Connor, Clark & Lunn Arrowstreet Capital Ltd. (CCLA) founded in November of 2001, is jointly owned by Connor, Clark & Lunn Investment Management Ltd. and Boston based Arrowstreet Capital, L.P. The mission of CCLA is to serve the global investment needs of Canadian investors and deliver value added returns in a consistent, risk controlled manner. At December 31, 2002 CCLA had $1,549 million under administration.

Within CCLA, Connor, Clark & Lunn focuses on U.S. equity management and Arrowstreet Capital, L.P., focuses on international equities. By combining the research and global investment management skills of Connor, Clark & Lunn and Arrowstreet Capital, L.P., the firm delivers a distinct investment style. The CCLA approach aims to consistently add value regardless of whether growth or value investing is in fashion.

Distinguishing Features:

• Core global approach that capitalizes on inefficiencies at the country, sector and stock level, viewed from both a bottom-up and top-down perspective

• No style bias as we do not limit ourselves to investment factors associated with any one particular investment approach such as growth or value

• Controlled risk by ensuring that investment decisions are based on a diversified set of factors

Investment Philosophy
CCLA believes it can add value to client benchmarks by employing a disciplined process that exploits behavioural and informational inefficiencies. Behavioural inefficiencies result from the systematic “mistakes” made by investors including the tendency for investors to overreact, to chase past returns and to avoid regret. Informational inefficiencies result from the market’s inability to fully process new information as it arrives to the marketplace. An example of this is the market’s slow recognition of revisions in analysts’ earnings forecasts, particularly among smaller companies and those located in less developed markets.

Inefficiencies can be better exploited if identified and measured across multiple dimensions. For example, price momentum can be measured at a country level, a sector level and an individual stock level. While individual market inefficiencies measured across single dimensions can sometimes diminish or be arbitraged away, CCLA can increase the likelihood of finding compelling opportunities at any point in time, by evaluating opportunities along multiple dimensions.

While the precise nature of inefficiencies will evolve over time, their underlying causes are persistent enough that they can provide regular sources for adding value. Moreover, by sensibly using quantitative tools to measure, refine, and exploit these inefficiencies, CCLA is able to adapt its process as opportunities change.