - - -

Net asset value per unit, end of year 14.66 12.81 14.03 15.27 16.27 14.90 13.02 14.25 15.48 16.45 10.80

Ratios & Supplemental Data Total return (%) (b) 14.76 (8.02) (7.32) (4.67) 9.98 14.89 (7.72) (7.19) (4.16) 4.81 8.90 Average net assets ($000’s) (c) 441,222 530,372 666,891 814,114 742,571 4,137 3,410 3,168 1,716 10 153,507 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.87 2.71 2.64 2.58 2.43 2.76 2.59 2.55 2.47 2.32 2.37 Management and operating expenses (%) 2.68 2.52 2.46 2.36 2.27 2.58 2.41 2.37 2.22 2.17 2.22 Goods and services tax expenses (%) 0.19 0.18 0.17 0.17 0.16 0.18 0.17 0.17 0.16 0.15 0.15 Total management expense ratio (%) 2.87 2.70 2.63 2.53 2.43 2.76 2.58 2.54 2.38 2.32 2.37 Portfolio turnover rate (e) 1.78 0.99 1.26 0.70 0.63 1.78 0.99 1.26 0.70 0.63 1.78

Front End DSC Class Z 2003 2002 2003 2002 2003 Units Issued and Outstanding Balance beginning of year 36,707,109 43,339,744 271,838 235,519 - Units issued for cash including re-invested distributions 1,085,846 2,155,659 113,698 84,196 235,078 Units issued on fund merger (Note 1) 1,092,507 - - - 15,252,689 Units redeemed (6,939,970) (8,788,294) (42,729) (47,877) (734,334) Units issued (redeemed) on conversion (net) -- -- - Balance end of year 31,945,492 36,707,109 342,807 271,838 14,753,433

Additional Fund Notes (in $000’s) Brokerage Commissions 918 745 Net capital loss carried forward 79,609 87,825 Non-capital loss carried forward (f) --

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 57 – CIG - 9007 Clarica Canadian Diversified Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (20.7%) MATERIALS (18.9%) (cont’d) 304,910 Amvescap PLC 2,852,800 2,865,483 197,499 Kinross Gold Corp. 2,131,547 2,038,190 39,600 Bank of America Corp. 3,904,581 4,130,660 36,800 Newmont Mining Corp. 1,681,419 2,319,955 122,200 Bank of Montreal 4,851,380 6,537,700 3,000,000 Noranda Operating Trust 6.529% 12/20/2010 3,000,000 3,000,000 248,900 Bank of Nova Scotia 12,929,692 16,377,620 35,400 Peabody Energy Corp. 1,543,724 1,914,916 179,600 Boardwalk Equities Inc. 2,741,657 3,218,432 361,700 Placer Dome Inc. 6,210,722 8,380,589 230,050 Cambior Inc., Warrants (12Aug08) 82,390 402,588 65,412 Rio Tinto PLC 2,203,558 2,337,712 5,000,000 Canadian Western Bank 5.96% 10/24/2013 5,000,000 5,000,000 54,400 Syngenta AG 3,966,549 4,737,903 2,600,000 Citigroup Finance Canada Inc., 4.3% 4/25/2006 2,611,666 2,654,522 258,500 Teck Cominco Ltd., Class B 4,280,382 5,668,905 153,400 Citigroup Inc. 7,791,517 9,656,757 212,800 Tembec Inc. 2,158,663 2,006,704 43,250 Deutsche Bank AG, Registered Shares 4,315,580 4,649,703 202,100 United States Steel Corp. 6,298,324 9,178,858 191,900 InnVest Real Estate Investment Trust 1,846,318 2,187,660 376,250 WMC Resources Ltd. 1,889,939 2,068,236 294,100 Manulife Financial Corp. 11,117,468 12,308,085 98,325,706 119,329,131 80,900 National Bank Of Canada 2,604,662 3,490,026 ENERGY (13.4%) 3,400,000 National Bank Of Canada 5.7% 4/16/2014 3,464,044 3,584,858 4,410,484 Alliance Pipeline LP 6.765% 12/31/2025 4,445,718 4,774,349 4,375,000 RBC Capital Trust Capital 135,000 BP PLC, ADR 8,149,649 8,640,266 Securities 5.812% 12/29/2049 4,384,714 4,522,219 220,600 EnCana Corp. 10,387,197 11,250,600 242,000 Royal Bank of Canada 12,680,623 14,955,600 220,200 Ensign Resource Service Group 4,199,885 4,536,120 5,600,000 Scotiabank Capital Trust 6.282% 12/29/2049 5,664,384 5,978,482 219,700 Inter Pipeline Fund 1,335,755 1,704,872 6,900,000 Teranet Land Info Services 5.737% 3/31/2017 6,900,000 6,978,276 152,400 Nexen Inc. 5,934,336 7,150,608 229,700 Toronto-Dominion Bank 8,048,382 9,943,713 79,600 Penn West Petroleum Ltd. 3,214,019 3,834,332 176,484 Trizec Canada Inc. 3,065,020 3,143,180 143,400 Petro-Canada 7,247,285 9,164,694 43,600 Wells Fargo & Co. 3,079,362 3,329,923 102,000 Precision Drilling Corp. 5,147,880 5,788,500 2,890,000 Wells Fargo Financial Canada Corp., 75,200 Royal Dutch Petroleum Co. ADR 4,703,367 5,109,430 5.5% 6/15/2007 2,932,433 3,041,985 118,500 Suncor Energy Inc. 2,616,659 3,851,250 50,700 Willis Group Holdings Ltd. 2,041,458 2,240,197 2,800,000 Suncor Energy Inc., 6.7% 8/22/2011 2,993,456 3,096,520 114,910,131 131,197,669 125,800 Talisman Energy Inc. 7,984,633 9,248,816 GOVERNMENT BONDS (20.1%) 600,000 TransCanada Pipelines Ltd., 6.89% 8/7/2028 607,230 646,860 8,600,000 The 55 Ontario School Board Trust 5.9% 6/2/2033 8,579,973 8,789,544 91,200 Unocal Corp. 3,631,869 4,356,149 21,600,000 Canada Government Bond 3% 12/01/2005 21,537,680 21,612,960 24,800 Valero Energy Inc. 1,465,755 1,490,438 23,000,000 Canada Government Bond 4.25% 12/1/2004 23,329,311 23,336,950 74,064,693 84,643,804 3,800,000 Canada Government Bond 5% 9/1/2004 3,863,751 3,859,432 INDUSTRIALS (5.8%) 1,385,000 Canada Government Bond 5.25% 6/1/2012 1,428,766 1,449,126 50,700 Canadian National Railway Co. 3,328,837 4,157,400 1,375,000 Canada Government Bond 5.75% 6/1/2029 1,439,512 1,480,188 377,200 CP Railway Ltd. 12,581,644 13,797,976 16,935,000 Canada Government Bond 5.75% 9/1/2006 17,853,410 17,995,131 75,000 CP Ships Ltd. 1,849,911 2,017,500 10,200,000 Canada Government Bond 6% 9/1/2005 10,806,380 10,712,550 107,732 Exel PLC 1,883,763 1,842,735 1,535,000 Canada Government Bond 8% 6/1/2023 2,017,890 2,068,213 100,000 Greater Toronto Airport Authority 3,035,000 Canada Government Bond 8% 6/1/2027 3,913,595 4,170,515 3.37286% 5/20/2005 100,192 100,000 6,000,000 Canada Government Bond 8.75% 12/1/2005 6,712,320 6,638,100 1,750,000 Greater Toronto Airport Authority 6.25% 1/30/2012 1,767,108 1,835,995 5,785,000 Concordia University 6.55% 9/2/2042 6,034,299 6,349,269 3,600,000 Greater Toronto Airport Authority 7.1% 6/4/2031 3,649,767 3,829,572 8,500,000 Province of Quebec 4.8% 04/01/2026 8,633,280 8,887,515 206,851 Laidlaw International Inc. (USD) 2,915,470 3,710,103 3,375,000 Province of Quebec 6.25% 12/1/2010 3,457,620 3,696,975 104,400 Plug Power Inc. 818,080 981,623 5,700,000 University of Ottawa 6.28% 4/15/2043 5,835,005 6,158,451 4,569,494 Strait Crossing Development Inc., 6.17% 9/15/2031 4,120,530 4,280,135 125,442,792 127,204,919 108,900 YBM Magnex International Inc. - 1 MATERIALS (18.9%) 33,015,302 36,553,040 24,300 Aber Diamond Corp. 805,411 1,142,343 CONSUMER DISCRETIONARY (5.0%) 189,500 Agrium Inc. 3,913,518 4,053,405 17,500 Adidas-Salomon AG 2,188,753 2,586,544 14,365 Air Liquide 3,078,934 3,280,857 113,500 Alliance Atlantis Communications Inc., Class B 1,841,236 2,249,570 227,100 Alcan Inc. 11,336,456 13,755,447 66,400 Astral Media Inc. 1,436,377 1,862,520 433,000 Barrick Gold Corp. 11,538,965 12,691,230 8,500,000 GMAC Canada Ltd., 5.4% 11/24/2006 8,488,355 8,617,187 281,300 Cambior Inc. 746,426 1,122,387 14,700 Thomson Corp. 608,931 692,076 96,100 Cameco Corp. 4,304,141 7,183,475 184,700 Torstar Corp., Class B 4,356,171 5,358,147 142,600 Canfor Corp. 1,394,215 1,607,102 86,600 Viacom Inc., Class B 4,441,254 4,984,383 44,800 Cia Vale do Rio Doce, Sponsored ADR 2,380,213 2,992,787 210,800 Wolters Kluwer NV 4,113,705 4,264,283 337,800 Domtar Inc. 5,261,869 5,489,250 97,428 Yellow Pages Income Fund 1,003,160 1,130,165 55,900 Du Pont EI de Nemours & Co. 3,158,443 3,326,872 28,477,942 31,744,875 470,495 Eldorado Gold Corp. 1,524,895 1,905,505 CONSUMER STAPLES (2.8%) 235,247 Eldorado Gold Corp. warrants - 2 520,300 Agricore United 3,503,693 4,734,730 3,700,000 Falconbridge Ltd., 8.5% 12/8/2008 3,974,742 4,188,474 251,900 Alimentation Couche Tard Inc., Class B 4,156,350 6,020,410 138,900 Fording Canadian Coal Trust 4,216,737 6,389,400 22,400 Bunge Ltd. 904,269 956,344 137,900 Glamis Gold Ltd. 2,651,636 3,072,412 73,800 Interbrew 2,553,485 2,547,568 98,900 IMC Global Inc. 1,185,341 1,273,655 53,300 Loblaw Cos Ltd. 3,314,635 3,560,440 35,800 Inco Ltd. 1,144,284 1,849,070 14,432,432 17,819,492 58,915 International Forest Products, Class A 344,653 353,490

2003 Annual Report as at December 31, 2003 – 58 – Clarica Canadian Diversified Fund Investment Portfolio as at December 31, 2003

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

HEALTH CARE (2.8%) 207,800 Bristol-Myers Squibb Co. 8,394,910 7,707,575 45,100 ImClone Systems Inc. 2,494,949 2,319,719 103,400 IVAX Corp. 2,380,425 3,202,293 94,300 King Pharmaceuticals Inc. 1,642,669 1,866,261 132,000 MDS Inc. 2,510,816 2,637,360 17,423,769 17,733,208 TELECOMMUNICATION SERVICES (2.8%) 398,800 BCE Inc. 12,508,312 11,525,320 5,500,000 BCE Inc., 6.75% 10/30/2007 5,682,330 5,983,890 18,190,642 17,509,210 UTILITIES (2.3%) 5,400,000 Hydro One Inc., 4.15% 4/21/2006 5,402,304 5,492,610 2,000,000 Nova Gas Transmission 8.9% 5/27/2025 2,302,922 2,591,480 417,000 Snam Rete Gas SpA 2,174,060 2,285,752 3,750,000 TransAlta Corp., 6.25% 11/15/2030 3,881,025 3,888,225 13,760,311 14,258,067 ASSET BACKED (1.1%) 7,050,000 CCIC 2003-WEM A2 4.588% 10/15/2008 7,000,208 6,951,934

INFORMATION TECHNOLOGY (0.8%) 179,800 Nokia OYJ, ADR 4,234,202 3,964,102 339,100 Nortel Networks Corp. 1,295,138 1,861,659 5,529,340 5,825,761 TELECOMMUNICATION SERVICES (0.4%) 70,300 Telus Corp. 1,837,667 1,824,285 31,500 Telus Corp. (Non-Voting) 725,471 762,300 2,563,138 2,586,585 HEALTH CARE (0.4%) 120,600 Tenet Healthcare Corp. 2,338,656 2,510,317

Total Bonds & Equities (97.3%) 555,475,062 615,868,012

Short Term Notes (2.1%) 13,099,236 13,099,236

DERIVATIVE INSTRUMENTS (Capital)

Foreign Currency Forward Contracts (Capital) (0.2%) (see Schedule 1) 1,058,177

Total Investments (99.6%) 568,574,298 630,025,425

Other Assets (net) (0.4%) 2,795,249

Total Net Assets (100.0%) 632,820,674

Schedule 1 Foreign Currency Forward Contracts (Capital) (0.2%) Due Credit Market Contracts Pay Receive Date Rating Value $

2 (1,140,000) US$ 1,510,204 Canadian$ 27-Jan-04 A-1 29,901 * 1 (1,610,000) US$ 2,132,848 Canadian$ 28-Jan-04 A-1 42,149 * 1 (2,400,000) US$ 3,178,584 Canadian$ 29-Jan-04 A-1 61,871 * 3 (5,673,000) US$ 7,520,955 Canadian$ 4-Feb-04 A-1+ 152,003 * 2 (8,065,000) US$ 10,611,211 Canadian$ 25-Feb-04 A-1+ 126,302 * 2 (5,700,000) US$ 7,485,383 Canadian$ 10-Mar-04 A-1+ 70,823 * 2 (6,800,000) US$ 8,934,928 Canadian$ 24-Mar-04 A-1 84,347 * 1 (11,200,000) US$ 14,758,800 Canadian$ 7-Apr-04 A-1 173,513 * 1 (18,650,000) US$ 24,610,540 Canadian$ 14-Apr-04 A-1+ 317,268 * Total Foreign Currency Forward Contracts Value 1,058,177

2003 Annual Report as at December 31, 2003 – 59 – Clarica Canadian Diversified Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 473,741 611,452 Investments at market value (Note 2) 630,025 472,417 Dividends 5,433 6,391 Cash 613 - Interest 12,114 11,187 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments 126 - (including reinvested distributions) 18,522 30,087 Receivable for unit subscriptions 295 38 Less foreign withholding taxes (248) (372) Amounts paid for units redeemed (98,485) (118,105) Receivable for securities sold -- 17,425 17,206 Return of capital -- Dividends and accrued interest receivable 2,646 2,370 Expenses (79,963) (88,018) 633,579 474,825 Management fees (Note 4) 10,900 12,015 Distributions to investors Liabilities Administrative (Note 4) 2,137 1,371 Distribution from realized gains -- Bank overdraft -70Custody 12 39 Distribution from net income (2,641) (3,540) Payable for securities purchased 553 744 Legal 828 (2,641) (3,540) Payable for unit redemptions 169 268 Audit 17 16 Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 906 939 fund merger (Note 1) 167,298 - Distributions payable 36 2 13,980 14,408 Increase (decrease) in net assets 758 1,084 Net income (loss) for the year 3,445 2,798 from operations 74,386 (46,153) Net assets and unitholders’ equity 632,821 473,741 Net assets, end of year 632,821 473,741 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 14.66 12.81 Realized gain (loss) on investments (a) 16,009 (47,530) DSC 14.90 13.02 Capital gain distribution from investments -- Class Z 10.80 N/A Change in unrealized appreciation (depreciation) of investments 54,932 (1,421) Number of units outstanding Net gain (loss) on investments 70,941 (48,951) Front End 31,945,492 36,707,109 Increase (decrease) in net assets DSC 342,807 271,838 from operations 74,386 (46,153) Class Z 14,753,433 N/A (a) Realized gain (loss) on investments Security Lending (Note 5) Proceeds from sale of investments including Loaned 35,151 20,030 foreign exchange gain (loss) (b) (c) 818,912 580,316 Collateral 37,600 21,420 Investments at cost, beginning of year 465,898 603,537 Income 46 43 Investments purchased 904,482 507,743 Change in cost of short-term notes held 1,097 (17,536) 1,371,477 1,093,744 Investments at cost, end of year 568,574 465,898 Approved on behalf of the Board of Directors: Cost of investments sold 802,903 627,846 Realized gain (loss) on investments 16,009 (47,530)

William T. Holland (b) Proceeds on sales of short-term Director notes sold during the year not included above 4,256,039 452,430

Peter W. Anderson (c) Foreign exchange gain (loss) Director included above (1,117) (3)

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

2003 Annual Report as at December 31, 2003 – 60 – Clarica Summit Growth and Income Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 12.79 13.26 12.84 11.27 11.34 13.14 13.61 13.15 11.41 11.24 Distribution per unit From net income - - (0.02) (0.09) (0.14) - - (0.01) (0.06) (0.01) From net realized gain - (0.23) - (0.27) (0.02) - (0.26) - (0.20) (0.01) Return of capital ------(0.23) (0.02) (0.36) (0.16) - (0.26) (0.01) (0.26) (0.02) Net income (loss) per unit (0.06) (0.05) 0.03 0.08 0.14 (0.05) (0.03) 0.06 0.16 0.01 Net realized and unrealized appreciation (depreciation) of investments per unit 1.02 (0.23) 0.41 1.85 (0.05) 1.05 (0.24) 0.41 1.84 0.18 0.96 (0.28) 0.44 1.93 0.09 1.00 (0.27) 0.47 2.00 0.19 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.04 0.04 - - - 0.05 0.06 - - -

Net asset value per unit, end of year 13.79 12.79 13.26 12.84 11.27 14.19 13.14 13.61 13.15 11.41

Ratios & Supplemental Data Total return (%) (b) 7.82 (1.73) 3.45 17.09 0.78 7.99 (1.57) 3.62 17.48 1.67 Average net assets ($000’s) (c) 188,139 185,531 132,918 98,200 119,923 3,290 2,097 820 234 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 3.24 3.10 3.09 3.13 2.80 3.13 2.99 2.97 3.03 2.64 Management and operating expenses (%) 3.03 2.89 2.85 2.79 2.62 2.93 2.76 2.71 2.57 2.47 Goods and services tax expenses (%) 0.21 0.20 0.20 0.20 0.18 0.20 0.21 0.19 0.18 0.17 Total management expense ratio (%) 3.24 3.09 3.05 2.99 2.80 3.13 2.97 2.90 2.75 2.64 Portfolio turnover rate (e) 0.18 0.76 0.30 0.51 0.09 0.18 0.76 0.30 0.51 0.09

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 15,192,099 11,898,157 236,644 92,002 Units issued for cash including re-invested distributions 1,242,290 4,783,686 64,487 159,526 Units issued on fund merger (Note 1) -- -- Units redeemed (2,603,585) (1,489,744) (46,067) (14,884) Units issued (redeemed) on conversion (net) -- -- Balance end of year 13,830,804 15,192,099 255,064 236,644

Additional Fund Notes (in $000’s) Brokerage Commissions 78 320 Net capital loss carried forward -- Non-capital loss carried forward (f) 335 -

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 61 – CIG - 9009 Clarica Summit Growth and Income Fund Investment Portfolio as at December 31, 2003

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

FINANCIALS (18.2%) 125,000 AGF Management Ltd., Class B 1,649,324 2,187,500 90,000 Bank of Nova Scotia 4,063,500 5,922,000 40 Berkshire Hathaway Inc., Class A 3,971,381 4,370,550 1,085 Berkshire Hathaway Inc., Class B 3,924,505 3,961,087 80,000 Canadian Imperial Bank of Commerce 3,200,000 5,120,000 125,000 Royal Bank of Canada 5,812,680 7,725,000 140,000 Toronto-Dominion Bank 4,628,470 6,060,600 27,249,860 35,346,737 MATERIALS (15.4%) 13,500 Air Liquide 2,731,625 3,083,298 80,000 Alcan Inc. 4,029,424 4,845,600 55,000 Cameco Corp. 1,801,250 4,111,250 100,000 IPSCO Inc. 1,558,346 2,405,000 230,000 Nexfor Inc. 1,847,265 2,495,500 235,000 Norske Skog Canada Ltd. 1,178,102 979,950 80,000 Potash Corp. Of Saskatchewan 7,675,251 8,978,400 40,000 Sigma-Aldrich Corp. 2,991,431 2,966,268 23,812,694 29,865,266 ENERGY (12.5%) 90,000 EnCana Corp. 3,914,288 4,590,000 140,000 Ensign Resource Service Group 2,409,117 2,884,000 72,500 Petro-Canada 2,624,604 4,633,475 140,000 ShawCor Ltd., Class A 1,826,300 2,182,600 170,000 Suncor Energy Inc. 3,589,830 5,525,000 60,000 Talisman Energy Inc. 3,239,400 4,411,200 17,603,539 24,226,275 GOVERNMENT BONDS (9.9%) 2,018,000 Canada Government Bond 10.25% 2/1/2004 2,177,422 2,028,332 1,397,000 Canada Government Bond 10.75% 10/1/2009 1,945,263 1,864,073 3,649,000 Canada Government Bond 11% 6/1/2009 4,994,654 4,869,445 838,000 Canada Government Bond 11.25% 6/1/2015 1,298,092 1,319,925 2,769,000 Canada Government Bond 7.25% 6/1/2007 3,134,630 3,093,471 1,354,000 Canada Government Bond 8.5% 6/1/2011 1,697,875 1,697,280 1,962,000 Canada Government Bond 8.75% 12/1/2005 2,249,825 2,170,659 1,713,000 Canada Government Bond 9% 3/1/2011 2,212,340 2,189,265 19,710,101 19,232,450 CONSUMER DISCRETIONARY (4.7%) 50,000 Jones Apparel Group Inc. 2,800,736 2,284,488 60,000 Koninklijke Philips Electronics NV, ADR 1,623,538 2,263,608 160,000 TJX Companies Inc. 5,012,432 4,575,460 9,436,706 9,123,556 CONSUMER STAPLES (3.3%) 135,000 Cadbury Schweppes PLC 1,152,478 1,282,774 225,000 Diageo PLC 3,563,156 3,830,342 4,000 Nestle SA, Registered Shares 1,177,124 1,292,292 5,892,758 6,405,408 INDUSTRIALS (2.1%) 40,000 Canadian National Railway Co. 2,625,759 3,280,000 50,000 Kemet Corp. 713,219 887,727 3,338,978 4,167,727 HEALTH CARE (0.4%) 20,000 Pfizer Inc. 1,060,413 916,388

Total Bonds & Equities (66.5%) 108,105,049 129,283,807

Short Term Notes (32.6%) 63,423,863 63,423,863

Total Investments (99.1%) 171,528,912 192,707,670

Other Assets (net) (0.9%) 1,686,203

Total Net Assets (100.0%) 194,393,873

2003 Annual Report as at December 31, 2003 – 62 – Clarica Summit Growth and Income Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 197,431 158,992 Investments at market value (Note 2) 192,708 201,639 Dividends 1,588 1,570 Cash 1,282 2,230 Interest 3,692 3,622 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 16,580 65,642 Receivable for unit subscriptions 99 87 Less foreign withholding taxes (33) (59) Amounts paid for units redeemed (33,971) (19,683) Receivable for securities sold -- 5,247 5,133 Return of capital -- Dividends and accrued interest receivable 387 357 Expenses (17,391) 45,959 194,476 204,313 Management fees (Note 4) 4,974 4,873 Distributions to investors Liabilities Administrative (Note 4) 812 507 Distribution from realized gains - (3,545) Bank overdraft --Custody 625Distribution from net income -- Payable for securities purchased 3 6,810 Legal 312 - (3,545) Payable for unit redemptions 79 65 Audit 57Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 403 378 fund merger (Note 1) -- Distributions payable -7 6,203 5,802 Increase (decrease) in net assets 82 6,882 Net income (loss) for the year (956) (669) from operations 14,354 (3,975) Net assets and unitholders’ equity 194,394 197,431 Net assets, end of year 194,394 197,431 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 13.79 12.79 Realized gain (loss) on investments (a) 1,071 5,845 DSC 14.19 13.14 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 14,239 (9,151) Front End 13,830,804 15,192,099 Net gain (loss) on investments 15,310 (3,306) DSC 255,064 236,644 Increase (decrease) in net assets from operations 14,354 (3,975) Security Lending (Note 5) Loaned 11,475 - (a) Realized gain (loss) on investments Collateral 12,270 - Proceeds from sale of investments including Income 75foreign exchange gain (loss) (b) (c) 20,615 171,325 Investments at cost, beginning of year 194,699 142,645 Investments purchased 26,175 129,585 Change in cost of short-term notes held (29,801) 87,949 Approved on behalf of the Board of Directors: 191,073 360,179 Investments at cost, end of year 171,529 194,699 Cost of investments sold 19,544 165,480 William T. Holland Realized gain (loss) on investments 1,071 5,845 Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 445,574 234,533 Director

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

2003 Annual Report as at December 31, 2003 – 63 – Clarica Global Bond Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 11.21 9.84 9.65 9.63 10.00 11.22 9.85 9.65 9.63 10.00 Distribution per unit From net income - (0.18) (0.24) (0.23) (0.02) - (0.20) (0.25) (0.24) (0.02) From net realized gain ------Return of capital (0.23) - - - - (0.25) - - - - (0.23) (0.18) (0.24) (0.23) (0.02) (0.25) (0.20) (0.25) (0.24) (0.02) Net income (loss) per unit (0.35) 0.18 0.26 0.33 0.03 (0.34) 0.19 0.28 0.34 0.03 Net realized and unrealized appreciation (depreciation) of investments per unit (0.77) 1.44 0.17 (0.08) (0.38) (0.77) 1.45 0.17 (0.08) (0.38) (1.12) 1.62 0.43 0.25 (0.35) (1.11) 1.64 0.45 0.26 (0.35) Surplus (deficiency) of capital transactions over original cost per unit (a) 0.05 (0.07) - - - 0.05 (0.07) - - -

Net asset value per unit, end of year 9.91 11.21 9.84 9.65 9.63 9.91 11.22 9.85 9.65 9.63

Ratios & Supplemental Data Total return (%) (b) (9.60) 15.99 4.54 2.70 (3.54) (9.47) 16.12 4.67 3.36 (3.53) Average net assets ($000’s) (c) 69,150 61,343 38,341 15,710 2,884 4,613 3,659 1,944 666 100 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.47 2.62 2.98 3.46 2.09 2.36 2.49 2.86 3.36 1.98 Management and operating expenses (%) 2.31 2.29 2.17 2.30 1.95 2.21 2.18 2.06 2.21 1.85 Goods and services tax expenses (%) 0.16 0.16 0.15 0.16 0.14 0.15 0.15 0.14 0.15 0.13 Total management expense ratio (%) 2.47 2.45 2.32 2.46 2.09 2.36 2.33 2.20 2.36 1.98 Portfolio turnover rate (e) 2.03 0.11 0.39 0.21 0.10 2.03 0.11 0.39 0.21 0.10

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 6,838,590 4,754,929 417,131 250,087 Units issued for cash including re-invested distributions 888,956 2,678,026 144,269 211,671 Units issued on fund merger (Note 1) -- -- Units redeemed (1,487,522) (594,365) (99,870) (44,627) Units issued (redeemed) on conversion (net) -- -- Balance end of year 6,240,024 6,838,590 461,530 417,131

Additional Fund Notes (in $000’s) Brokerage Commissions -- Net capital loss carried forward 244 244 Non-capital loss carried forward (f) 706 -

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 64 – CIG - 9005 Clarica Global Bond Fund Investment Portfolio as at December 31, 2003

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

CORPORATE BONDS (53.2%) Schedule 1 358,000 Buoni Poliennali Del Tes, 1.65% 09/15/2008 557,728 586,304 Foreign Currency Forward Contracts (Capital) (-0.3%) 988,000 Deutsche Bundesrepublik 5.5% 1/4/2031 1,692,840 1,742,515 Due Credit Market 82,000,000 Development Bank of Japan 1.05% 6/20/2023 819,251 850,508 Contracts Pay Receive Date Rating Value $ 1,803,000 European Investment Bank 3.25% 10/15/2008 2,726,941 2,903,131 1,233,000 European Investment Bank 3.5% 10/15/2005 1,954,938 2,044,674 1 (842,209) US$ 504,000 British Pound 14-Jan-04 A-1+ 73,786 * 569,000 European Investment Bank 3.625% 10/15/2013 822,724 873,392 3 (10,130,091) US$ 1,118,705,000 Japanese Yen 14-Jan-04 A-1 381,009 * 1,314,000 European Investment Bank 5.375% 10/15/2012 2,187,039 2,314,044 2 (5,215,000) Euro 6,064,347 US$ 14-Jan-04 A-1 (639,305)* 2,958,000 European Investment Bank 5.75% 02/15/2007 4,920,152 5,196,695 1 (106,109,000) Japanese Yen 955,937 US$ 14-Jan-04 A-1 (42,494)* 1,199,000 Int Bank Recon & Dev 8.25% 09/01/2016 2,140,244 2,050,528 Total Foreign Currency Forward Contracts Value (227,004) 743,000,000 Inter-American Development Bank 1.9% 07/08/2009 9,372,601 9,567,664 2,750,000 International Bank Recon & Dev 4.25% 09/08/2005 4,356,561 4,613,690 1,901,000 International Bank Recon & Dev 4.375% 09/28/2006 2,729,651 2,600,337 34,280,670 35,343,482 Schedule 2 CANADIAN GOVERNMENT BONDS (26.2%) Option Contracts (Capital) (0.2%) 11,415,000 Canada Government Bond 3% 12/01/2005 11,402,444 11,421,849 687,000 Canada Government Bond 4% 12/1/2031 906,848 952,214 Notional Expiry Strike Premium Paid Market 626,000 Canada Government Bond 4.25% 12/1/2021 907,780 930,661 Amount Underlying Interest Date Price (Received) $ Value $ 3,277,000 Canada Government Bond 5.75% 6/1/2029 3,461,666 3,527,690 502,000 Canada Government Bond 6% 6/1/2011 540,641 549,891 1,056,000 AUD/ USD OTC CALL 18-Sep-04 0.68 22,444 112,671 17,219,379 17,382,305 FOREIGN GOVERNMENT BONDS (17.5%) Total Option Contracts Value 112,671 766,000 Australia Government Bond 7.5% 09/15/2009 778,878 816,423 1,296,000 France Government Bond OAT 3% 7/25/2012 2,274,490 2,316,685 389,000 Mexico Government International Bond 6.375% 1/16/2013 559,550 523,412 Schedule 3 270,000 Russia Government International Foreign Currency Forward Contracts (Income) (-0.5%) Bond 10% 6/26/2007 483,797 411,091 Due Credit Market 2,018,000 South Africa Government Bond 13% 8/31/2010 415,336 476,413 Contracts Pay Receive Date Rating Value $ 5,610,000 Sweden Government Bond 6.75% 5/5/2014 1,131,643 1,170,429 5,680,000 Sweden Government Bond 8% 8/15/2007 1,102,071 1,165,903 1 (8,804,000) Canadian$ 6,506,060 US$ 14-Jan-04 A-1 (360,624) 519,000 U.K. Treasury 7.25% 12/07/07 1,258,588 1,316,643 Total Foreign Currency Forward Contracts Value (360,624) 563,000 United Kingdom Gilt 5% 3/7/2012 1,377,906 1,325,642 1,263,000 United States Treasury Inflation Indexed Bonds 4.25% 1/15/2010 2,266,046 2,078,491 11,648,305 11,601,132

Total Bonds & Equities (96.9%) 63,148,354 64,326,919

DERIVATIVE INSTRUMENTS (Capital)

Foreign Currency Forward Contracts (Capital) (-0.3%) (see Schedule 1) (227,004)

Option Contracts (Capital) (0.2%) (see Schedule 2) 22,444 112,671

Total Investments (Capital) (96.8%) 63,170,798 64,212,586

DERIVATIVE INSTRUMENTS (Income)

Fund Currency Forward Contracts (Income) (-0.5%) (see Schedule 3) (360,624)

Total Investments (96.3%) 63,851,962

Other Assets (net) (3.7%) 2,560,140

Total Net Assets (100.0%) 66,412,102

2003 Annual Report as at December 31, 2003 – 65 – Clarica Global Bond Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 81,334 49,258 Investments at market value (Note 2) 63,852 75,460 Dividends -- Cash 1,708 4,543 Interest 3,352 2,713 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments (3,998) - (including reinvested distributions) 10,871 29,598 Receivable for unit subscriptions 32 76 Less foreign withholding taxes (30) 12 Amounts paid for units redeemed (16,139) (6,580) Receivable for securities sold -- (676) 2,725 Return of capital (1,629) - Dividends and accrued interest receivable 865 1,280 Expenses (6,897) 23,018 66,457 81,359 Management fees (Note 4) 1,435 1,262 Distributions to investors Liabilities Administrative (Note 4) 256 196 Distribution from realized gains -- Bank overdraft --Custody 818Distribution from net income - (1,153) Payable for securities purchased 15Legal 15 - (1,153) Payable for unit redemptions 44 13 Audit 23Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 117 103 fund merger (Note 1) -- Distributions payable -7 1,819 1,587 Increase (decrease) in net assets 45 25 Net income (loss) for the year (2,495) 1,138 from operations (8,025) 10,211 Net assets and unitholders’ equity 66,412 81,334 Net assets, end of year 66,412 81,334 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 9.91 11.21 Realized gain (loss) on investments (a) 3,375 53 DSC 9.91 11.22 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments (8,905) 9,020 Front End 6,240,024 6,838,590 Net gain (loss) on investments (5,530) 9,073 DSC 461,530 417,131 Increase (decrease) in net assets from operations (8,025) 10,211 Security Lending (Note 5) Loaned 11,451 - (a) Realized gain (loss) on investments Collateral 12,250 - Proceeds from sale of investments including Income 3-foreign exchange gain (loss) (b) (c) 148,667 7,177 Investments at cost, beginning of year 65,513 47,898 Investments purchased 142,950 26,869 Change in cost of short-term notes held - (2,130) Approved on behalf of the Board of Directors: 208,463 72,637 Investments at cost, end of year 63,171 65,513 Cost of investments sold 145,292 7,124 William T. Holland Realized gain (loss) on investments 3,375 53 Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above - 175,622 Director

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

2003 Annual Report as at December 31, 2003 – 66 – Clarica Premier Bond Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 11.48 11.19 10.95 10.47 11.45 11.64 11.34 11.09 10.48 10.57 Distribution per unit From net income (0.31) (0.40) (0.40) (0.46) (0.50) (0.32) (0.41) (0.41) (0.40) (0.04) From net realized gain (0.02) - - - - (0.02) - - - - Return of capital ------(0.33) (0.40) (0.40) (0.46) (0.50) (0.34) (0.41) (0.41) (0.40) (0.04) Net income (loss) per unit 0.32 0.38 0.41 0.43 0.51 0.32 0.40 0.48 0.62 0.06 Net realized and unrealized appreciation (depreciation) of investments per unit 0.13 0.31 0.23 0.51 (0.99) 0.13 0.31 0.18 0.39 (0.11) 0.45 0.69 0.64 0.94 (0.48) 0.45 0.71 0.66 1.01 (0.05) Surplus (deficiency) of capital transactions over original cost per unit (a) (0.05) - - - - (0.04) - - - -

Net asset value per unit, end of year 11.55 11.48 11.19 10.95 10.47 11.71 11.64 11.34 11.09 10.48

Ratios & Supplemental Data Total return (%) (b) 3.39 6.25 5.93 9.44 (4.49) 3.58 6.24 6.14 9.76 (0.50) Average net assets ($000’s) (c) 295,465 265,582 250,119 237,740 336,644 11,276 7,099 3,839 1,146 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.34 2.29 2.27 2.24 2.00 2.22 2.15 2.15 2.14 1.88 Management and operating expenses (%) 2.19 2.13 2.12 2.00 1.87 2.08 1.99 2.01 1.84 1.76 Goods and services tax expenses (%) 0.15 0.15 0.15 0.14 0.13 0.14 0.14 0.14 0.13 0.12 Total management expense ratio (%) 2.34 2.28 2.27 2.14 2.00 2.22 2.13 2.15 1.97 1.88 Portfolio turnover rate (e) 2.89 0.47 0.40 0.59 0.59 2.89 0.47 0.40 0.59 0.59

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 23,808,200 23,565,649 713,409 450,636 Units issued for cash including re-invested distributions 9,267,367 4,634,018 255,103 357,717 Units issued on fund merger (Note 1) 9,667,265 - 656,356 - Units redeemed (12,450,269) (4,391,467) (193,785) (94,944) Units issued (redeemed) on conversion (net) -- -- Balance end of year 30,292,563 23,808,200 1,431,083 713,409

Additional Fund Notes (in $000’s) Brokerage Commissions -- Net capital loss carried forward - 12,555 Non-capital loss carried forward (f) --

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 67 – CIG - 9003 Clarica Premier Bond Fund Investment Portfolio as at December 31, 2003

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

GOVERNMENT BONDS (44.0%) 43,860,000 Canada Government Bond 4.25% 9/1/2008 44,028,260 44,491,584 41,290,000 Canada Government Bond 5.25% 6/1/2013 42,410,467 43,119,147 12,310,000 Canada Government Bond 5.75% 6/1/2033 13,144,842 13,362,505 5,220,000 Canada Government Bond 6% 6/1/2011 5,679,565 5,717,988 49,570,000 Canada Government Bond 7% 12/1/2006 54,750,745 54,537,905 160,013,879 161,229,129 CORPORATE BONDS (25.4%) 4,500,000 Bank of Nova Scotia B 4.515% 11/19/2008 4,500,000 4,549,365 3,260,000 BCE Inc., 7.35% 10/30/2009 3,601,992 3,675,324 3,230,000 Bell Canada 7.85% 4/2/2031 3,677,656 3,901,743 3,480,000 BMO Capital Trust 6.685% 12/29/2049 3,729,478 3,816,446 3,700,000 Cadbury Beverages Canada 4.9% 12/01/2008 3,693,192 3,729,526 6,050,000 Canada Housing Trust 4.1% 12/15/2008 5,993,070 6,047,580 4,000,000 Ford Credit Canada 5.8% 09/26/2006 3,998,360 4,066,440 3,000,000 George Weston Ltd., 7.1% 2/5/2032 3,210,030 3,282,210 4,660,000 Glacier Credit Card Trust 4.82% 12/20/2007 4,721,196 4,795,140 3,870,000 Great-West Lifeco Inc., 6.67% 3/21/2033 3,990,009 4,165,591 3,570,000 Hydro One Inc., 5.77% 11/15/2012 3,629,655 3,738,754 2,100,000 Investors Group Inc., 6.65% 12/13/2027 2,095,401 2,178,834 4,420,000 John Hancock Canadian Corp., 6.672% 05/31/2011 4,800,342 4,875,835 4,000,000 MBNA Canada Bank 5% 8/1/2008 3,958,880 4,047,960 3,090,000 Nova Scotia Power Inc., 6.95% 8/25/2033 3,056,644 3,281,858 4,670,000 Ontario School Board Trust 5.9% 6/2/2033 4,638,291 4,772,927 4,850,000 Ontrea Inc., 5.57% 4/9/2013 4,976,873 5,055,155 5,610,000 Scotiabank Capital Trust 6.282% 12/29/2049 5,779,751 5,989,157 6,210,000 TD Capital Trust 6.792% 12/29/2049 6,747,770 6,851,866 3,600,000 Terasen Inc., 4.85% 5/8/2006 3,644,236 3,690,648 2,680,000 Windsor Trust 3.938% 11/15/2007 2,680,000 2,712,160 3,910,000 York Receivables Trust II 4.272% 7/21/2008 3,885,993 3,925,327 91,008,819 93,149,846 PROVINCIAL BONDS (16.4%) 8,450,000 Province of British Columbia 6.25% 12/1/2009 9,147,015 9,263,482 3,660,000 Province of British Columbia 6.35% 6/18/2031 3,950,421 4,081,478 4,160,000 Province of Newfoundland 5.6% 10/17/2033 4,002,586 4,122,435 7,250,000 Province of Ontario 4.4% 11/19/2008 7,329,170 7,333,810 14,940,000 Province of Ontario 5.375% 12/2/2012 15,197,553 15,467,083 9,120,000 Province of Ontario 5.85% 3/8/2033 9,209,302 9,451,195 9,900,000 Province of Quebec 6% 10/1/2012 10,341,806 10,665,270 59,177,853 60,384,753 ASSET BACKED (1.0%) 3,780,000 N-45 First CMBS Class A2 4.681% 12/15/2019 Expected Mat 3/15/2013 3,670,002 3,719,029

Total Bonds & Equities (86.8%) 313,870,553 318,482,757

Short Term Notes (12.5%) 45,776,184 45,776,184

Total Investments (99.3%) 359,646,737 364,258,941

Other Assets (net) (0.7%) 2,451,137

Total Net Assets (100.0%) 366,710,078

2003 Annual Report as at December 31, 2003 – 68 – Clarica Premier Bond Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 281,710 268,810 Investments at market value (Note 2) 364,259 279,421 Dividends -- Cash 43 416 Interest 15,655 15,366 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 107,934 56,121 Receivable for unit subscriptions 189 107 Less foreign withholding taxes --Amounts paid for units redeemed (144,465) (50,226) Receivable for securities sold -- 15,655 15,366 Return of capital -- Dividends and accrued interest receivable 2,472 2,753 Expenses (36,531) 5,895 366,963 282,697 Management fees (Note 4) 5,661 5,037 Distributions to investors Liabilities Administrative (Note 4) 1,013 721 Distribution from realized gains (588) - Bank overdraft --Custody 87Distribution from net income (8,073) (9,607) Payable for securities purchased 7 840 Legal 516 (8,661) (9,607) Payable for unit redemptions 245 128 Audit 10 11 Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 464 404 fund merger (Note 1) 118,097 - Distributions payable 119 7,161 6,196 Increase (decrease) in net assets 253 987 Net income (loss) for the year 8,494 9,170 from operations 12,095 16,612 Net assets and unitholders’ equity 366,710 281,710 Net assets, end of year 366,710 281,710 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 11.55 11.48 Realized gain (loss) on investments (a) 8,951 1,070 DSC 11.71 11.64 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments (5,350) 6,372 Front End 30,292,563 23,808,200 Net gain (loss) on investments 3,601 7,442 DSC 1,431,083 713,409 Increase (decrease) in net assets from operations 12,095 16,612 Security Lending (Note 5) Loaned 103,128 15,080 (a) Realized gain (loss) on investments Collateral 110,320 16,130 Proceeds from sale of investments including Income 15 10 foreign exchange gain (loss) (b) (c) 773,738 122,305 Investments at cost, beginning of year 269,459 262,591 Investments purchased 810,789 129,883 Change in cost of short-term notes held 44,186 (1,780) Approved on behalf of the Board of Directors: 1,124,434 390,694 Investments at cost, end of year 359,647 269,459 Cost of investments sold 764,787 121,235 William T. Holland Realized gain (loss) on investments 8,951 1,070 Director

(b) Proceeds on sales of short-term notes sold during the year Peter W. Anderson not included above 379,865 922,619 Director

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

2003 Annual Report as at December 31, 2003 – 69 – Clarica Premier Mortgage Fund Statements of Financial Highlights (for the years ended December 31)

Front End DSC 2003 $ 2002 $ 2001 $ 2000 $ 1999 $ 2003 $ 2002 $ 2001 $ 2000 $ 1999 $

Net asset value per unit, beginning of year 10.31 10.35 10.20 10.10 10.43 10.43 10.46 10.30 10.13 10.12 Distribution per unit From net income (0.26) (0.33) (0.42) (0.47) (0.49) (0.27) (0.34) (0.42) (0.43) (0.06) From net realized gain ------Return of capital ------(0.26) (0.33) (0.42) (0.47) (0.49) (0.27) (0.34) (0.42) (0.43) (0.06) Net income (loss) per unit 0.25 0.34 0.43 0.45 0.48 0.27 0.36 0.50 0.61 0.06 Net realized and unrealized appreciation (depreciation) of investments per unit 0.12 (0.05) 0.14 0.12 (0.32) 0.12 (0.05) 0.08 (0.01) 0.01 0.37 0.29 0.57 0.57 0.16 0.39 0.31 0.58 0.60 0.07 Surplus (deficiency) of capital transactions over original cost per unit (a) 0.01 - - - - (0.01) - - - -

Net asset value per unit, end of year 10.43 10.31 10.35 10.20 10.10 10.54 10.43 10.46 10.30 10.13

Ratios & Supplemental Data Total return (%) (b) 3.68 2.88 5.63 5.81 1.61 3.70 3.13 5.79 6.04 0.72 Average net assets ($000’s) (c) 125,872 119,474 105,857 110,541 146,572 3,759 2,472 1,185 341 10 Management expense information (d) Management expense ratio before absorption of operating expenses (%) 2.37 2.26 2.20 2.18 1.69 2.26 2.12 2.09 2.10 1.61 Management and operating expenses (%) 2.22 2.10 2.03 1.93 1.58 2.11 1.95 1.90 1.79 1.50 Goods and services tax expenses (%) 0.15 0.15 0.14 0.13 0.11 0.15 0.14 0.13 0.12 0.11 Total management expense ratio (%) 2.37 2.25 2.17 2.06 1.69 2.26 2.09 2.03 1.91 1.61 Portfolio turnover rate (e) 0.36 0.26 0.34 0.21 0.20 0.36 0.26 0.34 0.21 0.20

Front End DSC 2003 2002 2003 2002 Units Issued and Outstanding Balance beginning of year 12,185,731 10,900,488 288,180 160,111 Units issued for cash including re-invested distributions 2,366,573 3,379,864 188,989 176,795 Units issued on fund merger (Note 1) -- -- Units redeemed (2,893,897) (2,094,621) (65,020) (48,726) Units issued (redeemed) on conversion (net) -- -- Balance end of year 11,658,407 12,185,731 412,149 288,180

Additional Fund Notes (in $000’s) Brokerage Commissions -- Net capital loss carried forward 4,550 5,148 Non-capital loss carried forward (f) --

Inception dates for all classes, please refer to note 1 in the Notes to the Financial Statements.

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

2003 Annual Report as at December 31, 2003 – 70 – CIG - 9002 Clarica Premier Mortgage Fund Investment Portfolio as at December 31, 2003

Interest $ Principal $ Amortized $ Market No. of Shares/ Average Market Rate [%] No. Balance Cost Value Face Amount Cost ($) Value ($)

MORTGAGES ASSET BACKED (53.7%) NHA Insured (37.0%) 3 1 78,086 75,914 75,779 5,000,000 CAN #96601976 4.45% 09/01/07 4,877,932 4,928,155 4 1 148,068 146,592 146,293 7,000,000 CAN Pool #96502026 4.55% 09/01/08 6,982,003 6,965,100 4 1 58,263 58,263 58,192 5,000,000 CAN Pool #97004048 4.6% 04/01/08 4,764,287 4,820,131 4 2 330,062 329,995 329,834 5,000,000 Canada Mortgage Pool #96414073 4.35% 03/04/08 4,865,388 4,878,777 5 7 555,442 555,487 553,982 6,000,000 CCIC 2003-WEM B 4.786% 10/15/08 5,999,820 5,999,820 5 13 1,371,540 1,371,599 1,370,395 6,028,000 Merrill Lynch 00-CAN3 A1 11/15/08 5,236,249 5,237,873 5 17 1,976,287 1,983,203 1,979,901 4,000,000 Merrill Lynch 2003 CAN 9 A 04/12/35 3,936,728 4,017,808 5 7 642,560 646,357 646,473 5,000,000 Merrill Lynch Financial Asset Inc., 6 18 2,468,998 2,480,280 2,491,751 4.501% 06/12/35 4,850,672 4,863,332 6 54 7,020,195 7,097,619 7,100,577 3,200,000 MLFA 2003-CA11 A 4.471% 11/12/35 3,203,904 3,225,600 6 58 5,762,413 5,817,517 5,851,001 6,000,000 N-45 First CMBS Issuer Corp., 4.968% 11/15/20 5,931,604 5,971,403 6 63 7,645,979 7,706,612 7,789,255 6,000,000 Peoples Trust CAN Pool #96602198 4.3% 05/01/08 5,947,877 5,961,743 7 47 5,244,526 5,301,822 5,375,940 6,000,000 Peoples Trust CAN Pool #96602214 7 34 3,908,118 3,950,758 4,013,369 5.037% 06/01/2008 5,720,226 5,756,497 7 26 2,123,148 2,144,852 2,179,464 5,000,000 Solar Trust 4.65% 05/12/2016 4,877,746 4,921,368 7 19 1,983,319 2,019,383 2,056,189 67,194,436 67,547,607 8 24 2,278,627 2,326,311 2,377,245 8 13 1,123,886 1,131,749 1,160,589 Total Mortgages and Asset Backed (94.3%) 117,776,288 118,626,716 8 5 385,377 397,248 402,416 8 6 507,646 517,057 531,739 Short Term Notes (1.6%) 1,998,335 1,998,332 9 1 45,628 47,123 48,076 9 1 40,264 40,264 44,050 Total Investment (95.9%) 119,774,623 120,625,048 Total NHA Insured 418 45,698,432 46,146,005 46,582,510 Other Assets (net) (4.1%) 5,263,632

Uninsured Total Net Assets (100.0%) 125,888,680 Conventional (3.6%) 4 1 5,624 5,624 5,622 5 2 116,681 116,681 116,678 5 3 320,662 320,662 322,198 5 2 207,540 207,540 207,695 5 3 372,269 372,269 373,726 6 3 351,272 351,272 353,391 6 7 406,446 406,446 409,349 6 6 411,779 411,779 418,280 6 7 532,208 532,208 544,646 7 4 441,754 441,754 443,058 7 5 669,878 669,878 684,091 7 3 169,505 169,505 176,006 7 1 77,368 77,368 79,557 8 4 352,861 352,861 362,302 Total Uninsured Conventional 51 4,435,847 4,435,847 4,496,599

Total Mortgages (40.6%) 469 50,134,279 50,581,852 51,079,109

2003 Annual Report as at December 31, 2003 – 71 – Clarica Premier Mortgage Fund Financial Statements

2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $

Assets Income Net assets, beginning of year 128,647 114,466 Investments at market value (Note 2) 120,625 125,317 Dividends -- Cash 4,842 2,608 Interest 6,235 6,768 Capital Transactions Income taxes recoverable --Income distribution from investments --Proceeds from units issued Daily variation margin --Gain (loss) on derivative investments --(including reinvested distributions) 26,554 36,637 Receivable for unit subscriptions 123 127 Less foreign withholding taxes --Amounts paid for units redeemed (30,761) (22,034) Receivable for securities sold 318 933 6,235 6,768 Return of capital -- Dividends and accrued interest receivable 397 242 Expenses (4,207) 14,603 126,305 129,227 Management fees (Note 4) 2,265 2,131 Distributions to investors Liabilities Administrative (Note 4) 603 407 Distribution from realized gains -- Bank overdraft --Custody 24Distribution from net income (3,202) (3,857) Payable for securities purchased 15 249 Legal 28 (3,202) (3,857) Payable for unit redemptions 94 17 Audit 34Acquisition of net assets on Foreign withholding tax payable --Goods and services tax 199 178 fund merger (Note 1) -- Distributions payable 307 314 3,074 2,732 Increase (decrease) in net assets 416 580 Net income (loss) for the year 3,161 4,036 from operations 4,651 3,435 Net assets and unitholders’ equity 125,889 128,647 Net assets, end of year 125,889 128,647 Realized and unrealized Net asset value per unit gain (loss) on investments Front End 10.43 10.31 Realized gain (loss) on investments (a) 848 1 DSC 10.54 10.43 Capital gain distribution from investments -- Change in unrealized appreciation Number of units outstanding (depreciation) of investments 642 (602) Front End 11,658,407 12,185,731 Net gain (loss) on investments 1,490 (601) DSC 412,149 288,180 Increase (decrease) in net assets from operations 4,651 3,435 Security Lending (Note 5) Loaned --(a) Realized gain (loss) on investments Collateral --Proceeds from sale of investments including Income -2foreign exchange gain (loss) (b) (c) 40,761 1,909 Investments at cost, beginning of year 125,109 113,472 Investments purchased 67,997 36,906 Mortgage principal repayment (20,398) (25,495) Approved on behalf of the Board of Directors: Change in cost of short-term notes held (13,020) 2,134 159,688 127,017 Investments at cost, end of year 119,775 125,109 William T. Holland Cost of investments sold 39,913 1,908 Director Realized gain (loss) on investments 848 1

(b) Proceeds on sales of short-term Peter W. Anderson notes sold during the year Director not included above 134,200 573,199

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

2003 Annual Report as at December 31, 2003 – 72 – Notes to the Financial Statements - Clarica Mutual Funds

1. THE FUND The following Clarica Mutual Funds are open-ended mutual fund trusts created under the laws of Ontario by declarations of trust:

Fund Names Inception Date of Front End Class Units Inception Date of DSC Class Units Clarica Alpine Canadian Resources Fund May 1, 1997 December 13, 1999 Clarica Alpine Growth Equity Fund May 1, 1997 December 13, 1999 Clarica Balanced Fund December 17, 2001 – Clarica Canadian Blue Chip Fund November 1, 1992 December 13, 1999 Clarica Canadian Diversified Fund May 1, 1994 December 13, 1999 Clarica Canadian Equity Fund November 17, 1999 December 13, 1999 Clarica Canadian Large Cap Value Fund December 17, 2001 – Clarica Canadian Small/Mid Cap Fund November 1, 1992 December 13, 1999 Clarica Global Bond Fund November 17, 1999 December 13, 1999 Clarica Global Large Cap Value Fund December 17, 2001 – Clarica Premier Bond Fund November 1, 1992 December 13, 1999 Clarica Premier International Fund May 1, 1993 December 13, 1999 Clarica Premier Mortgage Fund May 1, 1993 December 13, 1999 Clarica Summit Canadian Equity Fund May 1, 1997 December 13, 1999 Clarica Summit Dividend Growth Fund May 1, 1997 December 13, 1999 Clarica Summit Foreign Equity Fund May 1, 1997 December 13, 1999 Clarica Summit Growth and Income Fund May 1, 1997 December 13, 1999 Clarica US Small Cap Fund November 17, 1999 December 13, 1999

Clarica Canadian Diversified Fund and Clarica Canadian Blue Chip Fund offered Class Z units Terminated Funds Continuing Funds to investors commencing on August 29, 2003. Non-Taxable merger Clarica Income Fund Clarica Premier Bond Fund Both Front End and DSC class units are available to all investors. Clarica Money Market Fund CI Money Market Fund Clarica RSP European Index Fund CI European RSP Fund Class Z units were issued to certain investors in connection with various mutual fund reorgan- Clarica RSP International Index Fund CI International Value RSP Fund ization and are generally only available for purchase by those investors. Clarica Bond Fund CI Canadian Bond Fund Clarica RSP Japanese Index Fund CI Japanese RSP Fund Effective as of the close of business on August 29, 2003 the following funds were merged. Clarica Bond Index Fund CI Canadian Bond Fund Clarica RSP US Equity Index Fund CI American Value RSP Fund Terminated Funds Continuing Funds CIarica Canadian Equity Index Fund Signature Select Canadian Fund Taxable merger Clarica RSP US Technology Index Fund CI Global Science & Technology RSP Fund Clarica European Equity Fund CI European Fund Clarica Short-Term Bond Fund CI Short-Term Bond Fund Clarica Global Science & Technology Fund CI Global Science & Technology Sector Fund Clarica Growth Fund Clarica Alpine Growth Equity Fund The purchase method of accounting has been adopted for the merger of the mutual funds. Clarica Premier American Fund CI Value Trust Sector Fund Under this method, one of the Funds in each merger is identified as the acquiring Fund, and is Clarica Alpine Asian Fund CI Pacific Fund known as the “Continuing Fund”, and any other Fund involved in the merger is known as the Clarica Premier Emerging Markets Fund CI Emerging Markets Fund “Terminated Fund”. Clarica Amerifund CI American Value Fund Clarica Asia and Pacific Rim Equity Fund CI Pacific Fund The mergers were effected by transferring the net assets of the Terminated Funds in exchange CIarica Conservative Balanced Fund Clarica Canadian Diversified Fund for securities of the Continuing Funds. The value of the securities of the Continuing Funds issued Clarica Diversifund 40 Clarica Canadian Diversified Fund in connection with these mergers was equal to the market value of the net assets transferred Clarica US Growth Equity Fund CI Value Trust Sector Fund from the Terminated Funds. Clarica Equifund Clarica Canadian Blue Chip Fund

2003 Annual Report as at December 31, 2003 – 73 – Notes to the Financial Statements - Clarica Mutual Funds

In accordance with the provision of the Tax Act, each of the Continuing Funds involved in the non- (d) Net Asset Value Per Unit taxable merger and each of the Terminated Funds involved in the taxable merger had a taxation Net asset value per unit for each class is calculated at the end of each day on which year-end on the merger date. For the non-taxable merger, all unrealized losses and certain the Fund’s manager is open for business by dividing the net assets of each class by its elected unrealized gains were deemed to be realized as at the merger date. For the taxable outstanding units. merger, all unrealized losses and all unrealized gains were deemed to be realized as at the merger date. The assets of the Terminated Fund were transferred to the applicable Continuing The net asset value of each class is computed by calculating the value of that class’s Fund without incurring a tax liability for either Fund. Depending on the circumstances of the proportionate share of the Fund’s assets less that class’s proportionate share of the Fund’s Funds in each non-taxable merger, certain investments of each Terminated Fund were deemed to common liabilities and less class specific liabilities. Expenses directly attributable to a have been transferred to the applicable Continuing Fund at fair market value for income tax class are charged to that class. Other income and expenses are allocated to each class purposes. For taxable mergers, investments are transferred to the applicable Continuing Fund at proportionately based upon the relative net asset value of each class. fair market value. (e) Futures, Forward, Option and Swap Contracts These financial statements do not include the operating results of the Terminated Funds prior Futures, forward, option and swap contracts are valued on each business day according to to the merger date. the gain or loss that would be realized if the contracts were closed out, unless daily limits are in effect in which case they are valued based on the current market value of the under- The Investment Portfolio for each of the Funds are as at December 31, 2003 and the Statements lying interest. Any payments made to satisfy initial and variation margin are reflected as a of Net Assets are as at December 31, 2003 and 2002, if the Fund was in existence at that date. receivable balance in daily variation margin on the Statements of Net Assets. Margin, The Statements of Operations and Changes in Net Assets for each Fund are for the years ended consisting of assets other than cash, is noted in the Statement of Investment Portfolio. December 31, 2003 and 2002, except for Funds established during either period, in which case Gains or losses arising from futures, forward, option and swap contracts which are held as the information provided is for the period from inception to December 31. The Statements of hedges for capital investments are recorded as unrealized gains (losses) on investments Financial Highlights for each Fund are for each of the most recent five years ended December 31, until the contracts are closed or expire. Gains or losses arising from futures, forward, option except where the inception date of a Fund, or date of first sale of a Class of a Fund, was after and swap contracts not held as hedges for capital investments are recorded as income (loss) January 1, 1999, in which case the information is provided for the period from inception or date on a daily basis. of first sale, as applicable, to December 31 of that period, if applicable, and for each year ended December 31 thereafter. The date of inception of each Fund is shown above. (f) Use of Estimates The preparation of financial statements in accordance with Canadian generally accepted Prior year financial statements were reported on by other auditors. 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 2. SIGNIFICANT ACCOUNTING POLICIES amounts of revenues and expenses during the reporting period. Actual results could differ The following is a summary of significant accounting policies of the Funds: from those estimates.

(a) Valuation of Investments 3. INCOME TAXES Listed securities are valued on each business day at their latest available sale price. In the The Funds qualify as mutual fund trusts under the provisions of the Income Tax Act (Canada) absence of recorded sales on that day, they are valued at the average of the last recorded and, accordingly, are not subject to tax on net income, including net realized capital gains for bid and ask prices where appropriate. Unlisted securities are valued on each business day the taxation year, which is paid or payable to unitholders at the end of the taxation year. based on price quotations from recognized investment dealers, or failing that, management’s However, such part of each Fund’s taxable income and net realized capital gains that is not so best estimate. Short-term fixed income securities are valued at cost which, together with paid or payable will be taxable to that Fund. Income tax on net realized capital gains not paid accrued interest, approximates market value. or payable will be generally 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 (b) Foreign Exchange of each Fund to pay all net taxable income and sufficient net realized capital gains so that the Foreign currency amounts are translated into Canadian dollars as follows: market value of Fund will not be subject to income tax. Occasionally, a Fund may distribute more than it earns. investments, forward currency contracts, other assets and liabilities at the closing rate of This excess distribution is a return of capital and is not taxable to unitholders. Derivative invest- exchange on each business day; income, expenses and, purchases, sales and settlements ments are recorded in the same manner for tax purposes as for accounting purposes. of investments at the rate of exchange prevailing on the respective dates of such transactions. Net capital losses may be carried forward indefinitely to reduce future net realized capital (c) Investment Transactions and Income Recognition gains. Non-capital losses may be carried forward seven years. Net capital and non-capital loss Investment transactions are accounted for on the day following the trade date and any amounts appear under “Additional Fund Notes” on the Statements of Financial Highlights. realized gains and losses from such transactions are calculated on an average cost basis. Dividend income is recognized on the ex-dividend date and interest income on the 4. MANAGEMENT FEES AND OTHER EXPENSES accrual basis. Stock dividends are recorded as dividend income determined by reference to CI Mutual Funds Inc. is the Manager of each Fund and, in consideration of management fees market value. received, provides management services required in the day-to-day operations of the Funds including management of the investment portfolio of the Funds.

2003 Annual Report as at December 31, 2003 – 74 – Notes to the Financial Statements - Clarica Mutual Funds

The management fee is calculated on the net assets of each Fund at the end of each business day and is paid daily.

Each Fund also bears all operating and administrative expenses including audit and legal fees, registry and transfer agency fees, custody fees, expenses relating to reporting and making distributions to unitholders, all other costs and fees imposed by statute or regulation and expenses of all communications with unitholders.

To encourage large purchases in the Funds, the Manager may reduce the management fee that it would otherwise be entitled to receive from a Fund with respect to an investment in a Fund provided that the amount of the management fee reduction is distributed to the investor for whose benefit the fees were reduced.

Prior to 2003, in order to reduce the effective Management Expense Ratio’s of certain funds, some of the management fees and/or operating expenses may have been waived by the Manager.

5. SECURITIES LENDING Certain Funds have entered into a securities lending program with their custodian, Royal Trust Company of Canada (“Royal Trust”). The aggregate market value of all securities loaned by a Fund cannot exceed 50% of the 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. Royal Trust has indemnified the Funds against the credit risk of the borrowers. For those Funds participating in the program, amounts for securities loaned, the collateral received, and the income collected appear on the Statements of Net Assets and income from securities lending is included in "Interest Income" in the Statements of Operations.

6 . RELATED PARTY TRANSACTIONS Sun Life Financial Inc. (“Sun Life”) owns a significant interest in CI Fund Management Inc., parent of the Manager, and is therefore considered a related party to the Funds. The following is a summary of the investments by Sun Life in the Funds as at December 31.

Fund Names Net Asset Value (000’s) 2003 $ 2002 $ Clarica Balanced Fund 5,600 5,090 Clarica Alpine Growth Equity Fund (Front-end) 3,211 – Clarica Canadian Large Cap Value Fund 5,270 4,485 Clarica Global Large Cap Value Fund 4,900 4,640 CIarica Canadian Diversified Fund (Front-end) 10,659 –

7 . PORTFOLIO TRANSACTIONS A copy of the Statement of Portfolio Transactions (unaudited) for any Fund for the year ended December 31, 2003 is available without charge upon written request to the Manager, CI Mutual Funds Inc., CI Place, 151 Yonge Street, Eleventh Floor, Toronto, Ontario M5C 2W7.

2003 Annual Report as at December 31, 2003 – 75 – Management and Audit Reports - Clarica Mutual Funds

MANAGEMENT’S RESPONSIBILITY AUDITORS’ REPORT FOR FINANCIAL REPORTING To the unitholders of Clarica Mutual Funds (as defined in Note 1) (the “Funds”): The accompanying financial statements have been prepared by CI Mutual Funds Inc., the Manager of the Funds, and approved by the Board of Directors of the Manager. The Funds’ Manager is We have audited the Investment Portfolio of each of the Funds as at December 31, 2003, and responsible for the information and representations contained in these financial statements the Statements of Net Assets, Operations, Changes in Net Assets and Financial Highlights as and other sections of the Annual Report. at and for 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 CI Mutual Funds Inc. maintains appropriate processes to ensure that relevant and reliable financial based on our audits. 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 We conducted our audits in accordance with Canadian generally accepted auditing standards. on estimates and judgments. The significant accounting policies which management believes Those standards require that we plan and perform an audit to obtain reasonable assurance are appropriate for the Funds are described in Note 2 to the financial statements. whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial PricewaterhouseCoopers LLP are the external auditors of the Funds, appointed by the unitholders. statements. An audit also includes assessing the accounting principles used and significant They have audited the financial statements in accordance with Canadian generally accepted estimates made by management, as well as evaluating the overall financial statement presentation. auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out at the right. 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, the changes in each of their net assets and each of their financial highlights as at and for the periods indicated in Note 1 in accordance with generally accepted accounting principles.

President Prior years’ financial statements for the Funds were audited in accordance with Canadian CI MUTUAL FUNDS INC. generally accepted auditing standards and reported on by other auditors who expressed an opinion dated March 14, 2003, without reservation on those financial statements.

Chief Financial Officer CI MUTUAL FUNDS INC. Chartered Accountants PRICEWATERHOUSECOOPERS LLP

Toronto, Ontario January 30, 2004

2003 Annual Report as at December 31, 2003 – 76 – Trustees’ Letter

Your Clarica Funds’ Trustees are pleased to report on their activities in respect of the year affect the Funds, such as customer complaints. The personal trading rules under the CI Code ended December 31, 2003 and to date. The Trustees are appointed pursuant to the Declarations of Ethics and Conduct require prior clearance of personal trades and restrict the ability of staff of Trust governing the Funds. to trade any securities held by the Funds. During 2003, the three independent Trustees comprised the Audit Committee of the Trustees. The Audit Committee independently reviewed, The Trustees’ mandate is to consult with CI Mutual Funds Inc. (the “Manager”) and any invest- with the Funds’ auditors, the planning, scope and results of the audit of the financial statements ment advisers (referred to as “Subadvisers”) in matters pertaining to investment policy; receive of the Funds for the year 2003, and reported to the Trustees. In order to make your Trustees fully and review periodic reports concerning the investment of the Funds’ assets, the issue and independent from the Manager, Mr. Peter Anderson resigned as a Trustee in January 2004. In redemption of securities and distributions to securityholders; and to review and advise or February 2004, the Trustees received and accepted the 2003 Annual Reports of the Funds. consent, if appropriate, with respect to any other matter required by the Declarations of Trust and by applicable securities laws, regulations and rules. The Trustees met quarterly. The Manager's year 2003 report on compliance with the CI Code of Ethics and Conduct has been provided to the Trustees in a timely and satisfactory manner. The Trustees 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’ security- Stephen T. Moore holders and that, at all times, the interests of the the Funds and their securityholders are placed Chair, Clarica Funds Trustees above personal interests of employees, officers and directors of the Manager and each of its subsidiaries and affiliates, the Subadvisers, and the Trustees, through the application of the March 6, 2004 highest standards of integrity and ethical business conduct. The objective is not only to remove any potential for real conflict of interest but to avoid any perception of conflict. Trustees During 2003 Stephen T. Moore, Chair The independent Trustees report that management has been open and cooperative, permitting Jasmine Herlt the Trustees to meet with Subadvisers, to meet with individual department heads and Thomas L. Jarmai personnel to review control mechanisms and compliance procedures, including those relating Peter W. Anderson, President and Chief Executive Officer, CI Mutual Funds Inc. to the personal securities trading activity of employees, and to consider other matters that

Legal Notice

Notice: Should you require additional copies of this Annual Report or have received more than Distribution or Dividend Reinvestment: Distributions or dividends from the Funds are one copy, please contact CI Mutual Funds Inc. (the “Manager”) or your financial adviser. automatically reinvested, free of any sales commissions or charges, in additional securities of the relevant Fund, unless you otherwise direct. You may withdraw from participation in the Commissions, trailing commissions, management fees and expenses all maybe associated reinvestment plan at any time by delivering a written request to your financial adviser or to with mutual fund investments. Please read the prospectus before investing. Unless otherwise the Manager. indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance Redemption of Securities: Securities may be redeemed by securityholders on any business data assume reinvestment of all distributions or dividends and do not take into account sales, day by delivering to your financial adviser or the Manager a redemption request in writing, or in redemption, distribution or optional charges or income taxes payable by any securityholder that such other form as permitted by your financial adviser. If your redemption request is received would have reduced returns. Mutual funds are not guaranteed, their values change frequently by the Manager on any valuation date prior to 4:00 p.m. (Eastern time), then your securities and past performance may not be repeated. Mutual fund securities are not covered by the being redeemed will be priced at the next valuation time following receipt by the Manager of Canada Deposit Insurance Corporation or by any other government deposit insurer. the redemption request. If the proceeds of redemption exceed $10,000 or are to be paid to someone other than the registered owner, your signature must be guaranteed by a bank, trust The commentaries contained herein are provided as a general source of information and should company, investment dealer, or broker. If certificates representing the securities to be redeemed not be considered personal investment advice or an offer or solicitation to buy or sell securities. have been issued, the redemption request must be accompanied by the certificates, properly Every effort has been made to ensure that the material contained in these commentaries is endorsed for redemption with the signature guaranteed in the manner described above. If the accurate at the time of publication. However, the Manager cannot guarantee its accuracy or registered owner is a corporation, partnership, agent, fiduciary or surviving joint owner, additional completeness and accepts no responsibility for any loss arising from any use of or reliance on documentation may be required. the information contained herein. ®CI Funds, the CI Funds logo design, are registered trade marks of CI Mutual Funds Inc. Simplified Prospectus: The Simplified Prospectus and Annual Information Form of a Fund are ®Clarica is a registered trade mark of Sun Life Assurance Company of Canada. renewed annually. The Manager would be pleased to provide, without charge, the most recent Simplified Prospectus upon request to its Toronto office.

2003 Annual Report as at December 31, 2003 – 77 – CLARICAMFANN CLARICAMFANN 04/04-E

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