Imperial Overseas Equity Pool. Interim Management Report of Fund Performance

Transcription

1 Imperia Overseas Equity Poo Interim Management Report of Fund Performance for the period ended June 30, 2015 A figures are reported in Canadian doars uness otherwise noted This interim management report of fund performance contains financia highights but does not contain either the compete interim or annua financia statements of the investment fund If you have not received a copy of the interim financia reports with this interim management report of fund performance, you can get a copy of the interim or annua financia statements at your request, and at no cost, by caing us to-free at , by writing to us at CIBC, 18 York Street, Suite 1300, Toronto, Ontario, M5J 2T8, or by visiting cibccom/mutuafunds or the SEDAR website at sedarcom Unithoders may aso contact us using one of these methods to request a copy of the investment fund s proy voting poicies and procedures, proy voting discosure record, or quartery portfoio discosure Management Discussion of Fund Performance Resuts of Operations American Century Investment Management, Inc (ACI), Causeway Capita Management LLC (Causeway Capita), Pyramis Goba Advisors, LLC (Pyramis), INTECH Investment Management LLC (INTECH), Pzena Investment Management, Inc (Pzena) provide investment advice and investment management services to Imperia Overseas Equity Poo (the Poo) These portfoio sub-advisors use different investment styes and the percentage of the Poo aocated to each portfoio sub-advisor wi change from time to time ACI Overseas Equity Growth At a Reasonabe Price (GARP), approimatey 25% Causeway Capita Overseas Equity Large-Cap Vaue, approimatey 25% Pyramis Overseas Equity Large-Cap Growth, approimatey 20% INTECH Overseas Equity Core, approimatey 15% Pzena Overseas Equity Vaue, approimatey 15% The commentary that foows provides a summary of the resuts of operations for the period ended June 30, 2015 A doar figures are epressed in thousands, uness otherwise indicated The Poo's net asset vaue increased by 27% during the period, from $177,893 as at December 31, 2014 to $226,708 as at June 30, 2015 Net saes of $22,550 and positive investment performance resuted in an overa increase in net asset vaue Cass A units of the Poo posted a return of 147% for the period The Poo s benchmark, the MSCI EAFE Inde (the benchmark), returned 141% for the same period The Poo s return is after the deduction of fees and epenses, unike the benchmark Internationa stock markets benefited from positive economic data for most of the first haf of 2015 However, concerns about Greece s abiity to repay its sovereign debt had a negative impact on markets at the end of the period The divergence of monetary poicy among the word s centra banks aso affected market performance, with Japan and China maintaining stimuus programs, whie other centra banks (incuding Thaiand, South Korea, Austraia, New Zeaand and Norway) announced additiona rate cuts In genera, non-us stocks outperformed US stocks In Europe, the commencement of the European Centra Bank s (ECB) asset-purchase program contributed to positive equity market performance The Japanese equity market benefited from stronger-than-epected gross domestic product growth The strongest-performing markets over the period were Denmark, Japan and Ireand The weakest-performing markets were New Zeaand (the ony country to post a negative return), Austraia and Spain The consumer discretionary, heath care and teecommunication services sectors posted the strongest returns Whie aso posting positive returns, the utiities, energy and materias sectors agged the tota return of the benchmark In the Overseas Equity GARP component, from a geographic perspective, strong stock seection in Itay contributed to performance Significant individua contributors incuded Murata Manufacturing Co Ltd, which benefited from strength in the smartphone market PSA Peugeot Citroën SA aso contributed to performance, as the company benefited from an acceerating recovery in the automobie industry and improved margins Conversey, investments in the UK detracted from performance Individua detractors from performance incuded Associated British Foods PLC and Baidu Inc Associated British Foods share price decined amid negative currency issues Baidu eperienced weakness in its margin profie as a resut of epanding into non-core businesses In the Overseas Equity Large-Cap Vaue component, hodings in the UK and Switzerand, as we as overweight eposure to Hong Kong, contributed to performance Stock seection in the energy sector and in the banks, transportation, consumer services, and commercia and professiona services industry groups aso contributed to performance Significant individua contributors to performance incuded UBS Group AG, which reported strong earnings in the second quarter with higher-than-epected net profits, KDDI Corp, which benefited from a

2 Imperia Overseas Equity Poo change in management focus, and China Mobie Ltd, which continued to profit from a change in industry reguations Conversey, hodings in Japan, France and the Netherands detracted from performance Security seection in the automobies and auto components, capita goods, consumer durabes and appare, technoogy hardware and equipment, and media industry groups aso detracted from performance Significant individua detractors incuded Hyundai Motor Co Ltd, which met with concern over weak Chinese auto saes, GDF Suez, whose stock performance was severey affected by the weaker euro, and Aryzta AG, which had weaker saes as a resut of the devauation of the Swiss franc versus the euro During the period, Causeway Capita added SSE PLC, Vokswagen AG, Compagnie Financiere Richemont SA Registered, Aryzta AG and Caiabank SA to the component, and increased hodings in East Japan Raiway Co and GaoSmithKine PLC The sub-advisor eiminated hodings in Petrofac Ltd, Sembcorp Industries Ltd, Roya Dutch She PLC, Ream PLC, Sembcorp Marine Ltd, Rio Tinto PLC and BG Group PLC The sub-advisor decreased hodings in Novartis AG, Givaudan SA, Internationa Consoidated Airines Group SA, RELX NV, Shin-Etsu Chemicas Co Ltd, China Mobie and UBS In the Overseas Equity Large-Cap Growth component, security seection in the financias sector and in other European hodings contributed significanty to performance The share price of these hodings rose in response to the ECB s asset-purchase program Security seection in the materias sector contributed moderatey to performance Individua contributors to performance incuded ING Groep NV The bank s share price appreciated as decreasing costs and rising interest income resuted in stronger-than-epected earnings Aso contributing to performance was Murata Manufacturing Conversey, security seection in Japan moderatey detracted from performance Security seection in the energy and teecommunication services sectors aso moderatey detracted from performance Individua detractors from performance incuded overweight eposure to Roya Dutch She and hodings in GDF Suez and Ryman Heathcare Ltd Roya Dutch She s share price decined as a resut of oi-price voatiity GDF Suez s share price aso decined after it reported ower-than-epected earnings as a resut of oi-price voatiity Ryman Heathcare s share price decined as a resut of negative investor sentiment Pyramis added BG Group PLC and Zurich Insurance Services AG to the component BG Group has entered into a merger dea with Roya Dutch She The sub-advisor beieves this has the potentia to increase market share and reduce costs for both firms The sub-advisor increased the hoding in Mitsubishi UFJ Financia Group Inc, as the hoding provides eposure to one of Japan s argest financia groups The sub-advisor eiminated the hoding in Aianz AG, in favour of other more attractive investment opportunities In the Overseas Equity Core component, overweight eposure to Japan contributed to performance Underweight eposure to the energy sector, one of the worst-performing sectors, and stock seection within the consumer discretionary, heath care and consumer stapes sectors, aso contributed to performance Underweight eposure to mega-capitaization stocks and overweight eposure to sma-cap stocks aso contributed as sma-cap stocks outperformed arger-cap stocks on average The most significant individua contributors to performance incuded overweight hodings in Mabuchi Motor Co Ltd, Meiji Hodings Co Ltd and Pandora AS Conversey, overweight eposure to the utiities sector, the worst-performing sector, detracted from performance Stock seection within the teecommunication services and financias sectors aso detracted from performance Significant individua detractors from performance incuded underweight hodings in Novartis AG and Mitsubishi UFJ Financia Group Inc, as we as an overweight hoding in Brother Industries Ltd In the Overseas Equity Vaue component, from a country perspective, hodings in Switzerand and Germany contributed to performance In terms of sectors, hodings in the financias and teecommunication services sectors contributed to performance Significant individua contributors to performance incuded UBS and Travis Perkins PLC UBS benefited as the Swiss franc setted a itte ower, as we as from positive news about its dividend poicies and improvements in its investment banking earnings prospects Travis Perkins, a UK buiding materias suppier, benefited from improved residentia buiding data in the UK From a country perspective, eposure to the US detracted from performance, as did the component s French hodings In terms of sectors, the component s industrias hodings and its overweight eposure to the energy sector detracted from performance Individua detractors incuded stee pipe maker Vaourec SA, which was the argest individua detractor The company posted disappointing financia resuts with weak revenues driving a sharp decrease in profits Pzena added Fujitsu Ltd, Diahatsu Motor Co Ltd, Compa Eectronics Inc and Iida Group Hodings Co Ltd to the component The sub-advisor beieves Fujitsu wi benefit from current restructuring Daihatsu has strong market share, Compa Eectronics was recenty seected as a manufacturing partner for Appe Inc s ipad Mini, and Iida Group is the eading company in its market segment and is 13 times bigger than its net argest competitor The sub-advisor increased its Japanese eposure by adding to hodings in Honda Motor Co Ltd The sub-advisor eiminated hodings in Cap Gemini SA, Akzo Nobe NV, PartnerRe Ltd, Reed Esevier PLC and Cariion PLC as each company s share prices reached the sub-advisor s estimate of fair vaue The sub-advisor decreased hodings in Travis Perkins and Shin-Etsu on share price strength Recent Deveopments During the period, there were no events or activities that had a materia impact on the Poo Reated Party Transactions Canadian Imperia Bank of Commerce (CIBC) and its affiiates have the foowing roes and responsibiities with respect to the Poo, and receive the fees described beow in connection with their roes and responsibiities 2

3 Imperia Overseas Equity Poo Manager CIBC is the Manager of the Poo CIBC receives management fees with respect to the day-to-day business and operations of the Poo The Poo pays the Manager a maimum annua management fee rate of 025% of the net asset vaue of the Poo, as described in the section entited Management Fees Trustee CIBC Trust Corporation (CIBC Trust), a whoy-owned subsidiary of CIBC, is the trustee (the Trustee) of the Poo The Trustee hods tite to the property (cash and securities) of the Poo on behaf of its unithoders Portfoio Advisor The portfoio advisor provides, or arranges to provide, investment advice and portfoio management services to the Poo CAMI, a whoy-owned subsidiary of CIBC, is the portfoio advisor (the Portfoio Advisor) of the Poo Portfoio Sub-Advisor CAMI has retained ACI to provide investment advice and portfoio management services to the Poo Athough not an affiiate, CIBC currenty owns a 41% equity interest in ACI A portion of the portfoio advisory fees CAMI receives from the Manager wi be paid to ACI Discretionary Managers As at the date of this report, units of the Poo are offered through discretionary investment management services provided by certain subsidiaries of CIBC (coectivey, the Discretionary Managers) The Discretionary Managers may incude CIBC Trust and CAMI The Discretionary Managers arrange to purchase, switch, and redeem units of the Poo on behaf of their cients who have entered into discretionary investment management agreements with one of the Discretionary Managers The Discretionary Managers are the registered unithoders of the Poos for the purposes of receiving a unithoder materias and having the right to vote a proies with respect to units of the Poo Units of the Poo are aso offered to investors in connection with certain products offered by affiiated deaers pursuant to the terms of the account agreements governing such products There are no compensation arrangements with these deaers in respect of the sae of units of the Poo However, CIBC Trust receives fees from its cients for offering discretionary management services and, from these fees, CIBC Trust may pay affiiated deaers and other CIBC members for services provided in connection with the cient s discretionary investment managed account, which may hod units of the Poo CIBC receives fees from CIBC Trust for the services of CIBC advisors that assist investors with opening discretionary investment management accounts where CIBC Trust acts as the Discretionary Manager and for acting as the investors ongoing reationship manager CIBC is responsibe for the remuneration of the CIBC advisors and may pay the CIBC advisors out of such fees Further detais of the arrangement between CIBC and CIBC Trust may be found in the discretionary investment management agreement between CIBC Trust and investors CAMI receives fees from their cients for offering discretionary investment managed accounts, which may hod units of the Poo, and may pay a portion of such fees to their investment counseors Brokerage Arrangements and Soft Doars The Portfoio Advisor and any portfoio sub-advisors make decisions, incuding the seection of markets and deaers and the negotiation of commissions, with respect to the purchase and sae of portfoio securities, certain derivative products (incuding futures) and the eecution of portfoio transactions Brokerage business may be aocated by the Portfoio Advisor and any portfoio sub-advisors to CIBC Word Markets Inc (CIBC WM) and CIBC Word Markets Corp, each a subsidiary of CIBC CIBC WM and CIBC Word Markets Corp may aso earn spreads on the sae of fied income and other securities and certain derivative products (incuding forwards) to the Poo A spread is the difference between the bid and ask prices for a security in the appicabe marketpace, with respect to the eecution of portfoio transactions The spread wi differ based upon various factors such as the type and iquidity of the security Deaers, incuding CIBC WM and CIBC Word Markets Corp, may furnish goods and services, other than order eecution, to the Portfoio Advisor and any portfoio sub-advisors in partia echange for processing trades through them (referred to in the industry as soft doar arrangements) These goods and services are paid for with a portion of the brokerage commissions and assist the Portfoio Advisor and any portfoio sub-advisors with investment decision-making services for the Poo or reate directy to the eecution of portfoio transactions on behaf of the Poo As per the terms of the portfoio sub-advisory agreement, such soft doar arrangements are in compiance with appicabe aws In addition, the Manager may enter into commission recapture arrangements with certain deaers with respect to the Poo Any commission recaptured wi be paid to the Poo During the period, the Poo did not pay any brokerage commissions or other fees to CIBC WM or CIBC Word Markets Corp Spreads associated with fied income and other securities are not ascertainabe and, for that reason, cannot be incuded when determining these amounts Poo Transactions The Poo may enter into one or more of the foowing transactions (the Reated Party Transactions) in reiance on the standing instructions issued by the Independent Review Committee (IRC): invest in or hod equity securities of CIBC or issuers reated to a portfoio sub-advisor; invest in or hod non-echange-traded debt securities of CIBC or an issuer reated to CIBC in a primary offering and in the secondary market; invest in or hod debt securities of CIBC or issuers reated to a portfoio sub-advisor purchased in the secondary market; 3

4 Imperia Overseas Equity Poo make an investment in the securities of an issuer for which CIBC WM, CIBC Word Markets Corp, or any affiiate of CIBC (a Reated Deaer) acts as an underwriter during the offering of the securities at any time during the 60-day period foowing the competion of the offering of such securities (in the case of a private pacement offering, in accordance with the eemptive reief order granted by the Canadian securities reguatory authorities and in accordance with the poicies and procedures reating to such investment); purchase equity or debt securities from or se them to a Reated Deaer, where it is acting as principa; undertake currency and currency derivative transactions where a Reated Deaer is the counterparty; and purchase securities from or se securities to another investment fund or a managed account managed by the Manager or an affiiate of the Manager At east annuay, the IRC reviews the Reated Party Transactions for which they have issued standing instructions The IRC is required to advise the Canadian securities reguatory authorities if it determines that an investment decision was not made in accordance with conditions of its approva Custodian CIBC Meon Trust Company is the custodian of the Poo (the Custodian) The Custodian hods a cash and securities for the Poo and ensures that those assets are kept separate from any other cash or securities that the Custodian might be hoding The Custodian aso provides other services to the Poo incuding record-keeping and processing of foreign echange transactions The Custodian may hire sub-custodians for the Poo The fees and spreads for services of the Custodian directy reated to the eecution of portfoio transactions initiated by CAMI as the Portfoio Advisor are paid by CAMI and/or deaer(s) directed by CAMI, up to the amount of the credits generated under soft doar arrangements from trading by CAMI on behaf of the Poo during that month A other fees and spreads for the services of the Custodian are paid by the Manager and charged to the Poo on a recoverabe basis CIBC owns a 50% interest in the Custodian Service Provider CIBC Meon Goba Securities Services Company (CIBC GSS) provides certain services to the Poo, incuding securities ending, fund accounting and reporting, and portfoio vauation Such servicing fees are paid by the Manager and charged to the Poo on a recoverabe basis CIBC indirecty owns a 50% interest in CIBC GSS 4

5 Imperia Overseas Equity Poo Financia Highights The foowing tabes show seected key financia information about the Poo and are intended to hep you understand the Poo s financia performance for the period ended June 30, 2015 and December 31 of any other period(s) shown The Poo's Net Assets per Unit¹ - Cass A Units Net Assets, beginning of period $ 1591 $ 1598 $ 1214 $ 1045 $ 1189 $ 1150 Increase (decrease) from operations: Tota revenue $ 034 $ 054 $ 040 $ 034 $ 039 $ 027 Tota epenses (007) (013) (011) (003) (003) (003) Reaized gains (osses) for the period (016) Unreaized gains (osses) for the period 149 (177) (142) 021 Tota increase (decrease) from operations 2 $ 226 $ 032 $ 412 $ 203 $ (101) $ 061 Distributions: From income (ecuding dividends) $ $ 041 $ 029 $ 042 $ 041 $ 023 From dividends From capita gains Return of capita Tota Distributions 3 $ $ 041 $ 029 $ 042 $ 041 $ 023 Net Assets, end of period $ 1825 $ 1591 $ 1598 $ 1214 $ 1045 $ This information is derived from the Poo's audited annua and unaudited interim financia statements The Poo adopted Internationa Financia Reporting Standards (IFRS) on January 1, 2014 Previousy, the Poo prepared its financia statements in accordance with Canadian Generay Accepted Accounting Principes (GAAP) as defined in Part V of the CPA Canada Handbook Under Canadian GAAP, the Poo measured fair vaues of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for ong positions and ask prices for short positions As such, the net assets per unit figure presented in the financia statements may differ from the net asset vaue cacuated for fund pricing purposes An epanation of these differences can be found in the notes to the financia statements issued prior to January 1, 2014 Upon adoption of IFRS, the Poo measures the fair vaue of its investments by using the cose market prices, where the cose market price fas within the bid-ask spread As such, the Poo's accounting poicies for measuring the fair vaue of investments in the financia statements are consistent with those used in measuring the net asset vaue for transactions with unithoders Accordingy, the opening net asset figure as at January 1, 2013 was restated to refect accounting poicy adjustments made in accordance with IFRS A figures presented for periods prior to January 1, 2013 were prepared in accordance with Canadian GAAP and subsequent thereto were prepared in accordance with IFRS 2 Net assets and distributions are based on the actua number of units outstanding at the reevant time The tota increase (decrease) from operations is based on the weighted average number of units outstanding during the period 3 Distributions were paid in cash, reinvested in additiona units of the Poo, or both Ratios and Suppementa Data - Cass A Units Tota Net Asset Vaue (000s) 4 $ 226,708 $ 177,893 $ 148,233 $ 79,521 $ 111,322 $ 167,371 Number of Units Outstanding 4 12,419,698 11,181,771 9,274,365 6,548,109 10,648,935 14,078,570 Management Epense Ratio 5 022%* 022% 030% 029% 027% 025% Management Epense Ratio before waivers or absorptions 6 049%* 057% 070% 084% 056% 057% Trading Epense Ratio 7 018%* 030% 028% 026% 021% 020% Portfoio Turnover Rate % 12203% 6344% 6925% 4463% 5415% Net Asset Vaue per Unit $ 1825 $ 1591 $ 1598 $ 1214 $ 1045 $ 1189 * Ratio has been annuaized 4 This information is presented as at June 30, 2015 and December 31 of the period(s) shown 5 Management epense ratio is based on the tota epenses of the poo (ecuding commissions and other portfoio transaction costs), incurred by or aocated to a cass of units for the period shown, epressed as an annuaized percentage of the daiy average net asset vaue of that cass during the period 6 The decision to waive and/or absorb management fees and operating epenses is at the discretion of the Manager The practice of waiving and/or absorbing management fees and operating epenses may continue indefinitey or may be terminated at any time without notice to unithoders 7 The trading epense ratio represents tota commissions and other portfoio transaction costs before income taes epressed as an annuaized percentage of the daiy average net asset vaue during the period Spreads associated with fied income securities trading are not ascertainabe and, for that reason, are not incuded in the trading epense ratio cacuation 8 The portfoio turnover rate indicates how activey the portfoio advisor and/or portfoio sub-advisor manages the portfoio investmentsa portfoio turnover rate of 100% is equivaent to a fund buying and seing a of the securities in its portfoio once in the course of the period The higher a portfoio turnover rate in a period, the greater the trading costs payabe by a fund in the period, and the greater the chance of an investor receiving taabe capita gains in the year There is not necessariy a reationship between a high turnover rate and the performance of a fund 5

6 Imperia Overseas Equity Poo Management Fees The Poo, either directy or indirecty, pays an annua management fee to CIBC to cover the costs of managing the Poo Management fees are based on the net asset vaue of the Poo and are cacuated daiy and paid monthy Management fees are paid to CIBC in consideration for providing, or arranging for the provision of, management, distribution, and portfoio advisory services Advertising and promotiona epenses, office overhead epenses, traiing commissions, and the fees of the portfoio sub-advisor(s) are paid by CIBC out of the management fees received from the Poo The Poo is required to pay appicabe taes on the management fees paid to CIBC Refer to the Simpified Prospectus for the maimum annua management fee rate For the period ended June 30, 2015, 100% of the management fees coected from the Poo was attributabe to genera administration, investment advice, and profit Past Performance The performance data provided assumes reinvestment of distributions ony and does not take into account saes, redemption, distribution, or other optiona charges payabe by any unithoder that woud have reduced returns Past performance does not necessariy indicate how a fund wi perform in the future The Poo s returns are after the deduction of fees and epenses See the section entited Financia Highights for the management epense ratio Year-by-Year Returns The bar chart shows the annua performance of the Poo for each of the periods shown, and iustrates how the performance has changed from period to period The bar chart shows, in percentage terms, how an investment made on January 1 woud have increased or decreased by December 31, uness otherwise indicated Cass A Units a 2015 return is for the period from January 1, 2015 to June 30,

7 Imperia Overseas Equity Poo Summary of Investment Portfoio (as at June 30, 2015) The summary of investment portfoio may change due to ongoing portfoio transactions of the investment fund A quartery update is avaiabe by visiting cibccom/mutuafunds The Top Positions tabe shows a fund s 25 argest positions For funds with fewer than 25 positions in tota, a positions are shown % of Net Asset Portfoio Breakdown Vaue Japan 198 United Kingdom 194 Other Equities 148 France 114 Switzerand 113 Germany 74 Netherands 59 Hong Kong 31 Cash 27 Itay 23 Austraia 21 Other Assets, ess Liabiities -02 % of Net Asset Top Positions Vaue Cash 27 Roche Hoding AG Genusscheine 20 Novartis AG, Registered 19 Tota SA 15 UBS Group AG 12 Barcays PLC 12 Sanofi SA 11 Vokswagen AG, Preferred 11 KDDI Corp 11 Bayer AG 11 Schneider Eectric SE 11 Nesté SA, Registered, Series 'B' 10 Akzo Nobe NV 10 Vodafone Group PLC 10 British American Tobacco PLC 10 Reed Esevier NV 10 Toyota Motor Corp 09 China Mobie Ltd 09 Aviva PLC 09 ING Groep NV 09 KBC Groep NV 09 GaoSmithKine PLC 09 Anheuser-Busch InBev NV 08 Credit Suisse Group AG 08 Carniva PLC 08 7

8 The management report of fund performance may contain forward-ooking statements Forward-ooking statements incude statements that are predictive in nature, that depend upon or refer to future events or conditions, or that incude words such as epects, anticipates, intends, pans, beieves, estimates, or other simiar wording In addition, any statements that may be made concerning future performance, strategies, or prospects and possibe future actions taken by the fund, are aso forward-ooking statements These statements invove known and unknown risks, uncertainties, and other factors that may cause the actua resuts and achievements of the fund to differ materiay from those epressed or impied by such statements Such factors incude, but are not imited to: genera economic, market, and business conditions; fuctuations in securities prices, interest rates, and foreign currency echange rates; changes in government reguations; and catastrophic events We do not undertake, and specificay discaim, any obigation to update or revise any forward-ooking statements, whether as a resut of new information, future deveopments, or otherwise prior to the reease of the net management report of fund performance

9 Imperia Poos CIBC 18 York Street, Suite 1300 Toronto, Ontario M5J 2T Website cibccom/mutuafunds