Renaissance International Equity Fund. Annual Management Report of Fund Performance

Transcription

1 Renaissance International Equity Fund Annual Management Report of Fund Performance for the financial year ended August 31, 2017 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 FUND (3863), by writing to us at Renaissance Investments, 1500 Robert-Bourassa Boulevard, Suite 800, Montreal, QC, H3A 3S6, by visiting the SEDAR website at sedarcom, or by visiting renaissanceinvestmentsca 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: Renaissance International Equity Fund (the Fund) seeks to provide long-term capital growth through capital appreciation by investing primarily in a diversified portfolio of equity securities of foreign companies located in Europe, the Far East, and the Pacific Rim Investment Strategies: The Fund invests based on a bottom-up approach, identifying securities of growth companies with characteristics such as low prices relative to their long-term cash earnings potential and the potential for significant improvement in the company s business, financial strength, and sufficient liquidity Country allocations are not eplicitly set, but roll out from the basket of securities that comprise the portfolio Risk The Fund is an international equity fund that is suitable for long-term investors who can tolerate medium investment risk For the period ended August 31, 2017, the Fund s overall level of risk remains as discussed in the simplified prospectus Results of Operations The portfolio sub-advisor of the Fund is Walter Scott & Partners Limited (the sub-advisor) The commentary that follows provides a summary of the results of operations for the period ended August 31, 2017 All dollar figures are epressed in thousands, unless otherwise indicated The Fund's net asset value increased by 17% during the period, from $243,283 as at August 31, 2016 to $284,711 as at August 31, 2017 Net sales of $22,302 and positive investment performance resulted in an overall increase in net asset value Class A units of the Fund posted a return of 67% for the period The Fund s benchmark, the MSCI EAFE Inde (the benchmark), returned 129% for the same period The Fund s return is after the deduction of fees and epenses, unlike the benchmark's return See Past Performance for the returns of other classes of units offered by the Fund Global stock markets rose during the period, supported by encouraging corporate earnings, positive political developments in Europe and epectations of higher policy rates following years of quantitative easing (monetary policy used by central banks to increase money supply) The US presidential election had a significant impact on global equity markets, which reacted positively to the outcome The new US administration s program of corporate and personal income ta cuts, along with increased spending on US infrastructure, was epected to benefit the US economy, particularly the US corporate sector Global equity markets initially rose on this optimism, but subsequently reversed somewhat as the administration struggled to implement its policies Among developed markets, European stocks benefited from economic growth and the European Central Bank s (ECB s) commitment to monetary accommodation France was one of the best-performing developed markets following the election of a president focused on economic growth However, UK stocks declined as the country continued negotiations to eit the European Union (Breit) Heightened tensions concerning North Korea dominated news headlines toward the end of the period, but had little effect on global equity markets In terms of currencies, however, Breit uncertainties and tensions with North Korea weighed on the British pound and the US dollar, while the euro strengthened Japan posted strong returns as earnings eceeded epectations as a result of improved capital spending and continued strength in eports Globally, there were signs of economic growth in the period, with the Purchasing Managers Inde readings from the world s major economies (US, Europe, China, India and Japan) all in positive territory for both manufacturing and services

2 Renaissance International Equity Fund With global economic growth strengthening, a number of developed central banks signalled their intention to normalize monetary policy by raising policy rates and ending or unwinding quantitative easing measures However, persistently low inflation data contributed to doubts about potential interest-rate increases by the ECB and the US Federal Reserve Board, and investors ended the period anticipating continued accommodation from the central banks Stock selection in Europe outside the UK detracted significantly from the Fund s performance In terms of sectors, a significant underweight allocation to the financials sector detracted significantly from the Fund s performance, while stock selection in the materials sector detracted moderately Individual detractors included China Mobile Ltd, which is not included in the benchmark and detracted moderately, and overweight holdings in Rakuten Inc and Hennes & Mauritz AB (H&M), which detracted slightly China Mobile s profits were negatively affected by regulatory changes, although the sub-advisor epects the market-leading company to continue to benefit from rising mobile data usage in China Rakuten faced increased competition in its domestic e-commerce market H&M released weaker-than-epected monthly sales figures, which raised concerns about whether its business model is sustainable in the era of online retailing Stock selection in Japan contributed moderately to the Fund s performance In terms of sectors, stock selection in the health care sector globally contributed significantly to performance Individual contributors included overweight holdings in France-based LMVH Moët Hennessy-Louis Vuitton SA and Japan-based Keyence Corp, which contributed moderately, and a holding in Taiwan Semiconductor Manufacturing Co Ltd which contributed slightly LVMH Moët Hennessy-Louis Vuitton SA reported solid results, showing strong growth in Europe and Asia in particular Keyence posted robust sales and profit growth, driven by its overseas business The Portfolio Advisor believes it remains more profitable than its peers, and is growing faster Taiwan Semiconductor Manufacturing Co Ltd, benefited from strong revenue projections The sub-advisor added several new holdings to the Fund Coloplast AS was purchased as it is set to benefit from global population growth and an epansion of health care coverage in emerging markets The sub-advisor believes the company s overall profitability should continue to improve as a result of revenue growth, greater economic scale and cost discipline Rinnai Corp was added to the Fund for its dominant position in the tankless water heater market The sub-advisor believes demand for greater energy efficiency and penetration of piped gas into markets such as China and Indonesia should drive future overseas revenues SUNDRUG Co Ltd was also added The sub-advisor epects the company to benefit from consolidation in the fragmented Japanese drugstore market as a result of its high profitability, strong balance sheet and high cash flow generation Japanese consumer products 2 company Kao Corp was purchased as it is epanding in high-growth Asian markets and improving its underperforming cosmetics business Diagnostic testing company Sysme Corp was added for its track record of consistent and profitable growth The highly cash-generative business has a strong balance sheet and proprietary margin structure, and the majority of profits come from sales of consumables (chemical reagents), which offers resilience throughout the economic cycle Power tool manufacturer Makita Corp was added on the epectation that it may benefit from the US housing recovery as well as epansion into eastern Europe, particularly Russia New holding ASML Holding NV provides lithography equipment to the semiconductor industry, and controls approimately 80% of the global semiconductor market The Fund s holding in The Swatch Group AG was eliminated amid concerns about currency movements and the Chinese government s anti-corruption campaign, which threatened a key market for high-end watches In addition, the sub-advisor became concerned about the company s approach to production levels, inventories and margin structures Komatsu Ltd was sold from the Fund following a strong rebound in its share price, as the sub-advisor was not comfortable with the company s increased eposure to the mining sector following acquisitions The sub-advisor believes the share price already reflects a sustained recovery in commodity prices The Fund s holding in Danone was eliminated based on the sub-advisor s concerns about its acquisition-driven growth strategy The recent acquisition of WhiteWave Foods Co appears contrary to management s prior commitment to organic sales growth and improvement on return on invested capital As the acquisition of Syngenta AG by ChemChina neared completion, these holdings were sold from the Fund Recent Developments Effective April 27, 2017, the composition of the Independent Review Committee (IRC) changed Tim Kennish and William Thornhill resigned as members of the IRC and Susan Silma and Bryan Houston were appointed as members of the IRC Effective September 1, 2017, the annual management fee payable was reduced from 200% to 195% in respect of Class A units of the Fund, and from 100% to 095% in respect of Class F units of the Fund Related Party Transactions 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, Trustee, and Portfolio Advisor of the Fund CAMI, a wholly-owned subsidiary of CIBC, is the Fund's Manager, Trustee, and Portfolio Advisor CAMI receives management fees with respect to the Fund's day-to-day business and operations, calculated based on the net asset value of each respective class of units of the Fund as described in Management Fees As Trustee, CAMI holds title to the Fund's property (cash and securities) on behalf of its unitholders As Portfolio Advisor, CAMI provides, or arranges to

3 Renaissance International Equity Fund provide, investment advice and portfolio management services to the Fund CAMI also compensates dealers in connection with their marketing activities regarding the Fund From time to time, CAMI may provide seed capital to the Fund Distributor Dealers and other firms sell units of the Fund to investors These dealers and other firms include CIBC s related dealers such as 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 ISI and CIBC WM are wholly-owned subsidiaries of CIBC CAMI may pay sales commissions and 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 sales commissions and 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, 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 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 nature and liquidity of the security Dealers, including CIBC WM and CIBC World Markets Corp, may furnish goods and services, other than order eecution, when CAMI processes trades through them (referred to in the industry as soft-dollar arrangements) These goods and services are paid for with a portion of brokerage commissions and assist CAMI with investment decision-making services for the Fund or relate directly to the eecution of portfolio transactions on behalf of 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 In addition, the Manager 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 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; 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, after a matter has been referred to or reported to it by the Manager, if it determines that an investment decision was not made in accordance with conditions imposed by securities legislation or the IRC in any Related Party Transactions requiring 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 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 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 Renaissance International Equity 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 August 31 The Fund's Net Assets per Unit¹ - Class A Units Net Assets, beginning of period $ 753 $ 673 $ 628 $ 564 $ 484 Increase (decrease) from operations: Total revenue $ 019 $ 016 $ 017 $ 018 $ 014 Total epenses (023) (022) (022) (019) (015) Realized gains (losses) for the period (003) (005) Unrealized gains (losses) for the period Total increase (decrease) from operations 2 $ 049 $ 079 $ 044 $ 062 $ 075 Distributions: From income (ecluding dividends) $ $ $ $ $ From dividends From capital gains Return of capital Total Distributions 3 $ $ $ $ $ Net Assets, end of period $ 803 $ 753 $ 673 $ 628 $ This information is derived from the Fund's audited annual financial statements The Fund adopted IFRS on September 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 September 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 September 1, 2013 reflects the adjusted amount in accordance with IFRS All figures presented for periods prior to September 1, 2013 were prepared in accordance with Canadian GAAP 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 $ 104,603 $ 98,898 $ 94,981 $ 94,361 $ 75,639 Number of Units Outstanding 4 13,026,919 13,140,437 14,118,648 15,029,138 13,410,673 Management Epense Ratio 5 256% 283% 283% 283% 282% Management Epense Ratio before waivers or absorptions 6 260% 287% 290% 295% 307% Trading Epense Ratio 7 003% 004% 005% 009% 012% Portfolio Turnover Rate % 1469% 1410% 1118% 676% Net Asset Value per Unit $ 803 $ 753 $ 673 $ 628 $ This information is presented as at August 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 Renaissance International Equity Fund The Fund's Net Assets per Unit¹ - Class F Units Net Assets, beginning of period $ 1674 $ 1480 $ 1372 $ 1218 $ 1031 Increase (decrease) from operations: Total revenue $ 042 $ 036 $ 037 $ 039 $ 029 Total epenses (030) (026) (026) (023) (016) Realized gains (losses) for the period (007) (011) Unrealized gains (losses) for the period Total increase (decrease) from operations 2 $ 120 $ 199 $ 114 $ 149 $ 173 Distributions: From income (ecluding dividends) $ 008 $ 006 $ 011 $ 003 $ From dividends From capital gains Return of capital Total Distributions 3 $ 008 $ 006 $ 011 $ 003 $ Net Assets, end of period $ 1798 $ 1674 $ 1480 $ 1372 $ This information is derived from the Fund's audited annual financial statements The Fund adopted IFRS on September 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 September 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 September 1, 2013 reflects the adjusted amount in accordance with IFRS All figures presented for periods prior to September 1, 2013 were prepared in accordance with Canadian GAAP 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 F Units Total Net Asset Value (000s) 4 $ 79,565 $ 52,652 $ 41,131 $ 33,340 $ 23,674 Number of Units Outstanding 4 4,424,146 3,145,730 2,779,862 2,429,833 1,943,915 Management Epense Ratio 5 134% 133% 136% 138% 141% Management Epense Ratio before waivers or absorptions 6 135% 134% 136% 139% 142% Trading Epense Ratio 7 003% 004% 005% 009% 012% Portfolio Turnover Rate % 1469% 1410% 1118% 676% Net Asset Value per Unit $ 1798 $ 1674 $ 1480 $ 1372 $ This information is presented as at August 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 Renaissance International Equity Fund The Fund's Net Assets per Unit¹ - Class O Units Net Assets, beginning of period $ 1014 $ 891 $ 823 $ 725 $ 605 Increase (decrease) from operations: Total revenue $ 025 $ 022 $ 022 $ 023 $ 017 Total epenses (004) (003) (003) (003) Realized gains (losses) for the period (004) (007) Unrealized gains (losses) for the period Total increase (decrease) from operations 2 $ 093 $ 131 $ 084 $ 101 $ 109 Distributions: From income (ecluding dividends) $ 013 $ 010 $ 015 $ 006 $ From dividends From capital gains Return of capital Total Distributions 3 $ 013 $ 010 $ 015 $ 006 $ Net Assets, end of period $ 1096 $ 1014 $ 891 $ 823 $ This information is derived from the Fund's audited annual financial statements The Fund adopted IFRS on September 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 September 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 September 1, 2013 reflects the adjusted amount in accordance with IFRS All figures presented for periods prior to September 1, 2013 were prepared in accordance with Canadian GAAP 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 Total Net Asset Value (000s) 4 $ 100,543 $ 91,733 $ 83,708 $ 72,509 $ 45,921 Number of Units Outstanding 4 9,176,218 9,045,435 9,397,234 8,807,042 6,338,021 Management Epense Ratio 5 000% 000% 000% 000% 000% Management Epense Ratio before waivers or absorptions 6 007% 005% 009% 008% 010% Trading Epense Ratio 7 003% 004% 005% 009% 012% Portfolio Turnover Rate % 1469% 1410% 1118% 676% Net Asset Value per Unit $ 1096 $ 1014 $ 891 $ 823 $ This information is presented as at August 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 Renaissance International Equity Fund Management Fees The Fund pays CAMI an annual management fee 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 CAMI in consideration for providing, or arranging for the provision of, management, distribution, and portfolio advisory services Advertising and promotional epenses, office overhead epenses, and trailing commissions are paid by CAMI out of the management fees received from the Fund The Fund is required to pay applicable taes on the management fees paid to CAMI Refer to the simplified prospectus for the 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 August 31, 2017 These amounts do not include waived fees or absorbed epenses ClassAUnits ClassFUnits Sales and trailing commissions paid to dealers 4515% 000% General administration, investment advice, and profit 5485% 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 Financial Highlights for the management epense ratio Year-by-Year Returns These bar charts show the annual performance of each class of units of the Fund for each of the periods shown, and illustrate how the performance has changed from period to period These bar charts show, in percentage terms, how an investment made on September 1 would have increased or decreased by August 31, unless otherwise indicated Class A Units 20% 165% 10% 0% -10% -86% -47% -14% 20% 26% 113% 71% 119% 67% -20%

8 Renaissance International Equity Fund Class F Units 40% 20% 0% -20% -74% -34% -01% 34% 40% 181% 129% 87% 136% 80% -40% Class O Units 40% 20% 0% -28% 55% 198% 145% 102% 151% 95% -20% -40% 11 a a 2011 return is for the period from October 20, 2010 to August 31, 2011 Annual Compound Returns This table shows the annual compound return of each class of units of the Fund for each indicated period ended on August 31, 2017 The annual compound return is also compared to the Fund s benchmark The Fund s benchmark is the MSCI EAFE Inde 1 Year 3 Years 5 Years 10 Years* or Since Inception* Inception Date Class A units 67% 85% 106% 41% January 2, 2001 MSCI EAFE Inde 129% 84% 143% 38% Class F units 80% 101% 122% 55% May 16, 2006 MSCI EAFE Inde 129% 84% 143% 38% Class O units 95% 116% 137% 102% October 20, 2010 MSCI EAFE Inde 129% 84% 143% 95% * If a class of units has been outstanding for less than 10 years, the annual compound return since inception is shown MSCI EAFE Inde is a free float-adjusted market capitalization Inde of stocks of companies of developed market equity indices covering countries in Europe, Australia, and the Far East A discussion of the Fund's relative performance compared to its benchmark can be found in Results of Operations 8

9 Renaissance International Equity Fund Summary of Investment Portfolio (as at August 31, 2017) The summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund A quarterly update is available by visiting renaissanceinvestmentsca The Top Positions table shows a fund s 25 largest positions For funds with fewer than 25 positions in total, all positions are shown % of Net Asset Portfolio Breakdown Value Japan 279 Hong Kong 127 Switzerland 115 United Kingdom 108 France 95 Other Equities 86 Denmark 63 Germany 39 Cash 32 Australia 28 Taiwan 27 Other Assets, less Liabilities 01 % of Net Asset Top Positions Value Cash 32 Keyence Corp 29 Taiwan Semiconductor Manufacturing Co Ltd, ADR 27 AIA Group Ltd 25 SMC Corp 23 Daito Trust Construction Co Ltd 23 Industria de Diseño Tetil SA 22 Novo Nordisk AS, Series 'B' 22 Kone OYJ, Class 'B' 22 Novozymes AS, Class 'B' 22 Fanuc Corp 21 Diageo PLC 21 Kuehne & Nagel International AG, Registered 20 L'Oréal SA 20 Makita Corp 20 Nestlé SA, Series 'B', Registered 20 China Mobile Ltd 20 Eperian PLC 20 SAP AG 20 Daikin Industries Ltd 20 Compass Group PLC 20 SGS SA, Registered 20 LVMH Moët Hennessy-Louis Vuitton SA 20 DENSO Corp 19 Coloplast AS, Class 'B' 19 9

10 A note on Forward-looking Statements 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 Forward-looking statements are not guarantees of future performance 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 The above list of important factors that may affect future results is not ehaustive Before making any investment decisions, we encourage you to consider these and other factors carefully CIBC Asset Management Inc does not undertake, and specifically disclaims, 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

11 Renaissance Investments 1500 Robert-Bourassa Boulevard, Suite 800 Montreal, Quebec H3A 3S FUND (3863) Website renaissanceinvestmentsca CIBC Asset Management Inc, the manager and trustee of the Renaissance Investments family of funds, is a wholly-owned subsidiary of Canadian Imperial Bank of Commerce Please read the Renaissance Investments family of funds and Aiom Portfolios simplified prospectus before investing To obtain a copy of the simplified prospectus, call FUND (3863), us at info@renaissanceinvestmentsca, or ask your advisor Renaissance Investments is offered by and is a registered trademark of CIBC Asset Management Inc 02410E (201708)