CIBC Canadian Bond Index Fund. Annual Management Report of Fund Performance

Transcription

1 CIBC Canadian Bond Inde Fund Annual Management Report of Fund Performance for the financial year ended December 31, 2015 All figures are reported in Canadian dollars unless otherwise noted This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the investment fund If you have not received a copy of the annual financial statements with this annual management report of fund performance, you can get a copy of the annual financial statements at your request, and at no cost, by calling us toll-free at , by writing to us at CIBC, 18 York Street, Suite 1300, Toronto, Ontario, M5J 2T8, or by visiting wwwcibccom/mutualfunds or the SEDAR website at wwwsedarcom Unitholders may also contact us using one of these methods to request a copy of the investment fund s proy voting policies and procedures, proy voting disclosure record, or quarterly portfolio disclosure Management Discussion of Fund Performance Investment Objective and Strategies Investment Objective: CIBC Canadian Bond Inde Fund (the Fund) seeks to provide a high level of income and some capital growth, while attempting to preserve capital The Fund is managed to obtain a return that approimates the performance of the FTSE TMX Canada Universe Bond Inde, which is comprised of more than 900 marketable Canadian bonds intended to reflect the performance of the broad Canadian investment-grade bond market Investment Strategies: The Fund uses passive management strategies to create a portfolio with characteristics similar to the FTSE TMX Canada Universe Bond Inde, allowing the Fund to obtain a return that approimates the performance of that inde Risk The Fund is a Canadian fied income fund that is suitable for short- to medium-term investors who can tolerate low investment risk For the period ended December 31, 2015, the Fund s overall level of risk remains as discussed in the simplified prospectus Results of Operations The portfolio advisor of the Fund is CIBC Asset Management Inc (CAMI or the Portfolio Advisor) The commentary that follows provides a summary of the results of operations for the period ended December 31, 2015 All dollar figures are epressed in thousands, unless otherwise indicated The Fund's net asset value decreased by 1% during the period, from $391,754 as at December 31, 2014 to $389,780 as at December 31, 2015 Net redemptions of $12,028 in the period, which included purchases of $551 due to rebalancing of a portfolio product that holds units of the Fund, were partially offset by positive investment performance, resulting in an overall decrease in net asset value Class A units of the Fund posted a return of 24% for the period The Fund s benchmark, the FTSE TMX Canada Universe Bond Inde (the benchmark), returned 35% for the same period The Fund s return is after the deduction of fees and epenses, unlike the benchmark See Past Performance for the returns of other classes of units offered by the Fund Oil and other commodity prices declined sharply in 2015 in response to slower global growth and, in particular, a slower-than-epected Chinese economy The Bank of Canada reduced interest rates by 50 basis points over the period to counter some of the negative impact of lower commodity prices on Canada s economy Government bond yields (return on income) were lower, while credit spreads (the difference in yield between corporate bonds and Government of Canada bonds with the same maturity) increased for higher-risk corporate bonds as investors appeared to prefer lower-risk investments The US Federal Reserve Board raised its federal funds rate by 25 basis points, marking the first change since December 2008, as the US employment market eperienced strong job growth As an inde fund, the Fund s composition is meant to reflect a portfolio with characteristics similar to that of the benchmark Securities were added and sold during the period for inde-matching purposes Recent Developments During the period, there were no events or activities that had a material impact on the Fund Related Party Transactions Canadian Imperial Bank of Commerce (CIBC) and its affiliates have the following roles and responsibilities with respect to the Fund, and receive the fees described below in connection with their roles and responsibilities Manager CIBC is the Manager of the Fund CIBC receives management fees with respect to the day-to-day business and operations of the Fund, calculated based on the net asset value of each respective class of units of the Fund as described in the section entitled Management Fees The Manager also compensates its wholesalers in connection

2 CIBC Canadian Bond Inde Fund with their marketing activities regarding the Fund From time to time, CIBC may provide seed capital to the Fund Trustee CIBC Trust Corporation, a wholly-owned subsidiary of CIBC, is the trustee (the Trustee) of the Fund The Trustee holds title to the property (cash and securities) of the Fund on behalf of its unitholders Portfolio Advisor The portfolio advisor provides, or arranges to provide, investment advice and portfolio management services to the Fund CAMI, a wholly-owned subsidiary of CIBC, is the portfolio advisor of the Fund Distributor Dealers and other firms sell the units of the Fund to investors These dealers and other firms include CIBC s related dealers such as the principal distributor, CIBC Securities Inc (CIBC SI), the CIBC Investor s Edge discount brokerage division of CIBC Investor Services Inc (CIBC ISI), the CIBC Imperial Service division of CIBC ISI, and the CIBC Wood Gundy division of CIBC World Markets Inc (CIBC WM) CIBC SI, CIBC ISI, and CIBC WM are wholly-owned subsidiaries of CIBC CIBC may pay trailing commissions to these dealers and firms in connection with the sale of units of the Fund These dealers and other firms may pay a portion of these trailing commissions to their advisors who sell units of the Fund to investors Brokerage Arrangements and Soft Dollars The Portfolio Advisor makes decisions, including the selection of markets and dealers and the negotiation of commissions, with respect to the purchase and sale of portfolio securities, certain derivative products (including futures) and the eecution of portfolio transactions Brokerage business may be allocated by the Portfolio Advisor to CIBC WM and CIBC World Markets Corp, each a subsidiary of CIBC CIBC WM and CIBC World Markets Corp may also earn spreads on the sale of fied income securities and other securities and certain derivative products (including forwards) to the Fund A spread is the difference between the bid and ask prices for a security in the applicable marketplace, with respect to the eecution of portfolio transactions The spread will differ based upon various factors such as the type and liquidity of the security Dealers, including CIBC WM and CIBC World Markets Corp, may furnish goods and services, other than order eecution, to the Portfolio Advisor in partial echange for processing trades through them (referred to in the industry as soft dollar arrangements) These goods and services are paid for with a portion of the brokerage commissions and assist the Portfolio Advisor with investment decision-making services for the Fund or relate directly to the eecution of portfolio transactions on behalf of the Fund In addition, CIBC may enter into commission recapture arrangements with certain dealers with respect to the Fund Any commission recaptured will be paid to the Fund During the period, the Fund did not pay any brokerage commissions or other fees to CIBC WM or CIBC World Markets Corp Spreads associated with fied income and other securities are not ascertainable and, for that reason, cannot be included when determining these amounts Fund Transactions The Fund may enter into one or more of the following transactions (the Related Party Transactions) in reliance on the standing instructions issued by the Independent Review Committee (IRC): l l l l l l invest in or hold equity securities of CIBC or issuers related to a portfolio sub-advisor; invest in or hold non-echange-traded debt securities of CIBC or an issuer related to CIBC in a primary offering and in the secondary market; make an investment in the securities of an issuer for which CIBC WM, CIBC World Markets Corp, or any affiliate of CIBC (a Related Dealer) acts as an underwriter during the offering of the securities at any time during the 60-day period following the completion of the offering of such securities (in the case of a private placement offering, in accordance with the eemptive relief order granted by the Canadian securities regulatory authorities and in accordance with the policies and procedures relating to such investment); purchase equity or debt securities from or sell them to a Related Dealer, where it is acting as principal; undertake currency and currency derivative transactions where a Related Dealer is the counterparty; and purchase securities from or sell securities to another investment fund or a managed account managed by the Manager or an affiliate of the Manager At least annually, the IRC reviews the Related Party Transactions for which they have issued standing instructions The IRC is required to advise the Canadian securities regulatory authorities if it determines that an investment decision was not made in accordance with conditions of its approval Custodian CIBC Mellon Trust Company is the custodian of the Fund (the Custodian) The Custodian holds all cash and securities for the Fund and ensures that those assets are kept separate from any other cash or securities that the Custodian might be holding The Custodian also provides other services to the Fund including record-keeping and processing of foreign echange transactions The Custodian may hire sub-custodians for the Fund The fees and spreads for services of the Custodian directly related to the eecution of portfolio transactions by the Fund are paid by CAMI and/or dealer(s) directed by CAMI, up to the amount of the credits generated under soft dollar arrangements from trading on behalf of the Fund during that month All other fees and spreads for the services of the Custodian are paid by the Manager and charged to the Fund on a recoverable basis CIBC owns a 50% interest in the Custodian 2

3 CIBC Canadian Bond Inde Fund Service Provider CIBC Mellon Global Securities Services Company (CIBC GSS) provides certain services to the Fund, including securities lending, fund accounting and reporting, and portfolio valuation Such servicing fees are paid by the Manager and charged to the Fund on a recoverable basis CIBC indirectly owns a 50% interest in CIBC GSS 3

4 CIBC Canadian Bond Inde Fund 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 period ended December 31 The Fund's Net Assets per Unit¹ - Class A Units Net Assets, beginning of period $ 1112 $ 1060 $ 1116 $ 1118 $ 1064 Increase (decrease) from operations: Total revenue $ 040 $ 041 $ 042 $ 045 $ 047 Total epenses (013) (013) (013) (013) (011) Realized gains (losses) for the period 003 (001) Unrealized gains (losses) for the period (003) 055 (062) (013) 048 Total increase (decrease) from operations 2 $ 027 $ 082 $ (024) $ 028 $ 089 Distributions: From income (ecluding dividends) $ 027 $ 029 $ 030 $ 031 $ 035 From dividends From capital gains 002 Return of capital Total Distributions 3 $ 027 $ 029 $ 032 $ 031 $ 035 Net Assets, end of period $ 1112 $ 1112 $ 1060 $ 1115 $ This information is derived from the Fund's audited annual financial statements The Fund adopted International Financial Reporting Standards (IFRS) on January 1, 2014 Previously, the Fund prepared its financial statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP) as defined in Part V of the CPA Canada Handbook Under Canadian GAAP, the Fund measured fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short positions As such, the net assets per unit figure presented in the financial statements may differ from the net asset value calculated for fund pricing purposes An eplanation of these differences can be found in the notes to the financial statements issued prior to January 1, 2014 Upon adoption of IFRS, the Fund measures the fair value of its investments by using the close market prices, where the close market price falls within the bid-ask spread As such, the Fund's accounting policies for measuring the fair value of investments in the financial statements are consistent with those used in measuring the net asset value for transactions with unitholders Accordingly, the opening net asset figure as at January 1, 2013 was restated to reflect accounting policy adjustments made in accordance with IFRS All 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 actual number of units outstanding at the relevant time The total 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 additional units of the Fund, or both Ratios and Supplemental Data - Class A Units Total Net Asset Value (000s) 4 $ 319,976 $ 320,593 $ 323,079 $ 429,497 $ 426,758 Number of Units Outstanding 4 28,772,276 28,828,201 30,489,738 38,484,251 38,136,613 Management Epense Ratio 5 116% 116% 117% 116% 114% Management Epense Ratio before waivers or absorptions 6 136% 139% 135% 132% 131% Trading Epense Ratio 7 000% 000% 000% 000% 000% Portfolio Turnover Rate % 2211% 3016% 2930% 2457% Net Asset Value per Unit $ 1112 $ 1112 $ 1060 $ 1116 $ This information is presented as at December 31 of the period(s) shown 5 Management epense ratio is based on the total epenses of the fund (ecluding commissions and other portfolio transaction costs), incurred by or allocated to a class of units for the period shown, epressed as an annualized percentage of the daily average net asset value of that class 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 indefinitely or may be terminated at any time without notice to unitholders 7 The trading epense ratio represents total commissions and other portfolio transaction costs before income taes epressed as an annualized percentage of the daily average net asset value during the period Spreads associated with fied income securities trading are not ascertainable and, for that reason, are not included in the trading epense ratio calculation 8 The portfolio turnover rate indicates how actively the portfolio advisor and/or portfolio sub-advisor manages the portfolio investmentsa portfolio turnover rate of 100% is equivalent to a fund buying and selling all of the securities in its portfolio once in the course of the period The higher a portfolio turnover rate in a period, the greater the trading costs payable by a fund in the period, and the greater the chance of an investor receiving taable capital gains in the year There is not necessarily a relationship between a high turnover rate and the performance of a fund 4

5 CIBC Canadian Bond Inde Fund The Fund's Net Assets per Unit¹ - Premium Class Units a Net Assets, beginning of period $ 996 $ 949 $ 999 $ 1002 $ 1000 b Increase (decrease) from operations: Total revenue $ 036 $ 037 $ 038 $ 040 $ 004 Total epenses (004) (004) (004) (004) Realized gains (losses) for the period 003 (001) Unrealized gains (losses) for the period (004) 050 (057) (007) 005 Total increase (decrease) from operations 2 $ 031 $ 082 $ (015) $ 037 $ 011 Distributions: From income (ecluding dividends) $ 032 $ 033 $ 035 $ 037 $ 009 From dividends From capital gains 001 Return of capital Total Distributions 3 $ 032 $ 033 $ 036 $ 037 $ 009 Net Assets, end of period $ 996 $ 996 $ 949 $ 998 $ 1002 a Information presented is for the period from November 24, 2011 to December 31, 2011 b Initial offering price 1 This information is derived from the Fund's audited annual financial statements The Fund adopted International Financial Reporting Standards (IFRS) on January 1, 2014 Previously, the Fund prepared its financial statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP) as defined in Part V of the CPA Canada Handbook Under Canadian GAAP, the Fund measured fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short positions As such, the net assets per unit figure presented in the financial statements may differ from the net asset value calculated for fund pricing purposes An eplanation of these differences can be found in the notes to the financial statements issued prior to January 1, 2014 Upon adoption of IFRS, the Fund measures the fair value of its investments by using the close market prices, where the close market price falls within the bid-ask spread As such, the Fund's accounting policies for measuring the fair value of investments in the financial statements are consistent with those used in measuring the net asset value for transactions with unitholders Accordingly, the opening net asset figure as at January 1, 2013 was restated to reflect accounting policy adjustments made in accordance with IFRS All 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 actual number of units outstanding at the relevant time The total 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 additional units of the Fund, or both Ratios and Supplemental Data - Premium Class Units a Total Net Asset Value (000s) 4 $ 26,212 $ 24,338 $ 26,148 $ 33,465 $ 6,287 Number of Units Outstanding 4 2,632,591 2,444,106 2,755,771 3,350, ,008 Management Epense Ratio 5 039% 039% 038% 040% 040%* Management Epense Ratio before waivers or absorptions 6 089% 089% 088% 091% 095%* Trading Epense Ratio 7 000% 000% 000% 000% 000% Portfolio Turnover Rate % 2211% 3016% 2930% 2457% Net Asset Value per Unit $ 996 $ 996 $ 949 $ 999 $ 1003 a Information presented is for the period from November 24, 2011 to December 31, 2011 * Ratio has been annualized 4 This information is presented as at December 31 of the period(s) shown 5 Management epense ratio is based on the total epenses of the fund (ecluding commissions and other portfolio transaction costs), incurred by or allocated to a class of units for the period shown, epressed as an annualized percentage of the daily average net asset value of that class 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 indefinitely or may be terminated at any time without notice to unitholders 7 The trading epense ratio represents total commissions and other portfolio transaction costs before income taes epressed as an annualized percentage of the daily average net asset value during the period Spreads associated with fied income securities trading are not ascertainable and, for that reason, are not included in the trading epense ratio calculation 8 The portfolio turnover rate indicates how actively the portfolio advisor and/or portfolio sub-advisor manages the portfolio investmentsa portfolio turnover rate of 100% is equivalent to a fund buying and selling all of the securities in its portfolio once in the course of the period The higher a portfolio turnover rate in a period, the greater the trading costs payable by a fund in the period, and the greater the chance of an investor receiving taable capital gains in the year There is not necessarily a relationship between a high turnover rate and the performance of a fund 5

6 CIBC Canadian Bond Inde Fund The Fund's Net Assets per Unit¹ - Institutional Class Units a Net Assets, beginning of period $ 981 $ 935 $ 991 $ 1000 b Increase (decrease) from operations: Total revenue $ 035 $ 036 $ 037 $ 020 Total epenses (002) (002) (002) (001) Realized gains (losses) for the period 003 (001) Unrealized gains (losses) for the period (022) 049 (061) (007) Total increase (decrease) from operations 2 $ 014 $ 082 $ (020) $ 016 Distributions: From income (ecluding dividends) $ 033 $ 035 $ 036 $ 027 From dividends From capital gains 007 Return of capital Total Distributions 3 $ 033 $ 035 $ 043 $ 027 Net Assets, end of period $ 980 $ 981 $ 935 $ 990 a Information presented is for the period from June 22, 2012 to December 31, 2012 b Initial offering price 1 This information is derived from the Fund's audited annual financial statements The Fund adopted International Financial Reporting Standards (IFRS) on January 1, 2014 Previously, the Fund prepared its financial statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP) as defined in Part V of the CPA Canada Handbook Under Canadian GAAP, the Fund measured fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short positions As such, the net assets per unit figure presented in the financial statements may differ from the net asset value calculated for fund pricing purposes An eplanation of these differences can be found in the notes to the financial statements issued prior to January 1, 2014 Upon adoption of IFRS, the Fund measures the fair value of its investments by using the close market prices, where the close market price falls within the bid-ask spread As such, the Fund's accounting policies for measuring the fair value of investments in the financial statements are consistent with those used in measuring the net asset value for transactions with unitholders Accordingly, the opening net asset figure as at January 1, 2013 was restated to reflect accounting policy adjustments made in accordance with IFRS All 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 actual number of units outstanding at the relevant time The total 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 additional units of the Fund, or both Ratios and Supplemental Data - Institutional Class Units a Total Net Asset Value (000s) 4 $ 392 $ 324 $ 224 $ 153 Number of Units Outstanding 4 39,996 33,041 23,942 15,416 Management Epense Ratio 5 025% 025% 023% 025%* Management Epense Ratio before waivers or absorptions 6 075% 073% 072% 075%* Trading Epense Ratio 7 000% 000% 000% 000% Portfolio Turnover Rate % 2211% 3016% 2930% Net Asset Value per Unit $ 980 $ 981 $ 935 $ 991 a Information presented is for the period from June 22, 2012 to December 31, 2012 * Ratio has been annualized 4 This information is presented as at December 31 of the period(s) shown 5 Management epense ratio is based on the total epenses of the fund (ecluding commissions and other portfolio transaction costs), incurred by or allocated to a class of units for the period shown, epressed as an annualized percentage of the daily average net asset value of that class 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 indefinitely or may be terminated at any time without notice to unitholders 7 The trading epense ratio represents total commissions and other portfolio transaction costs before income taes epressed as an annualized percentage of the daily average net asset value during the period Spreads associated with fied income securities trading are not ascertainable and, for that reason, are not included in the trading epense ratio calculation 8 The portfolio turnover rate indicates how actively the portfolio advisor and/or portfolio sub-advisor manages the portfolio investmentsa portfolio turnover rate of 100% is equivalent to a fund buying and selling all of the securities in its portfolio once in the course of the period The higher a portfolio turnover rate in a period, the greater the trading costs payable by a fund in the period, and the greater the chance of an investor receiving taable capital gains in the year There is not necessarily a relationship between a high turnover rate and the performance of a fund 6

7 CIBC Canadian Bond Inde Fund The Fund's Net Assets per Unit¹ - Class O Units a Net Assets, beginning of period $ 994 $ 947 $ 1000 b Increase (decrease) from operations: Total revenue $ 036 $ 037 $ 023 Total epenses Realized gains (losses) for the period 003 (001) 002 Unrealized gains (losses) for the period 047 (044) Total increase (decrease) from operations 2 $ 039 $ 083 $ (019) Distributions: From income (ecluding dividends) $ 036 $ 037 $ 028 From dividends From capital gains 005 Return of capital Total Distributions 3 $ 036 $ 037 $ 033 Net Assets, end of period $ 994 $ 994 $ 947 a Information presented is for the period from May 22, 2013 to December 31, 2013 b Initial offering price 1 This information is derived from the Fund's audited annual financial statements The Fund adopted International Financial Reporting Standards (IFRS) on January 1, 2014 Previously, the Fund prepared its financial statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP) as defined in Part V of the CPA Canada Handbook Under Canadian GAAP, the Fund measured fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short positions As such, the net assets per unit figure presented in the financial statements may differ from the net asset value calculated for fund pricing purposes An eplanation of these differences can be found in the notes to the financial statements issued prior to January 1, 2014 Upon adoption of IFRS, the Fund measures the fair value of its investments by using the close market prices, where the close market price falls within the bid-ask spread As such, the Fund's accounting policies for measuring the fair value of investments in the financial statements are consistent with those used in measuring the net asset value for transactions with unitholders Accordingly, the opening net asset figure as at January 1, 2013 was restated to reflect accounting policy adjustments made in accordance with IFRS All 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 actual number of units outstanding at the relevant time The total 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 additional units of the Fund, or both Ratios and Supplemental Data - Class O Units a Total Net Asset Value (000s) 4 $ 43,200 $ 46,499 $ 43,415 Number of Units Outstanding 4 4,347,052 4,678,423 4,583,460 Management Epense Ratio 5 000% 000% 000%* Management Epense Ratio before waivers or absorptions 6 003% 003% 002%* Trading Epense Ratio 7 000% 000% 000% Portfolio Turnover Rate % 2211% 3016% Net Asset Value per Unit $ 994 $ 994 $ 947 a Information presented is for the period from May 22, 2013 to December 31, 2013 * Ratio has been annualized 4 This information is presented as at December 31 of the period(s) shown 5 Management epense ratio is based on the total epenses of the fund (ecluding commissions and other portfolio transaction costs), incurred by or allocated to a class of units for the period shown, epressed as an annualized percentage of the daily average net asset value of that class 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 indefinitely or may be terminated at any time without notice to unitholders 7 The trading epense ratio represents total commissions and other portfolio transaction costs before income taes epressed as an annualized percentage of the daily average net asset value during the period Spreads associated with fied income securities trading are not ascertainable and, for that reason, are not included in the trading epense ratio calculation 8 The portfolio turnover rate indicates how actively the portfolio advisor and/or portfolio sub-advisor manages the portfolio investmentsa portfolio turnover rate of 100% is equivalent to a fund buying and selling all of the securities in its portfolio once in the course of the period The higher a portfolio turnover rate in a period, the greater the trading costs payable by a fund in the period, and the greater the chance of an investor receiving taable capital gains in the year There is not necessarily a relationship between a high turnover rate and the performance of a fund 7

8 CIBC Canadian Bond Inde Fund Management Fees The Fund, either directly or indirectly, pays an annual management fee to CIBC to cover the costs of managing the Fund Management fees are based on the net asset value of the Fund and are calculated daily and paid monthly Management fees are paid to CIBC in consideration for providing, or arranging for the provision of, management, distribution, and portfolio advisory services Advertising and promotional epenses, office overhead epenses, trailing commissions, and the fees of the portfolio sub-advisor(s) are paid by CIBC out of the management fees received from the Fund The Fund is required to pay applicable taes on the management fees paid to CIBC Refer to the Simplified Prospectus for the maimum annual management fee rate for each class of units For Class O units, the management fee is negotiated with and paid by, or as directed by, unitholders or dealers and discretionary managers on behalf of unitholders Such Class O management fee will not eceed the Class A unit management fee rate The following table shows a breakdown of the services received in consideration of the management fees, as a percentage of the management fees collected from the Fund for the period ended December 31, 2015 These amounts do not include waived fees or absorbed epenses Class A Units Premium Class Units Institutional Class Units Sales and trailing commissions paid to dealers 1067% 4060% 000% General administration, investment advice, and profit 8933% 5940% 10000% Past Performance The performance data provided assumes reinvestment of distributions only and does not take into account sales, redemption, distribution, or other optional charges payable by any unitholder that would have reduced returns Past performance does not necessarily indicate how a fund will perform in the future The Fund s returns are after the deduction of fees and epenses, and the difference in returns between classes of units is primarily due to differences in the management epense ratio See the section entitled Financial Highlights for the management epense ratio Year-by-Year Returns The bar chart shows the annual performance of the Fund for each of the periods shown, and illustrates how the performance has changed from period to period The bar chart shows, in percentage terms, how an investment made on January 1 would have increased or decreased by December 31, unless otherwise indicated Class A Units 8

9 CIBC Canadian Bond Inde Fund Premium Class Units a 2011 return is for the period from November 24, 2011 to December 31, 2011 Institutional Class Units a 2012 return is for the period from June 22, 2012 to December 31, 2012 Class O Units a 2013 return is for the period from May 22, 2013 to December 31, 2013 Annual Compound Returns This table shows the annual compound return of each class of units of the Fund for each indicated period ended on December 31, 2015 The annual compound total return is also compared to the Fund s benchmark(s) The Fund s benchmark is the FTSE TMX Canada Universe Bond Inde 9

10 CIBC Canadian Bond Inde Fund 1 Year 3 Years 5 Years 10 Years* or Since Inception* Inception Date Class A units 24% 26% 37% 39% September 22, 1997 FTSE TMX Canada Universe Bond Inde 35% 36% 48% 50% Premium Class units 32% 34% 36% November 24, 2011 FTSE TMX Canada Universe Bond Inde 35% 36% 40% Institutional Class units 34% 35% 35% June 22, 2012 FTSE TMX Canada Universe Bond Inde 35% 36% 35% Class O units 36% 40% May 22, 2013 FTSE TMX Canada Universe Bond Inde 35% 38% * If a class of units has been outstanding for less than 10 years, the annual compound return since inception is shown FTSE TMX Canada Universe Bond Inde is comprised of marketable Canadian bonds intended to reflect the performance of the broad Canadian investment-grade bond market Returns are calculated daily and are weighted by market capitalization A discussion of the relative performance of the Fund compared to its primary benchmark(s) can be found in Results of Operations 10

11 CIBC Canadian Bond Inde Fund Summary of Investment Portfolio (as at December 31, 2015) The summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund A quarterly update is available by visiting wwwcibccom/mutualfunds The Top Positions table shows a fund s 25 largest positions For funds with fewer than 25 positions in total, all positions are shown Cash and cash equivalents are shown in total as one position % of Net Asset Portfolio Breakdown Value Government of Canada & Guaranteed Bonds 328 Provincial Government & Guaranteed Bonds 322 Corporate Bonds 280 Municipal Government & Guaranteed Bonds 37 Supranational Bonds 21 Cash & Cash Equivalents 07 Mortgage-Backed Securities 05 % of Net Asset Value Top Positions Canada Housing Trust No 1, Series '56', 235%, 2018/12/15 27 Government of Canada, 400%, 2041/06/01 19 Canada Housing Trust No 1, 205%, 2017/06/15 18 Government of Canada, 375%, 2019/06/01 17 Government of Canada, 500%, 2037/06/01 14 Canada Housing Trust No 1, 170%, 2017/12/15 14 Government of Canada, 150%, 2017/09/01 14 Province of Quebec, 500%, 2041/12/01 13 Government of Canada, 575%, 2033/06/01 13 Government of Canada, 150%, 2020/03/01 12 Province of Ontario, 825%, 2036/06/20 12 Hydro-Québec, Series 'HL', 1100%, 2020/08/15 11 Government of Canada, 575%, 2029/06/01 11 Province of Ontario, 345%, 2045/06/02 10 Government of Canada, 150%, 2017/03/01 10 Government of Canada, 350%, 2045/12/01 10 Province of Ontario, 350%, 2043/06/02 09 Government of Canada, 350%, 2020/06/01 09 Government of Canada, 275%, 2048/12/01 09 Government of Canada, 325%, 2021/06/01 08 Province of Ontario, 350%, 2024/06/02 08 Asian Development Bank, 465%, 2027/02/16 08 Canada Housing Trust No 1, 205%, 2018/06/15 08 New Brunswick F-M Project Company Inc, 647%, 2027/11/30 08 Asian Development Bank, 475%, 2017/06/

12 The management report of fund performance may contain forward-looking statements 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 epects, anticipates, intends, plans, believes, estimates, or other similar wording In addition, any statements that may be made concerning future performance, strategies, or prospects and possible future actions taken by the fund, are also forward-looking statements These statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results and achievements of the fund to differ materially from those epressed or implied by such statements Such factors include, but are not limited to: general economic, market, and business conditions; fluctuations in securities prices, interest rates, and foreign currency echange rates; changes in government regulations; and catastrophic events We do not undertake, and specifically disclaim, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise prior to the release of the net management report of fund performance

13 CIBC Mutual Funds CIBC Family of Managed Portfolios CIBC 18 York Street, Suite 1300 Toronto, Ontario M5J 2T8 CIBC Securities Inc Website wwwcibccom/mutualfunds CIBC Securities Inc is a wholly-owned subsidiary of CIBC and is the principal distributor of the CIBC Mutual Funds and the CIBC Family of Managed Portfolios CIBC Family of Managed Portfolios are mutual funds that primarily invest in other CIBC Mutual Funds To obtain a copy of the simplified prospectus, call CIBC Securities Inc at or ask your advisor