Investors Canadian Money Market Fund

Transcription

1 Annual Management Report of Fund Performance FOR THE PERIOD ENDED MARCH, 06 CAUTION REGARDING FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Fund, including its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance. This annual Management Report of Fund Performance contains financial highlights, but does not contain the complete audited annual financial statements of the investment fund. If the audited annual financial statements of your investment fund did not accompany the mailing of this report, you may receive a copy of them, at your request, and at no cost, by calling ( if you live in Québec) or by writing to us at 7 Portage Avenue, Winnipeg, Manitoba, RB H5 (00, boulevard Robert-Bourassa, bureau 000, Montréal (Québec), HA A6 if you live in Québec), or by visiting our website at or SEDAR at Securityholders may also use one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. Every effort has been made to ensure that the information contained in this Report is accurate as of March, 06 (except when stated otherwise), however, the Fund cannot guarantee the accuracy or the completeness of this material. Please refer to the Fund s Prospectus and audited annual financial statements for more information. References to Consultant or Consultants mean Representative or Representatives in Québec. For current net asset values per security for the Fund and for more recent information on general market events, please visit our website at CAUTION REGARDING FUTURE PERFORMANCE Sales commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Fund s offering documents before investing. The indicated rates of return are the historical annual compounded total returns including changes in security value and reinvestment of all distributions (except for fee rebates) and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any investor that would have reduced returns. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated. Copyright Investors Group Inc. 06 Trademarks owned by IGM Financial Inc. and licensed to its subsidiary corporations.

2 Management Discussion of Fund Performance This management discussion of Fund performance presents views of the portfolio management team about the significant factors and developments during the past year that have affected the Fund s performance and outlook. Please read the caution regarding forward-looking statements located on the first page of this document. Investment Objective and Strategies The Fund aims to provide secure current income, capital stability and liquidity by investing primarily in high-quality, short-term Canadian money market investments. To achieve the Fund s investment objective, the portfolio management team selects investments that include: short-term debt issued or guaranteed by the federal, provincial or municipal government(s) including treasury bills; promissory notes; non-government obligations issued by chartered banks, including bankers acceptances, term deposits, floating rate notes and assetbacked securities; and commercial paper issued by corporations, including floating rate notes and asset-backed securities. Investments in money market securities will have terms to maturity of 65 days or less, and the Fund s portfolio will have a dollar-weighted average term to maturity not exceeding 90 days (based on the interest rate reset date for any short-term notes), and not more than 80 days (based on the actual maturity date of any short-term notes). At least 95% of the Fund s portfolio will consist of cash and near-cash investments denominated in Canadian currency. Generally speaking, it is the Fund s intention that its investment in foreign securities will range from 0% to 0% of its assets, but the Fund may invest up to 50% of its assets in foreign securities from time to time. Risk The overall level of risk of investing in the Fund remains as discussed in the Prospectus, and is not expected to have significantly increased or decreased as a result of operations during the period. Accordingly, the Fund also remains suitable for the same investors as discussed in the Prospectus. Results of Operations CHANGES IN NET ASSETS The Fund s net assets increased by 99.% during the period to $. billion. This change was comprised primarily of gains from operations of $5. million an increase of $5.8 million due to a merger with another fund (see Other Developments), and an increase of $68. million due to net securityholder activity. This level of securityholder activity relative to net assets is unusual, and is primarily due to subscription activity by other funds that invest into this Fund. The Manager does not believe that net securityholder activity had a significant impact on the Fund s performance. FEES AND EXPENSES The management expense ratios (MERs) for all series are lower than the MERs for the -month period ended March, 05. During both periods, Investors Group absorbed a portion of the Fund s management fees and/or operating expenses to ensure returns remained competitive. However, the amount absorbed in the most recent period is greater, relative to average assets, than the amount absorbed in the prior period. As a result, the MERs net of waivers or absorptions are lower in the current period. Total expenses paid vary period to period mainly as a result of changes in average assets in each series. Average net assets of the Fund for the period were $. billion, an increase of over 80% compared to the period ended March, 05. INVESTMENT PERFORMANCE For the returns of all series and for longer-term performance of the Fund, see the Past Performance section of this report. Performance will vary by series primarily because fees and expenses may differ between series, or because securities of a series were not issued and outstanding for the entire reporting period. See Series Information for the annual expense rates for each series. The Bank of Canada last changed the key target interest rate in July 05, when it was cut by 0.5% to 0.50%. The Canadian economy rebounded somewhat in the third and fourth quarters of 05 when the Bank of Canada opted to stand pat on interest rates, waiting for potential fiscal stimulus from the recent federal budget in March. Three-month treasury-bill yields dropped to a low of 0.8% in January on initial expectations of a cut, but by the end of the period, yields were back up to 0.5%. On a year-over-year basis, three-month treasury-bill yields were down 0.0%. Other sectors of the short-term market such as provincial and bank securities were down only 0.0% to 0.06% to levels of 0.6% and 0.8% respectively. The Fund s investment in securities guaranteed by both federal and provincial governments was maintained at 7% and the corporate financial sector remained at 7%. Investments in Canadian bank securities constituted the largest portion within the corporate sector. Investment in one- to two-year Canadian bank floating rate notes over the period helped to provide a higher level of overall yield for the Fund. The Fund continued to maintain a high level of credit quality. The average term to maturity of the Fund ranged from 55 to 86 days during the last nths, and at the end of March, the average term was at the high end of the range, closer to the maximum of 9 days. Recent Developments (BASED ON INFORMATION AS AT APRIL, 06) Recent GDP figures for January showed a marked improvement with the year-over-year release now at.5%, better than most participants had expected, and which bodes well for overall first-quarter growth. Also on the plus side, the employment report for March was well ahead of market expectations with pronounced growth in full-time positions. The labour force survey is known to be volatile but the current trend is better than expected, considering the slowdown in the commodities sector. The Fund looks to maintain its weighting in governments and corporate securities around current levels. The average term of the Fund is expected to remain above 80 days going forward. Other Developments RECENT MERGER Investors Premium Money Market Fund was merged into this Fund after the close of business on May 5, 05. Aside from increasing the size of the Fund, the merger is not a material transaction for the Fund.

3 Related Party Transactions I.G. Investment Management, Ltd. is the Manager, Trustee and Portfolio Advisor of the Fund. The Fund is offered through the Consultants of Investors Group Financial Services Inc. and Investors Group Securities Inc., together referred to as the Distributors. The Manager, Portfolio Advisor, Distributors and Trustee are, indirectly, wholly owned subsidiaries of IGM Financial Inc. The Fund paid a management fee to the Manager and Portfolio Advisor for management and portfolio advisory services (see Management Fees). The Fund also paid the Manager an administration fee and in exchange the Manager paid the operating costs and expenses of the Fund, except for certain specified costs. The Trustee is responsible for the overall direction and management of the affairs of the Fund. The Fund paid the Trustee a fee for its services. See Series Information for the annual rates paid by each series (as a percent of average net assets) for these fees. During the period, Investors Group reimbursed the Fund so that the Fund returns remained competitive. There is no assurance that fees or expenses will be waived in the future. Certain other investment funds distributed by Investors Group and other qualified investors may invest in Series P or S of this Fund. All such transactions in the Fund are executed in accordance with standing instructions approved by the Investors Group Funds Independent Review Committee and based on the net asset value per security determined in accordance with the stated policies of the Fund on each transaction day. No commissions or other transaction fees were paid by the Fund in relation to these transactions. As at March, 06, these series comprised approximately.% of the Fund s net assets. IGM Financial Inc. maintains a defined benefit employee pension plan and is the pension plan sponsor. The pension plan is a separate trust and its assets are invested in various mutual funds managed by the Manager. As at March, 06, the pension plan held securities valued at $0,90,000 in the Premium Series of the Fund. Investors Group has an investment in the Fund which, at March, 06, was $,00 for Series RDSP. Management Fees The Fund pays Investors Group a management fee. The management fee paid by each series is calculated as a percentage of the net asset value of the series, as of the close of business on each business day (see Series Information for rates payable by each series). Generally management fees are used in part to pay costs incurred in providing investment advisory and management services and distribution-related services provided by the Distributors. For retail series (i.e. excluding Series P and S), approximately 50% of management fees payable during the period was waived by the Manager to ensure returns remained competitive. The balance of approximately 50% was used to pay both distribution-related services and investment advisory and management services. This may vary by series.

4 Summary of Investment Portfolio AT MARCH, 06 The largest positions of the Fund (up to 5) at the end of the period, and the major asset classes in which the Fund was invested, are indicated below. The Fund held no short positions at the end of the period. This summary of investment portfolio may change due to ongoing portfolio transactions. The Fund s summary of investment portfolio will be updated as at the end of the next quarter. Please see the front page for information about how it can be obtained. Summary of Top 5 Long Positions % of net assets Government of Canada 0.8% Government of Canada 0.8% Government of Canada 0.7% Government of Canada 0.% Government of Canada 0.50% National Bank of Canada F/R Series MTN.8 Canadian Imperial Bank of Commerce F/R Royal Bank of Canada F/R Series DPNT.8 The Bank of Nova Scotia 0.77% Province of Alberta 0.6% Province of Quebec 0.6% Royal Bank of Canada 0.5% Government of Canada 0.7% Government of Canada 0.50% Government of Canada 0.% Province of Quebec 0.6% Province of British Columbia 0.6% Bank of Montreal F/R Series. Bank of Montreal F/R Series DPNT. Canadian Imperial Bank of Commerce F/R Series DPNT. Canadian Imperial Bank of Commerce F/R Province of Manitoba 0.6% Province of Saskatchewan 0.6% Province of Saskatchewan 0.6% The Toronto-Dominion Bank F/R Summary of Composition of the Portfolio PORTFOLIO ALLOCATION % of net assets Money Market Securities 8.0 Bonds 8.8 Cash 0. Other net assets (liabilities) 0. Total 00.0 SECTOR ALLOCATION Provincial Governments 7. Corporate 7. Federal Government 5. Cash 0. Other net assets (liabilities) CREDIT RATING R (High) 7.6 R (Mid) Series Information AT MARCH, 06 Inception Management Service Administration Trustee Series date fee (%) fee (%) fee (%) fee (%) Classic Series* n/a Series RDSP /0/ Premium Series 05/5/ Series P 05/0/ Series S 07/5/ Inception dates of the series are shown if within 0 years. For details see Related Party Transactions. Securities are only available for purchase by other investment funds or other qualified investors. * Classic Series was formerly known as Mutual Fund Units.

5 Past Performance It is important to remember that past performance doesn t necessarily indicate future performance. The returns presented below: assume that all distributions, except for fee rebates, are reinvested into the Fund; do not include sales charges, income taxes, optional expenses or advisory fees payable directly by securityholders in certain series, that reduce returns; show performance based on Canadian dollar returns; and show performance for each of the past 0 financial years, or since the series started. Financial years are as follows: to 008 nths ended September six months ended March - 00 to 06 nths ended March Inception dates of the series within these periods are shown in Series Information. Performance during these periods may have been impacted by the following events: During some performance measurement periods, certain fees or expenses may have been waived or absorbed by the Manager. There is no assurance that fees will be waived in the future. In October 007, the Fund began to pay an administration fee. In exchange, the Manager began to pay certain operating costs and expenses which previously had been paid by the Fund. Year-by-Year Returns These bar charts show how much an investment in securities made on the first day of each financial year would have increased or decreased by the end of the respective period. For the first year of a series, the percentage shown will be the actual return of the series from its inception date. The charts illustrate how the Fund s performance has changed over time. CLASSIC SERIES % mo. SERIES RDSP % mo. PREMIUM SERIES % 0. 6 mo. SERIES P % mo. SERIES S % mo.

6 Annual Compound Returns The following table presents the historical annual compound returns for each series for the periods shown ending March, 06. For a discussion of the Fund s recent performance see Results of Operations. Since (%) yr yrs 5 yrs 0 yrs inception Classic Series n/a Series RDSP n/a n/a 0. Premium Series n/a n/a n/a n/a 0. Series P n/a n/a n/a n/a 0.6 Series S n/a 0.9

7 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five financial years. Footnotes are presented after Ratios and Supplemental Data. Net Assets per Security CLASSIC SERIES SERIES RDSP (in $) Net assets, beginning of period Increase (decrease) from operations: (in $) Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.0) (0.0) (0.0) (0.0) (0.0) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations Distributions: From net investment income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets at period end Total revenue Total expenses (0.0) (0.0) (0.0) (0.0) - Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations Distributions: From net investment income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets at period end PREMIUM SERIES (in $) Net assets, beginning of period 0.00 n/a n/a n/a n/a Increase (decrease) from operations: Total revenue 0.06 n/a n/a n/a n/a Total expenses (0.0) n/a n/a n/a n/a Realized gains (losses) for the period - n/a n/a n/a n/a Unrealized gains (losses) for the period - n/a n/a n/a n/a Total increase (decrease) from operations 0.0 n/a n/a n/a n/a Distributions: From net investment income (excluding dividends) (0.0) n/a n/a n/a n/a From dividends - n/a n/a n/a n/a From capital gains - n/a n/a n/a n/a Return of capital - n/a n/a n/a n/a 5 Total annual distributions (0.0) n/a n/a n/a n/a Net assets at period end 0.00 n/a n/a n/a n/a SERIES P (in $) Net assets, beginning of period 0.00 n/a n/a n/a n/a Increase (decrease) from operations: Total revenue 0.06 n/a n/a n/a n/a Total expenses - n/a n/a n/a n/a Realized gains (losses) for the period - n/a n/a n/a n/a Unrealized gains (losses) for the period - n/a n/a n/a n/a Total increase (decrease) from operations 0.06 n/a n/a n/a n/a Distributions: From net investment income (excluding dividends) (0.06) n/a n/a n/a n/a From dividends - n/a n/a n/a n/a From capital gains - n/a n/a n/a n/a Return of capital - n/a n/a n/a n/a 5 Total annual distributions (0.06) n/a n/a n/a n/a Net assets at period end 0.00 n/a n/a n/a n/a

8 Net Assets per Security (CONTINUED) SERIES S (in $) Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.0) (0.0) (0.0) (0.0) (0.0) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations Distributions: From net investment income (excluding dividends) From dividends From capital gains Return of capital Total annual distributions Net assets at period end Ratios and Supplemental Data CLASSIC SERIES Total net asset value (pricing NAV) ($000 s), 9,9 65,08 88, 560,86 Number of securities outstanding (000 s), 9,9 65,08 88, 560,86 6 Management expense ratio (%) Management expense ratio before waivers or absorptions (%) Trading expense ratio (%) Portfolio turnover rate (%) n/a n/a n/a n/a n/a Net asset value per security (pricing NAV) ($) SERIES RDSP Total net asset value (pricing NAV) ($000 s),69,, Number of securities outstanding (000 s),69,, Management expense ratio (%) Management expense ratio before waivers or absorptions (%) Trading expense ratio (%) Portfolio turnover rate (%) n/a n/a n/a n/a n/a Net asset value per security (pricing NAV) ($) PREMIUM SERIES Total net asset value (pricing NAV) ($000 s) 67,570 n/a n/a n/a n/a Number of securities outstanding (000 s) 6,757 n/a n/a n/a n/a 6 Management expense ratio (%) 0.6 n/a n/a n/a n/a Management expense ratio before waivers or absorptions (%) 0.67 n/a n/a n/a n/a 7 Trading expense ratio (%) - n/a n/a n/a n/a 8 Portfolio turnover rate (%) n/a n/a n/a n/a n/a Net asset value per security (pricing NAV) ($) 0.00 n/a n/a n/a n/a

9 Ratios and Supplemental Data (CONTINUED) SERIES P Total net asset value (pricing NAV) ($000 s) 58,77 n/a n/a n/a n/a Number of securities outstanding (000 s) 58,8 n/a n/a n/a n/a 6 Management expense ratio (%) - n/a n/a n/a n/a Management expense ratio before waivers or absorptions (%) - n/a n/a n/a n/a 7 Trading expense ratio (%) - n/a n/a n/a n/a 8 Portfolio turnover rate (%) n/a n/a n/a n/a n/a Net asset value per security (pricing NAV) ($) 0.00 n/a n/a n/a n/a SERIES S Total net asset value (pricing NAV) ($000 s) 8,76 0,98,9 0,90,6 Number of securities outstanding (000 s) 8,76 0,98,9 0,90,6 6 Management expense ratio (%) Management expense ratio before waivers or absorptions (%) Trading expense ratio (%) Portfolio turnover rate (%) n/a n/a n/a n/a n/a Net asset value per security (pricing NAV) ($) These calculations are prescribed by securities regulations and are not intended to be a reconciliation between opening and closing net assets per security. This information is derived from the Fund s audited annual financial statements. The financial information is determined in accordance with IFRS, except for information for periods prior to April, 0, which is derived from financial statements prepared in accordance with Canadian GAAP. Prior to April, 0, the net assets per security presented in the financial statements may be different from the net asset value calculated for Fund pricing purposes. This difference was due to the requirements of Canadian GAAP which may have resulted in a different valuation of investments held by the Fund in accordance with Canadian GAAP than the market value used to determine net asset value of the Fund for the purchase and redemption of the Fund s securities (pricing NAV). The pricing NAV per security at the end of the period is disclosed in Ratios and Supplemental Data. Effective April, 0, commissions and other portfolio transaction costs are included in total expenses. Prior to April, 0, these costs were reported within realized and unrealized gains (losses) for the period for the purposes of these tables. Net asset value and distributions are based on the actual number of securities outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of securities outstanding over the financial period. In the period a series is established, the financial information is provided from the date of inception to the end of the period. 5 Distributions were paid in cash, reinvested in additional securities of the Fund, or both. 6 Management expense ratio (MER) is based on total expenses, excluding commissions and other portfolio transaction costs, for the stated period and is expressed as an annualized percentage of daily average net assets during the period, except as noted. In the period a series is established, the MER is annualized from the date of inception to the end of the period. Where a Fund directly or indirectly via derivative contract invests in securities of an Underlying Fund, the MERs presented for the Fund include the portion of MERs of the Underlying Fund(s) attributable to this investment. Correspondingly, the MERs presented for the Fund exclude any management or other fees that are waived as a result of its investment in the Underlying Fund(s). Certain expenses that are non-recurring and/or otherwise uncertain as to their future timing and amount have not been annualized. 7 The trading expense ratio (TER) represents total commissions and other portfolio transaction costs incurred as an annualized percentage of daily average net assets during the period. Where a Fund invests in securities of an Underlying Fund, the TERs presented for the Fund include the portion of TERs of the Underlying Fund(s) attributable to this investment. 8 The Fund s portfolio turnover rate indicates how actively the Fund s Portfolio Advisor manages its portfolio investments. A portfolio turnover rate of 00% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the period. Generally, the higher a Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. Transactions incurred to realign the Fund s portfolio after a fund merger, if any, are excluded from the portfolio turnover rate. Portfolio turnover rate is not applicable for Money Market Funds.

10 Memo