Imperial Money Market Pool. Annual Management Report of Fund Performance

Transcription

1 Imperia Money Market Poo Annua Management Report of Fund Performance for the financia year ended December 31, 2015 A figures are reported in Canadian doars uness otherwise noted This annua management report of fund performance contains financia highights but does not contain the compete annua financia statements of the investment fund If you have not received a copy of the annua financia statements with this annua management report of fund performance, you can get a copy of the 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 wwwcibccom/mutuafunds or the SEDAR website at wwwsedarcom 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 Investment Objective and Strategies Investment Objective: Imperia Money Market Poo (the Poo) seeks to maimize interest income, whie attempting to preserve capita and maintain iquidity by investing primariy in treasury bis, notes, bonds, debentures, and other debt obigation securities of Canadian issuers Investment Strategies: The term-to-maturity of the Poo is adjusted to refect the portfoio advisor s outook for interest rates and the aocation of assets by credit quaity is adjusted to refect the attractiveness of non-government of Canada treasury bis versus Government of Canada treasury bis The maimum overa average term-to-maturity of the Poo wi not eceed 90 days Risk The Poo is a conservative Canadian money market fund that is suitabe for short-term investors who can toerate ow investment risk For the period ended December 31, 2015, the Poo s overa eve of risk remains as discussed in the simpified prospectus Resuts of Operations The portfoio advisor of the Poo is CIBC Asset Management Inc (CAMI or the Portfoio Advisor) The commentary that foows provides a summary of the resuts of operations for the period ended December 31, 2015 A doar figures are epressed in thousands, uness otherwise indicated The Poo's net asset vaue increased by 19% during the period, from $460,783 as at December 31, 2014 to $548,853 as at December 31, 2015 Net saes of $84,595 in the period incuded redemptions of $329 due to rebaancing of a portfoio product that hods units of the Poo Positive investment performance aso contributed to an overa increase in net asset vaue In January, the Bank of Canada (BoC) owered its target overnight rate from 100% to 075% The BoC again owered the target overnight rate by 25 basis points, to 050%, at its Juy meeting and maintained that eve for the rest of 2015 The Poo maintains overweight eposure to corporate bonds, which contributed to the Poo s performance over the period, increasing its running yied (the annua income on an investment divided by its market vaue) The Poo s hodings in Canadian bank foating-rate notes and short-term asset-backed securities aso contributed to its performance The foating-rate notes have a higher running yied than government bonds or commercia paper Athough the Portfoio Advisor beieves the ikeihood of any near-term adjustment in the BoC s monetary poicy is ow, investors appear to be epecting further easing by the BoC, and this epectation is being refected in fied income prices A 2016 rate cut coud be possibe if the Canadian economy continues to underperform or deceerate In this ow interest rate environment, the Portfoio Advisor beieves eposure to corporate bonds is beneficia to maintaining the Poo s higher running yied With no immediate prospects for BoC interest rate increases, and a fat yied curve, the Portfoio Advisor beieves there is imited opportunity to add vaue to the Poo s performance In addition, the Portfoio Advisor epects poicy divergence between Canada and the US to continue, athough US interest rate increases are ikey to be gradua 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

2 Imperia Money Market Poo 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 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 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 makes 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 CAMI 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 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 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 with investment decision-making services for the Poo or reate directy to the eecution of portfoio transactions on behaf of the Poo In addition, CIBC 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 2

3 Imperia Money Market Poo 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 by the Poo 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 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 Money Market 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 December 31 The Poo's Net Assets per Unit¹ - Cass A Units Net Assets, beginning of period $ 1002 $ 1002 $ 1002 $ 1002 $ 1001 Increase (decrease) from operations: Tota revenue $ 010 $ 013 $ 013 $ 012 $ 011 Tota epenses (001) (001) (002) (002) (002) Reaized gains (osses) for the period Unreaized gains (osses) for the period Tota increase (decrease) from operations 2 $ 009 $ 012 $ 011 $ 010 $ 010 Distributions: From income (ecuding dividends) $ 009 $ 012 $ 011 $ 011 $ 010 From dividends From capita gains Return of capita Tota Distributions 3 $ 009 $ 012 $ 011 $ 011 $ 010 Net Assets, end of period $ 1002 $ 1002 $ 1002 $ 1002 $ This information is derived from the Poo's audited annua 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 $ 548,853 $ 460,783 $ 449,048 $ 434,077 $ 392,482 Number of Units Outstanding 4 54,779,192 45,985,091 44,810,972 43,323,891 39,172,032 Management Epense Ratio 5 011% 011% 016% 016% 016% Management Epense Ratio before waivers or absorptions 6 055% 055% 056% 051% 053% Trading Epense Ratio 7 000% 000% 000% 000% 000% Portfoio Turnover Rate 8 n/a n/a n/a n/a n/a Net Asset Vaue per Unit $ 1002 $ 1002 $ 1002 $ 1002 $ This information is presented as at 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 Money Market 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 December 31, 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 5

6 Imperia Money Market Poo Summary of Investment Portfoio (as at December 31, 2015) The summary of investment portfoio may change due to ongoing portfoio transactions of the investment fund A quartery update is avaiabe by visiting wwwcibccom/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 Short-Term Investments 873 Fied Income Securities 128 Other Assets, ess Liabiities -01 % of Net Asset Top Positions Vaue Bank of Nova Scotia,Term Deposit, 045%, 2016/01/04 54 Banner Trust, Discount Note, 076%, 2016/03/17 46 Merit Trust, Senior Discount Note, 087%, 2016/03/23 36 Bay Street Funding Trust, Discount Note, 084%, 2016/03/22 36 Storm King Funding, Discount Note, 075%, 2016/02/23 32 Carity Trust, Series 'A', Discount Note, 078%, 2016/03/02 28 Toronto-Dominion Bank (The), Foating Rate, 100%, 2016/04/21 27 King Street Funding Trust, Discount Note, 075%, 2016/01/07 27 Ridge Trust, Discount Note, 077%, 2016/02/02 26 Roya Bank of Canada, Variabe Rate, 095%, 2016/06/23 22 Ridge Trust, Discount Note, 075%, 2016/01/27 18 Prime Trust, Senior Discount Note, 074%, 2016/01/08 18 Zeus Receivabes Trust, Senior Discount Note, 074%, 2016/01/21 18 Prime Trust, Senior Discount Note, 074%, 2016/01/22 18 King Street Funding Trust, Discount Note, 076%, 2016/01/20 18 Canadian Master Trust, Discount Note, 073%, 2016/01/26 18 Paza Trust, Discount Note, 077%, 2016/02/09 18 Bay Street Funding Trust, Discount Note, 075%, 2016/02/23 18 Roya Bank of Canada, Variabe Rate, 100%, 2016/09/16 16 Nationa Bank of Canada, Variabe Rate, 097%, 2016/06/22 11 Bank of Montrea, Variabe Rate, 107%, 2017/04/10 11 Bank of Nova Scotia, Foating Rate, 093%, 2016/03/11 11 Nationa Bank of Canada, Foating Rate, 103%, 2016/06/23 11 Roya Bank of Canada, Foating Rate, 107%, 2016/12/02 10 Bank of Montrea, Foating Rate, 129%, 2017/06/

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 wwwcibccom/mutuafunds