CIBC Global Equity Fund. Annual Management Report of Fund Performance

Transcription

1 CIBC Goba Equity Fund Annua Management Report of Fund Performance for the financia year ended December 31, 2017 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: CIBC Goba Equity Fund (the Fund) seeks to provide ong-term growth through capita appreciation by investing primariy in a diversified portfoio of equity securities of foreign companies ocated in North America, Europe, the Far East, and the Pacific Basin Investment Strategies: The Fund empoys three types of decisions in the management of the Fund The first invoves the decision to underweight or overweight certain regions or countries of the word; the second empoys a currency strategy that wi protect against, and take advantage of, currency movements; and the third decision is sector and security eve anaysis Risk The Fund is a goba equity fund that is suitabe for ong-term investors who can toerate medium investment risk For the period ended December 31, 2017, the Fund s overa eve of risk remained as discussed in the simpified prospectus Resuts of Operations The Fund s portfoio advisor 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, 2017 A doar figures are epressed in thousands, uness otherwise indicated The Fund's net asset vaue increased by 5% during the period, from $55,261 as at December 31, 2016 to $57,986 as at December 31, 2017 Positive investment performance was partiay offset by net redemptions of $4,199, resuting in an overa increase in net asset vaue Cass A units of the Fund posted a return of 130% for the period The Fund s benchmark, the MSCI A Country Word Inde (the benchmark), returned 164% for the same period The Fund s return is after the deduction of fees and epenses, unike the benchmark's After a mid-cyce sowdown eary in the period, goba economic growth finished the period on a strong note Financia conditions remained supportive, and markets did not epect centra banks to impement tighter monetary poicy over the near term With this positive backdrop, equity markets posted strong gains However, poitica and geopoitica uncertainty remained a concern Furthermore, imbaances arose in the form of ecess debt, overvaued rea estate prices and ecess capacity in commodity production Despite high vauations, US equities continued to perform we as a resut of strong earnings and epectations of corporate taation reform European equities underperformed as the euro appreciated, which ed to tighter monetary conditions and made eurozone producers ess competitive Supported by a strong economic outook and attractive vauations, emerging markets outperformed The Fund s significanty overweight aocation to Europe detracted from performance, as did a significanty underweight aocation to the US On a country eve, a moderatey overweight aocation to Maaysia and moderatey underweight aocations to Korea and Russia detracted from performance Maaysia is a defensive market that tends to underperform during strong positive market movements, whie Korean equities benefited from the strong upswing in Asia and outperformed Russian equities underperformed eary in the year when the price of oi was under pressure, and the Portfoio Advisor sod the Fund s Russian hodings before oi prices started to rebound The Fund s moderate overweight aocation to emerging markets contributed to performance On a country eve, moderatey overweight aocations to India, China and Norway contributed to performance Indian companies showed good growth prospects and performed strongy, athough ater in the year shares became overvaued Concerns about a financia downturn in China diminished as the government made progress on financia reguation and economic rebaancing, which permitted a repricing of inepensive Chinese equities The Norwegian equity market, which is heaviy weighted to energy companies, was supported by the higher price of oi in the second haf of the period

2 CIBC Goba Equity Fund In Apri, the Portfoio Advisor added a new aocation to Maaysia, where equities are attractivey vaued Among Asian emerging markets, the country is defensive, and benefits from soid goba economic data A new aocation to Itay was added in December as the country is making progress in improving its banking system baance sheet Despite eevated poitica risks, the Portfoio Advisor beieves Itaian equities are attractivey vaued and may benefit from the European Centra Bank s monetary poicy The Portfoio Advisor increased the Fund s aocation to eurozone countries, which ag the US in the economic cyce and have ess epensive equities The Fund s aocation to emerging markets was increased in response to attractive vauations and as the period's synchronized goba economic growth favoured their outperformance The Fund s ong eposure to Canada was eiminated as the Portfoio Advisor epected imited appreciation in commodity sectors as profit margins were restored, and risks in the rea estate market increased as the Bank of Canada tightened its monetary poicy Eposure to Indian equities was eiminated based on vauation concerns The Fund s cash eposure was decreased in January and March as the environment was positive for equities, making them a better vaue proposition than cash Recent Deveopments Effective Apri 27, 2017, the composition of the Independent Review Committee (IRC) changed Tim Kennish and Wiiam Thornhi resigned as members of the IRC and Susan Sima and Bryan Houston were appointed as members of the IRC Reated Party Transactions Canadian Imperia Bank of Commerce (CIBC) and its affiiates have the foowing roes and responsibiities with respect to the Fund, and receive the fees described beow in connection with their roes and responsibiities Manager CIBC is the Fund's manager (the Manager) CIBC receives management fees with respect to the Fund's day-to-day business and operations, cacuated based on the net asset vaue of each respective cass of units of the Fund as described in the section entited Management Fees The Manager aso compensates its whoesaers in connection with their marketing activities regarding the Fund From time to time, CIBC may provide seed capita to the Fund Trustee CIBC Trust Corporation, a whoy-owned subsidiary of CIBC, is the Fund's trustee (the Trustee) The Trustee hods tite to the Fund's property (cash and securities) on behaf of its unithoders Portfoio Advisor The portfoio advisor provides, or arranges to provide, investment advice and portfoio management services to the Fund CAMI, a whoy-owned subsidiary of CIBC, is the Fund's portfoio advisor Distributor Deaers and other firms se the units of the Fund to investors These deaers and other firms incude CIBCs reated deaers such as the principa distributor, CIBC Securities Inc (CIBC SI), the CIBC Investor s Edge discount brokerage division of CIBC Investor Services Inc (CIBC ISI), the CIBC Imperia Investor Service division of CIBC ISI, and the CIBC Wood Gundy division of CIBC Word Markets Inc (CIBC WM) CIBC SI, CIBC ISI, and CIBC WM are whoy-owned subsidiaries of CIBC CIBC may pay traiing commissions to these deaers and firms, ecept for CIBC SI, in connection with the sae of units of the Fund These deaers and other firms may pay a portion of these traiing commissions to their advisors who se units of the Fund to investors CIBC does not pay traiing commissions to CIBC SI for seing units of the Fund, athough overa saes of CIBC funds may be considered in assessing the performance of their advisors and may therefore contribute to their annua compensation 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 and the eecution of portfoio transactions Brokerage business may be aocated by the Portfoio Advisor to 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 securities and other securities and certain derivative products to the Fund 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 Fund or reate directy to the eecution of portfoio transactions on behaf of the Fund In addition, CIBC may enter into commission recapture arrangements with certain deaers with respect to the Fund Any commission recaptured wi be paid to the Fund During the period, the Fund paid brokerage commissions and other fees of $4,414 to CIBC WM; the Fund did not pay any brokerage commissions or other fees to 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 Fund Transactions The Fund may enter into one or more of the foowing transactions (the Reated Party Transactions) in reiance on the standing instructions issued by the IRC: 2

3 CIBC Goba Equity Fund 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; 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, after a matter has been referred or reported to the IRC by the Manager, if it determines that an investment decision was not made in accordance with a condition imposed by securities egisation or the IRC in any Reated Party Transaction requesting its approva or recommendation, as appicabe Custodian CIBC Meon Trust Company is the custodian of the Fund (the Custodian) The Custodian hods a 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 hoding The Custodian aso provides other services to the Fund incuding 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 directy reated to the eecution of portfoio transactions by the Fund 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 Fund during that month A other fees and spreads for the services of the Custodian are paid by the Manager and charged to the Fund 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 Fund, incuding securities ending, fund accounting and reporting, and portfoio vauation Such servicing fees are paid by the Manager, and charged to the Fund on a recoverabe basis CIBC indirecty owns a 50% interest in CIBC GSS 3

4 CIBC Goba Equity Fund Financia Highights The foowing tabes show seected key financia information about the Fund and are intended to hep you understand the Fund s financia performance for the period ended December 31 The Fund's Net Assets per Unit¹ - Cass A Units Net Assets, beginning of period $ 2015 $ 2034 $ 1788 $ 1625 $ 1264 Increase (decrease) from operations: Tota revenue $ 144 $ 042 $ 090 $ 063 $ 093 Tota epenses (063) (063) (064) (055) (048) Reaized gains (osses) for the period Unreaized gains (osses) for the period 024 (089) 013 (057) 277 Tota increase (decrease) from operations 2 $ 264 $ (023) $ 253 $ 160 $ 359 Distributions: From income (ecuding dividends) $ 062 $ $ 003 $ $ From dividends 002 From capita gains Return of capita Tota Distributions 3 $ 064 $ $ 003 $ $ Net Assets, end of period $ 2213 $ 2015 $ 2034 $ 1788 $ This information is derived from the Fund's audited annua financia statements The Fund adopted Internationa Financia Reporting Standards (IFRS) on January 1, 2014 Previousy, the Fund 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 Fund 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 Fund 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 Fund'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 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 Fund, or both Ratios and Suppementa Data - Cass A Units Tota Net Asset Vaue (000s) 4 $ 57,986 $ 55,261 $ 59,392 $ 56,749 $ 56,757 Number of Units Outstanding 4 2,620,935 2,742,690 2,919,742 3,174,520 3,493,755 Management Epense Ratio 5 255% 278% 289% 290% 290% Management Epense Ratio before waivers or absorptions 6 282% 307% 309% 330% 334% Trading Epense Ratio 7 018% 026% 016% 020% 028% Portfoio Turnover Rate % 6370% 6685% 4304% 3001% Net Asset Vaue per Unit $ 2213 $ 2015 $ 2034 $ 1788 $ 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 fund (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 The trading epense ratio incudes the fees attributabe to echange traded funds 8 The portfoio turnover rate indicates how activey the portfoio advisor and/or portfoio sub-advisor manages the portfoio investments A 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 CIBC Goba Equity Fund Management Fees The Fund, either directy or indirecty, pays CIBC an annua management fee to cover the costs of managing the Fund Management fees are based on the net asset vaue of the Fund 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 Fund The Fund is required to pay appicabe taes on the management fees paid to CIBC Refer to the Simpified Prospectus for the annua management fee rate The foowing tabe shows a breakdown of the services received in consideration of the management fees, as a percentage of the management fees coected from the Fund for the period ended December 31, 2017 These amounts do not incude waived fees or absorbed epenses Cass A Units Saes and traiing commissions paid to deaers 1843% Genera administration, investment advice, and profit 8157% 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 Fund s returns are after the deduction of fees and epenses, and the difference in returns between casses of units is primariy due to differences in the management epense ratio See the section entited Financia Highights for the management epense ratio Year-by-Year Returns The bar chart shows the annua performance of the Fund 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 400% 200% 00% -200% -400% 102% 285% 161% 100% 140% 130% 44% -10% -103% -257% Annua Compound Returns This tabe shows the annua compound return of each cass of units of the Fund for each indicated period ended on December 31, 2017 The annua compound tota return is aso compared to the Fund s benchmark The Fund s benchmark is the MSCI A Country Word Inde 5

6 CIBC Goba Equity Fund 1 Year 3 Years 5 Years 10 Years or Since Inception Inception Date Cass A units 130% 84% 125% 49% January 1, 1988 MSCI A Country Word Inde 164% 128% 166% 77% MSCI A Country Word Inde is a free foat-adjusted market capitaization weighted inde that is designed to measure the equity market performance of deveoped and emerging markets A discussion of the Fund's reative performance compared to its benchmark can be found in Resuts of Operations 6

7 CIBC Goba Equity Fund Summary of Investment Portfoio (as at December 31, 2017) 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 United States 391 United Kingdom 162 Other Equities 128 Maaysia 72 Hong Kong 59 Germany 43 Itay 43 Taiwan 41 Cash 37 Switzerand 35 Other Assets, ess Liabiities -03 Forward & Spot Contracts -08 % of Net Asset Vaue Top Positions USD Denominated Nikkei 225 Inde Future, March Maaysia Kuaa Lumpur Composite Inde Future, January Hong Kong Mini Hang Seng Inde Future, January Mini MSCI Emerging Markets Future, March Taiwan MSCI Stock Inde Future, January Cash 37 Itay Mini FTSE/MIB Inde Future, March Switzerand Market Inde Future, March Mini-DAX Inde Future, March Sweden Stockhom Options Market Inde Future, January Poand WIG20 Inde Future, March Appe Inc 16 Aon PLC 13 Microsoft Corp 12 Eon Mobi Corp 12 HSBC Hodings PLC 10 Euro Sto 50 Inde Future, March Accenture PLC, Cass 'A' 09 Novartis AG, Registered 08 Chevron Corp 08 Berkshire Hathaway Inc, Cass 'B' 08 JPMorgan Chase & Co 08 GaoSmithKine PLC 08 Facebook Inc, Cass 'A' 08 DSV AS 08 7

8 A note on forward-ooking statements 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 Forward-ooking statements are not guarantees of future performance 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 The above ist of important factors that may affect future resuts is not ehaustive Before making any investment decisions, we encourage you to consider these and other factors carefuy CIBC does not undertake, and specificay discaims, any obigation to update or revise any forward-ooking statements, whether as a resut of new information, future deveopments, or otherwise prior to the reease of the net management report of fund performance

9 CIBC Mutua Funds CIBC Famiy of Portfoios CIBC 18 York Street, Suite 1300 Toronto, Ontario M5J 2T8 CIBC Securities Inc Website wwwcibccom/mutuafunds CIBC Securities Inc is a whoy-owned subsidiary of CIBC and is the principa distributor of the CIBC Mutua Funds and the CIBC Famiy of Portfoios CIBC Famiy of Portfoios are mutua funds that primariy invest in other CIBC Mutua Funds To obtain a copy of the simpified prospectus, ca CIBC Securities Inc at or ask your advisor