Imperial Global Equity Income Pool. Interim Management Report of Fund Performance

Transcription

1 Imperia Goba Equity Income 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 BackRock Financia Management Inc (BackRock) and Keinwort Benson Investors Internationa Limited (Keinwort Benson) provide investment advice and investment management services to Imperia Goba Equity Income 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 BackRock US Large-Cap Equity, approimatey 50% Keinwort Benson Internationa Equity, approimatey 50% The commentary that foows provides a summary of the resuts of operations for the si-month period ended June 30, 2015 A doar figures are epressed in thousands, uness otherwise indicated The Poo's net asset vaue increased by 52% during the period, from $1,353,093 as at December 31, 2014 to $2,061,147 as at June 30, 2015 Both strong net saes of $589,056 and investment performance resuted in an overa increase in net asset vaue During the period, the strength of the goba economy ed to strong positive returns for internationa equities Cass A units of the Poo posted a return of 92% for the period The Poo s benchmark, the MSCI Word Inde (the benchmark), returned 110% for the same period The Poo s return is after the deduction of fees and epenses, unike the benchmark The European Centra Bank (the ECB) announced the epansion of its quantitative easing program at the beginning of 2015, which resuted in a significant ray in European equities Greece s debt crisis dominated headines in the atter months of the period, as Greece became the first deveoped economy to go into arrears on its debt to the Internationa Monetary Fund (IMF) This increased voatiity resuted in a decine in goba equity markets in the fina weeks of June In China, the combination of a sowing economy, monetary poicy activism and government encouragement of Mainand investment in quaified stocks in Hong Kong resuted in sharp gains in Apri foowed by significant osses in May and June The impact on Asian markets was particuary notabe US equities decined in January as ower oi prices weighed on the energy sector, and the impact of a stronger US doar began to show in the earnings of arge goba eporting companies Equity performance improved in February thanks to increased merger and acquisition activity and strong earnings reports from technoogy companies In March, however, investors retreated from US equities in favour of appeaing opportunities overseas as US profit margins neared record highs and earnings growth weakened US economic data softened over the first quarter with a gross domestic product growth rate of -02% During the second quarter of 2015, the US economy appeared to have rebounded out of its first quarter growth sump, with consumers benefiting from ower energy prices Infation remained benign, and US economic data showed upward trends in both housing and abour markets Investors began to avoid interest rate sensitive industry groups, which benefited stocks in banks, diversified financias and media In the US Large-Cap Equity component, stock seection in US equities was a significant detractor from performance, notaby in the information technoogy and industrias sectors A significant overweight aocation to US equities (approimatey 90% of the portfoio) detracted from performance as the US underperformed against Europe and Japan, which benefited from their centra banks accommodative monetary poicies An underweight eposure to Japan aso negativey impacted performance Significant individua detractors from performance incuded Inte Corp and Raytheon Co Inte stock suffered from weakness in the firm s persona computer and mobie units overshadowed growth in the company s data centre business Raytheon decined on concerns reated to a recent purchase Significant underweight aocations to Canada and Austraia contributed to performance as these commodity driven economies underperformed reative to their deveoped market peers Stock

2 Imperia Goba Equity Income Poo seection in the US financias sector was a moderate contributor, as was stock seection in the energy sector (notaby, an overweight eposure to Marathon Petroeum Corp) Significant individua contributors incuded JPMorgan Chase & Co, Bristo-Meyers Squibb Co and Marathon Petroeum Corp JPMorgan s second quarter earnings eceeded estimates, significanty outperforming its benchmark peers Bristo-Meyers Squibb stock rose on strong earnings and as a resut of receiving faster than epected approva of a drug Marathon Petroeum performed we amid stronger than epected earnings growth Backrock purchased severa new hodings over the period, incuding Doar Genera Corp, Anthem Inc, UnitedHeath Group Inc, CMS Energy Corp, SK Teecom Co Ltd, The Gap Inc and Orace Corp for their attractive growth opportunities Eisting positions in Lockheed Martin Corp, The Coca-Coa Co, Citigroup Inc and JPMorgan were increased The sub-advisor eiminated severa positions, incuding Johnson Contros Inc, Genera Mis Inc, The Toronto-Dominion Bank, Kraft Foods Group Inc, Wa-Mart Stores Inc and Automatic Data Processing Inc, among others, in favour of more attractive investment opportunities Hodings in Chevron Corp, The Home Depot Inc, Microsoft Corp and Comcast Corp were trimmed In the Internationa Equity component, stock seection in both Europe and Japan, as we as in the capita goods, pharmaceuticas and biotechnoogy sub-sectors, detracted from performance Significant individua detractors incuded AstraZeneca PLC and Ree SA AstraZeneca stock strugged with disappointing revenue returns and the impact of foreign echange on its earnings Ree s US and Canadian business had decined, driven by the oi and gas sectors Stock seection in the energy sector as we as the automobies and components industry was the strongest contributor to performance An overweight eposure to the automobie industry benefited from strong returns Significant individua contributors incuded Nokian Renkaat OYJ and NTT DoCoMo Inc Nokian Renkaat performed strongy, supported by an improving macroeconomic environment in Russia Investors responded positivey to NTT s medium term business pan Keinwort Benson purchased severa new hodings over the period, incuding Novartis AG and Otsuka Hodings Co Ltd in the heath care sector and Intesa Sanpaoo, RNC and Banco Santander SA in the financias sector Within the component s materias sector stocks, the eisting position in Rio Tinto PLC was increased Using recenty introduced investment hurdes for the bank sub-sector, the sub-advisor eiminated the component s hodings in Westpac Banking Corp Ltd, Nationa Austraia Bank Ltd, Austraia and New Zeaand Banking Group Ltd, Svenska Handesbanken and BBVA Banco Frances SA Nokian Renkaat was aso eiminated as the dividend characteristics of the company have recenty deteriorated In addition, the component s hodings of HSBC Hodings PLC, GaoSmithKine PLC, DAIICHI SANKYO CO LTD and BASF SE were trimmed 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 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 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 2

3 Imperia Goba Equity Income Poo 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; 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 3

4 Imperia Goba Equity Income 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 $ 1088 $ 1029 $ 838 $ 784 $ 816 $ 807 Increase (decrease) from operations: Tota revenue $ 025 $ 042 $ 032 $ 028 $ 029 $ 026 Tota epenses (004) (007) (007) (002) (001) (001) Reaized gains (osses) for the period (010) (022) (013) Unreaized gains (osses) for the period (009) 040 Tota increase (decrease) from operations 2 $ 083 $ 121 $ 257 $ 099 $ (003) $ 052 Distributions: From income (ecuding dividends) $ 036 $ 050 $ 020 $ 023 $ 025 $ 021 From dividends From capita gains Return of capita Tota Distributions 3 $ 036 $ 067 $ 058 $ 048 $ 028 $ 025 Net Assets, end of period $ 1153 $ 1088 $ 1029 $ 838 $ 784 $ 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 $ 2,061,147 $ 1,353,093 $ 843,488 $ 153,940 $ 72,911 $ 44,227 Number of Units Outstanding 4 178,792, ,352,886 81,947,967 18,376,433 9,301,738 5,418,726 Management Epense Ratio 5 017%* 016% 018% 021% 018% 017% Management Epense Ratio before waivers or absorptions 6 032%* 033% 042% 053% 059% 085% Trading Epense Ratio 7 012%* 011% 018% 015% 013% 013% Portfoio Turnover Rate % 4139% 3263% 4931% 4983% 3928% Net Asset Vaue per Unit $ 1153 $ 1088 $ 1029 $ 838 $ 784 $ 816 * 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 4

5 Imperia Goba Equity Income 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 2008 return is for the period from February 4, 2008 to December 31, 2008 b 2015 return is for the period from January 1, 2015 to June 30,

6 Imperia Goba Equity Income 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 United States 455 United Kingdom 128 Japan 113 Other Equities 69 Switzerand 53 Austraia 48 France 31 Cash 30 Germany 26 Sweden 25 Spain 20 Other Assets, ess Liabiities 02 % of Net Asset Top Positions Vaue Cash 30 JPMorgan Chase & Co 21 Wes Fargo & Co 19 HSBC Hodings PLC 16 Citigroup Inc 16 Zurich Insurance Services AG 15 Home Depot Inc 13 Genera Eectric Co 13 British American Tobacco PLC 13 Pfizer Inc 13 UnitedHeath Group Inc 11 Merck & Co Inc 11 AstraZeneca PLC 11 Microsoft Corp 10 TeiaSonera AB 10 GaoSmithKine PLC 10 Bristo-Myers Squibb Co 10 Raytheon Co 10 BP PLC 10 Nesté SA, Registered, Series 'B' 09 SunTrust Banks Inc 09 Imperia Tobacco Group PLC 09 Procter & Gambe Co (The) 09 Swedbank AB 09 Inte Corp 09 6

7 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

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