TD Asian Growth Class

Transcription

1 TD Asset Management TD Asian Growth Class (01/17) TD Mutual Funds Corporate Class Funds for the period ended This Interim Management Report of Fund Performance contains financial highlights, but does not contain either the complete interim financial report or annual financial statements of the invest ment fund. You can get a copy of the interim financial report or annual financial statements at your request, at no cost, by calling , by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto-Dominion Centre, Toronto, Ontario, M5K 1G8, by to tdadvisor@td.com, or by visiting our website at tdassetmanagement.com or the SEDAR website at sedar.com Securityholders may also contact us or visit our website to get a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure at no cost. This Interim Management Report of Fund Performance represents management s view of the significant factors and developments affecting the investment fund s performance and outlook since May 31, 2016, the investment fund s fiscal year-end, until. This report should be read in conjunction with the May 31, 2016 Annual Management Report of Fund Performance.

2 ntd Asian Growth Class Management Discussion of Fund Performance Results of Operations The Investor Series shares of the TD Asian Growth Class ( Fund ) returned 8.5 percent for the six-month period ended November 30, 2016 ( Reporting Period ), versus 10.7 percent for the Fund s product benchmark the MSCI All Country Asia Pacific ex-japan Index (Net Dividend, C$). Returns for other series of the Fund may vary, largely due to differences in fees and expenses. Unlike the benchmark, the Fund s return is quoted after the deduction of fees and expenses. During the Reporting Period, the Fund invested its assets solely in the O-Series units of an underlying fund, the TD Asian Growth Fund ( UF ). The performance of the UF is similar to that of the Fund except for differences arising from fees and expenses. This Results of Operations and the following Recent Developments commentaries reflect the views of the UF s sub-adviser for the same period as they directly impact the Fund. Market Update Asian equities rose over the Reporting Period. News in the latter part of June was dominated by the U.K. s decision to leave the European Union, and Asian equity markets (as was the case with global equity markets) initially sold off sharply. However, they rallied in the final days of the month. The generally positive worldwide backdrop helped Asian equity markets gain over the Reporting Period. Global equity markets were generally stronger as well, with stocks pushing higher and the U.S. Federal Reserve Board ( Fed ) leaving interest rates at their historically low levels yet again, supporting the lower-for-longer idea, which has been supportive of emerging markets equities in There was also noticeable outperformance by North Asia over South Asia over the Reporting Period, with the strongest-performing equity markets being Taiwan, China, Hong Kong and South Korea. Events in the U.S. had a significant impact on Asia, with the presidential election driving up bond yields and a number of regional currencies being pressured, leading to rising concerns about reserve adequacy most notably in Malaysia and Indonesia. While the world remains unclear about the economic plans of the new administration in the U.S., expectations are building for a looser fiscal policy that the UF s sub-adviser anticipates should ultimately result in a return to the more typical monetary policy prior to the global financial crisis. Earlier in the Reporting Period, Raghuram Rajan s replacement as governor of the Reserve Bank of India ( RBI ) was announced, with his deputy, Urjit Patel, taking over in September and almost immediately lowering policy interest rates. As headline inflation had been higher than the RBI s target range, this was somewhat surprising, with the new central banker emphasizing a likely reduction in food price inflation. Elsewhere, Thailand held a constitutional referendum to pass a new draft constitution and to allow both chambers of the National Assembly to appoint the country s new prime minister. Both votes passed with a slightly larger majority than expected, pushing the Thai stock market higher. Australia s benchmark interest rate was reduced by 0.25 percent, to a record low of 1.5 percent. The Reserve Bank of Australia pointed to a slow world economy and the difficulty a strong Australian dollar may cause, although more recent economic data resulted in higher bond yields. Key Contributors/Detractors From a regional perspective, the UF s stock selection in Malaysia was the main positive driver of total returns. A lack of exposure to the Philippines, which was down 1.1 percent over the Reporting Period, also aided the UF s performance. Conversely, stock selection in India was the main detractor, while the positive aspects of the UF s overweight exposure to China (5.4 percent) were outweighed by poor stock selection. At a sector level, positive stock selection in the information technology and real estate sectors, alongside a lack of exposure to health care stocks (-3.3 percent), contributed to returns. However, poor stock selection in the materials, consumer discretionary and energy sectors detracted from performance. With regards to individual stocks, the UF s holding in South Korean electronics giant Samsung Electronics Co., Ltd. performed well. Early in the Reporting Period, analysts began to revise up expecta tions for the company s profits based on a recovery in handset profitability. In November, the company announced it would return more money to shareholders through share buybacks and dividends. Malaysian airline AirAsia Berhad ( AirAsia ), which was sold during the Reporting Period, fared well early on, reporting strong first-quarter results, which led to upward revisions by analysts. The weakest performer was LG Household and Health Care, Ltd. The South Korean cosmetics and household-products manufacturer released another set of positive results in July, delivering strong growth and beating consensus expectations. Despite these results, the stock was sold off due to a combination of profit taking and moderation in growth relative to recent history. Infosys Limited was also a notable detractor from performance, the company was impacted by weak first-quarter results and general commentary from the industry suggesting U.S. demand was mixed. This was compounded by the U.K. s Brexit vote, as Infosys has reasonable exposure to Europe. The UF initiated six new holdings during the Reporting Period. These were bottling company Coca-Cola Amatil Limited, South Korean water-purifier manufacturer Coway Co. Ltd., Chinese sportswear brand Li Ning Company Limited, Indonesian retailer PT Matahari Department Store Tbk, South Korean electronics name Primax Technologies Inc. and semiconductor manufacturer SK Hynix Inc. Sales over the Reporting Period were Malaysian airline AirAsia, Australian transport group Asciano Limited and Taiwanese lithium battery manufacturer Simplo Technology Co., Ltd. The UF holds securities that may potentially become illiquid securities. The UF s sub-adviser monitors the overall liquidity of the UF on a regular basis, and the number of trading days required to liquidate holdings, to ensure that the UF can meet its future cash needs. 1

3 Recent Developments The federal budget released on March 22, 2016 (the 2016 Budget Proposal ) proposes to amend the Income Tax Act (Canada) such that a switch of shares between two classes of a mutual fund corporation (including the classes of TD Mutual Funds Corporate Class Ltd.) will be treated as a disposition of those shares at their fair market value and will trigger a capital gain or capital loss if the switch occurs on or after the proposed effective date of October 1, The proposed effective date was extended to January 1, 2017 when the draft legislation was released on July 29, 2016, as of which investors will no longer be able to switch between classes on a tax-deferred basis. On December 15, 2016, Bill C-29 containing the above budget measure received Royal Assent and came into force. A switch of shares from one series of a class to shares of another series of the same class will continue to generally not be considered a taxable disposition (except to the extent that shares are redeemed to pay any applicable fees) as the only difference between the series relates to management fees or expenses to be borne by investors. conversion and redemption orders, issues investor statements and prepares annual tax reporting information on behalf of the Fund. The Fund also maintains bank accounts and overdraft provisions with TD for which TD earns a fee. Buying and Selling Securities: TDAM has established an independent review committee ( IRC ) which acts as an impartial and independent committee to review and provide recommendations or, if appropriate, approvals respecting any conflict of interest matters referred to it by TDAM. The IRC prepares, at least annually, a report of its activities for securityholders of the Fund. The report is available on the TDAM website at tdassetmanagement.com or at the securityholder s request at no cost by contacting TDAM (see front cover). The Fund and/or the underlying fund in which the Fund invests did not engage in any portfolio transactions requiring IRC approval during the Reporting Period. The UF s sub-adviser believes investors have been very focused on a number of major macroeconomic risks for some time: a slowing Chinese economy, a change in Fed policy and the continuous downgrading of earnings expectations. Looking ahead, the UF s subadviser believes these risks are likely to remain significant. China is undergoing a structural shift and a slower growth rate is anticipated. That said, the country is unlikely to repeat the mistakes of 2009, and further stimulus measures are likely to be limited. Related Party Transactions Affiliates of TD Asset Management Inc. ( TDAM ) may earn fees and spreads in connection with various services provided to, or transactions with, the Fund, such as in connection with banking, custody, brokerage and derivatives transactions. Manager and Portfolio Adviser: TDAM, a wholly-owned subsidiary of The Toronto-Dominion Bank ( TD ), is the manager and portfolio adviser of the Fund. The Fund pays TDAM an annual management fee, which may vary for each series of Fund shares, and an annual administration fee of 0.35 percent with respect to the Investor Series and Advisor Series shares of the Fund. The Fund may also hold series of units of other funds managed by TDAM for which TDAM may be paid a fee. However, there is no duplication of fees. Distributor: Shares of the Fund are distributed through brokers and dealers including TD Waterhouse Canada Inc. ( TDW ), a wholly-owned subsidiary of TD. TDW, like other dealers, is paid a trailer commission by TDAM for distributing certain series of shares of the Fund. Trailer commissions are paid by TDAM out of the management fees it receives from the Fund and are based on the average value of assets held by each dealer. Registrar and Transfer Agent: TD is the registrar and transfer agent of the Fund, and as such maintains all shareholder records, processes purchase, switch, 2

4 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 six-month period ended and the past five fiscal years, as applicable. Net Assets per Share ($) 1 INVESTOR SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Net Assets, Beginning of Period Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.18) (0.36) (0.57) (0.50) (0.32) (0.30) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period 0.89 (2.65) (0.62) Total Increase (Decrease) from Operations (2.05) (0.87) Distributions: From Net Investment Income (excluding dividends) From Dividends 0.00 (0.23) (0.21) (0.04) From Capital Gains (0.59) (0.74) (0.15) Return of Capital Total Annual Distributions 3 (0.59) (0.97) (0.36) (0.04) Net Assets, End of Period ADVISOR SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Net Assets, Beginning of Period Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.17) (0.34) (0.57) (0.51) (0.32) (0.30) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period 0.82 (2.27) (0.62) Total Increase (Decrease) from Operations (1.66) (0.87) Distributions: From Net Investment Income (excluding dividends) From Dividends 0.00 (0.23) (0.56) (0.02) From Capital Gains (0.49) (1.31) (0.09) Return of Capital Total Annual Distributions 3 (0.49) (1.54) (0.65) (0.02) Net Assets, End of Period Footnotes for the above table(s) can be found at the end of the Net Assets per Share section. 3

5 Net Assets per Share ($) 1 (continued) F-SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Net Assets, Beginning of Period Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.10) (0.20) (0.37) (0.35) (0.03) (0.12) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period 1.09 (1.79) (5.10) (0.63) Total Increase (Decrease) from Operations (1.56) (4.13) (0.70) Distributions: From Net Investment Income (excluding dividends) From Dividends 0.00 (0.33) (0.01) (0.24) From Capital Gains (0.33) (0.02) (0.19) Return of Capital Total Annual Distributions 3 (0.33) (0.35) (0.20) (0.24) Net Assets, End of Period This information is derived from the Fund s interim and audited annual financial statements. The Fund adopted International Financial Reporting Standards ( IFRS ) on June 1, 2014 and accordingly adjusted the immediately preceding financial year ended May 31, 2014 to reflect the amounts in accordance with IFRS. Previously, financial statements were prepared as per Canadian generally accepted accounting principles ( GAAP ) under which the Fund measured fair values of its investments based on bid prices for long positions and ask prices for short positions. As such, the net assets per share presented in the financial statements may have differed from the net asset value ( NAV ) per share calculated for fund pricing purposes. Under IFRS, the Fund measures fair values of its investments based on close market prices, where the close market price falls within the bid-ask spread or based on quotations from recognized dealers. As such, the Fund s accounting policies for measuring the fair value of investments in the financial statements are substantively consistent with those used in measuring the NAV for transactions with shareholders. All figures presented prior to June 1, 2013 were prepared in accordance with Canadian GAAP. 2 Net assets and distributions are based on the actual number of shares outstanding at the relevant time. The increase (decrease) from operations presented in the Net Assets per Share tables starting from June 1, 2013 are based on the weighted average number of shares outstanding over the financial periods. The increase (decrease) from operations prior to June 1, 2013 were calculated by aggregating each valuation day s increase (decrease) from operations divided by the number of shares outstanding on that date. These tables are not intended to be a reconciliation of the net assets per share. 3 Distributions were paid in cash or reinvested in additional shares of the Fund, or both. Ratios and Supplemental Data INVESTOR SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Total Net Asset Value ($000s) Number of Shares Outstanding (000s) Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Share ($) ADVISOR SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Total Net Asset Value ($000s) Number of Shares Outstanding (000s) Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Share ($) Footnotes for the above table(s) can be found at the end of the Ratios and Supplemental Data section. 4

6 Ratios and Supplemental Data (continued) F-SERIES Nov. 30, 2016 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013 May 31, 2012 Total Net Asset Value ($000s) Number of Shares Outstanding (000s) Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Share ($) This information is provided as at and May 31 of the years shown, as applicable. 2 Management expense ratio ( MER ) is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period, including the Fund s proportionate share of the MER, if any, of the underlying fund(s) in which the Fund has invested, and is expressed as an annualized percentage of daily average NAV during the period. It excludes any operating expenses waived or absorbed by TDAM, which may be discontinued at any time by TDAM at its discretion without notice. 3 The trading expense ratio ( TER ) represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average NAV during the stated period. Where a Fund invests in securities of any underlying fund, the TER presented for the Fund includes the portion of TERs, if available, of the underlying fund(s) attributable to this investment. 4 The Fund s portfolio turnover rate ( PTR ) indicates how actively the Fund s portfolio adviser manages its investments. A PTR of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the stated period. The higher a fund s PTR, the greater the trading costs payable, directly or indirectly, by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the fiscal year. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Less than $500 Less than 500 shares Management Fees As manager of the Fund, TDAM is responsible for the overall business and affairs of the Fund including activities related to making shares of the Fund available to investors, and providing, or arranging for the provision of, investment advisory services and marketing services to the Fund. In consideration for the provision of such services, each series of the Fund pays TDAM a management fee. Management fees are calculated and accrued as a percentage of the net asset value of each series of shares of the Fund, as of the close of business on each business day for each series and are paid monthly to TDAM. The maximum management fee is the maximum fee that can be charged to each series of shares of the Fund according to the simplified prospectus. TDAM may charge management fees that are less than the management fees TDAM is otherwise entitled to charge each series of shares of the Fund. The actual management fee is the annualized fee that was charged for the Reporting Period. TDAM may charge the maximum management fee without notice to shareholders. Management fees for the Reporting Period, annualized, and a breakdown of the major services rendered for each series, as a percentage of the actual management fees, are as follows: Maximum Actual Dealer Waived (expressed as a %) Mgmt. Fee Mgmt. Fee Compensation Expenses Other Investor Series Advisor Series F-Series > Includes management fees paid by the Fund and the proportionate management fees, if any, of the underlying fund in which the Fund has invested. However, there is no duplication of fees for the services provided. Investment advisory, marketing services and other. TDAM s expenses for servicing this series of the Fund exceeded the management fees of the series. 5

7 Past Performance The following charts show how the Fund has performed in the past, and can help you understand the risks of investing in the Fund. These returns include the reinvestment of all distributions and would be lower if an investor did not reinvest distributions. They do not include deduction of sales, switch, redemption, or other optional charges (which dealers may charge) or income taxes payable, and these returns would be lower if they did. The Fund s past performance does not necessarily indicate how it will perform in the future. Year-by-year returns The bar charts show how the Fund s performance has varied from year to year for each of the fiscal years shown. They show in percentage terms how an investment made on June 1 would have increased or decreased by May 31 for each year and for the six-month period ended. 6

8 Summary of Investment Portfolio as at % of Net Asset Value as at % of Net Asset Value ASSET ALLOCATION International Equity Funds Other Net Assets (Liabilities) 0.0 TOP 25 INVESTMENTS 1. TD Asian Growth Fund, O-Series Total % of Net Asset Value represented by these holdings TOTAL NET ASSET VALUE (000s) $ 489 as at % of Net Asset Value INVESTMENT MIX OF UNDERLYING FUND China 24.6 South Korea 14.8 Australia 14.5 Hong Kong 14.3 Taiwan 9.6 India 8.5 Singapore 5.9 United Kingdom 1.9 Thailand 1.9 Indonesia 1.7 Other Countries 2.6 Cash 1.2 Other Net Assets (Liabilities) (1.5) TOP 25 INVESTMENTS OF UNDERLYING FUND 1. Taiwan Semiconductor Manufacturing Company Limited Tencent Holdings Limited Samsung Electronics Co., Ltd AIA Group Ltd Commonwealth Bank of Australia China Construction Bank Corporation Alibaba Group Holding Limited Macquarie Group Limited China Mobile Limited United Overseas Bank Limited E.SUN Financial Holding Company Ltd Infosys Limited Hyundai MOBIS Co., Ltd SK hynix Inc Orora Limited CNOOC Limited Minth Group Limited Global Logistic Properties Limited LG Chem Ltd Woolworths Limited Industrial and Commercial Bank of China Limited HSBC Holdings PLC Hero MotoCorp Ltd LG Household & Health Care Ltd China Merchants Holdings (International) Company Limited 1.6 Total % of Net Asset Value represented by these holdings 72.7 Note: Totals may not add due to rounding to one decimal place of individual figures. The simplified prospectus and other information about underlying TD investment fund(s) are available on the internet at sedar.com, tdassetmanagement.com or upon request to TD Asset Management Inc. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and the underlying fund. Updates are available quarterly. You may obtain the most current quarterly information by contacting TD Mutual Funds at , by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto, Ontario, M5K 1G8, or by to tdadvisor@td.com 7

9 Caution regarding forward-looking statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking state ments including, but not limited to, statements about the Fund, its strategy, risks, expected performance and condition. 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 expects, anticipates, intends, plans, believes, estimates and similar forward-looking expressions or negative versions thereof. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future general economic, political and relevant market factors, such as interest rates, foreign exchange rates, equity and capital markets, and the general business environment, in each case assuming no changes to applicable tax or other laws or government regulation. Expectations and projections about future events are inherently subject to, among other things, risks and uncertainties, some of which may be unforeseeable. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date. Forward-looking statements are not guarantees of future performance, and actual events could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could con tribute to these digressions, including, but not limited to, general economic, political and relevant market factors in North America and internationally, interest and foreign exchange rates, equity and capital markets, business competition, tech nological change, changes in government relations, unexpected judicial or regulatory proceedings and catastrophic events. The above mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing any undue reliance on forward-looking statements. Further, there is no specific intention of updating any forward-looking statements contained herein whether as a result of new information, future events or otherwise. For Funds with references to FTSE TMX Canada indices: FTSE TMX Global Debt Capital Markets Inc 2016 FTSE is a trade mark of FTSE International Ltd and is used under licence. TMX is a trade mark of TSX Inc. and is used under licence. All rights in the FTSE TMX Global Debt Capital Markets Inc s indices and/or FTSE TMX Global Debt Capital Markets Inc s ratings vest in FTSE TMX Global Debt Capital Markets Inc and/or its licensors. Neither FTSE TMX Global Debt Capital Markets Inc nor its licensors accept any liability for any errors or omissions in such indices and/or ratings or underlying data. No further distribution of FTSE TMX Global Debt Capital Markets Inc s data is permitted without FTSE TMX Global Debt Capital Markets Inc s express written consent. TD Mutual Funds Corporate Class funds are issued by TD Mutual Funds Corporate Class Ltd. TD Mutual Funds, TD Pools, TD Emerald Funds and the classes of TD Mutual Funds Corporate Class Ltd. are managed by TD Asset Management Inc., a wholly-owned subsidiary of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. The TD logo and other trade-marks are the property of The Toronto-Dominion Bank. 8