Ninepoint Short-Term Bond Fund

Transcription

1 Ninepoint Short-Term Bond Fund INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE JUNE 30 The interim management report of fund performance is an analysis and explanation that is designed to complement and supplement an investment fund s financial statements. This report contains financial highlights but does not contain the complete interim financial statements of the investment fund. You can get a copy of the interim financial statements at your request, and at no cost, by calling , by visiting our website at or SEDAR at or by writing to us at: Ninepoint Partners LP, Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2700, P.O. Box 27, Toronto, Ontario M5J 2J1. Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure.

2 Ninepoint Short-Term Bond Fund June 30, Management Discussion of Fund Performance Investment Objective and Strategies The investment objective of Ninepoint Short-Term Bond Fund (the Fund ) is to provide regular income while preserving capital and maintaining liquidity. The Fund invests primarily in short-term debt securities issued by Canadian federal, provincial and municipal governments as well as corporate issuers. To achieve the Fund s investment objective, the Fund will employ investment strategies based upon economic research, quantitative and technical analysis, the analysis of credit quality pertaining to prospective investments and establishing an evolving asset allocation containing government and corporate bonds. The Fund may invest a portion of its assets in short-term debt securities of foreign issuers. As part of its investment strategy, the Fund may engage in securities lending and use derivative instruments, such as options, futures, forward contracts and swaps, in a manner which is consistent with the Fund s investment objectives and permitted by securities regulations. Risk The risks of investing in the Fund are described in the Fund s simplified prospectus. The Fund is suitable for those investors who seek exposure to short-term high quality fixed income securities issued primarily by Canadian governments and companies. The Fund is suitable for investors with a low risk tolerance and a short-term investment horizon. There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. Results of Operations and Recent Developments The Fund, Series A, returned 0.8% in the first half of, compared to a 0.5% return for the FTSE TMX Canada Short Term Overall Bond Index for the same period. During the period, the Bank of Canada increased interest rates. The Fund s low duration (interest-rate sensitivity) contributed to its performance through the use of floating-rate notes and very short-dated corporate bonds. As interest rates rose, the Fund remained stable, while earning reasonable income. The average weighting of the Fund s holdings was A-, which contributed to performance as credit spreads (the difference in yield between two bonds of similar maturity but differing credit quality) widened during the period. The Fund s lack of exposure to foreign currency and non-canadian securities, which also contributed to performance as these assets generally underperformed. From an individual security perspective, a position in a floating-rate preferred share contributed significantly to the Fund s performance as it rebounded as interest rates rose. A legacy capital instrument of The Toronto-Dominion Bank that is scheduled to be called later this year contributed significantly to the Fund s performance. Because of its nature (a Tier 1 capital instrument), this bond has a higher yield, but very low duration because of its call date (date on which a bond can be redeemed before maturity). The Manager increased the Fund s allocation to floating-rate notes to 30%. Floating-rate note prices do not rise and fall with interest rates because the coupon they offer adjusts to market rates every quarter. As a result, they offer yield, but less interest-rate sensitivity than fixed coupon bonds. The Fund s net asset value decreased by 15.8% during the period, from 13.9 million as at December 31,, to 11.7 million as at June 30,. This change was primarily due to net share redemptions of 2.2 million. The management expense ratio increased compared to the prior period. Ninepoint Partners LP is the manager and portfolio advisor of the Fund. Prior to August 1,, Sprott Asset Management LP was the manager and portfolio advisor of the Fund. Ninepoint Partners LP assumed the portfolio management of the Canadian diversified asset business of Sprott Asset Management LP on August 1,. NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

3 Ninepoint Short-Term Bond Fund June 30, Related Party Transactions MANAGEMENT FEES The Fund pays a management fee to the Manager an annual rate of up to 0.75% for Series A units, up to 0.50% for Series F units and is negotiated by the unitholders for Series I and Series I1. The management fee is calculated and accrued daily based on daily net asset value of the applicable series of the Fund, and is paid monthly. For the six-month period ended June 30,, the Fund incurred management fees of 22,864 (including taxes). The breakdown of the services received in consideration of the management fees, as a percentage of management fees, is as follows: Portfolio Advisory Trailing Commission Ninepoint Short-Term Bond Fund Series A 66% 34% Ninepoint Short-Term Bond Fund Series F 100% Ninepoint Short-Term Bond Fund Series I 100% Ninepoint Short-Term Bond Fund Series I1 100% Out of the management fees that the Manager received from the Fund, the Manager paid trailer commissions of 685 during the six-month period ended June 30, to SP Wealth, an affiliate of the manager. OPERATING EXPENSES The Fund pays its own operating expenses, which include, but are not limited to, audit, legal, custodial, trustee, filing and administrative expenses as well as unitholder reporting costs. The Manager pays certain of these expenses on behalf of the Fund and then is reimbursed by the Fund. At its sole discretion, the Manager may waive or absorb a portion of the operating expenses of certain Funds. Amounts waived or absorbed by the Manager are reported in the Statements of Comprehensive Income. Waivers or absorptions can be terminated at any time without notice. For the six-month period ended June 30,, the Manager did not absorb any of the expenses. OTHER RELATED PARTY TRANSACTIONS The Fund relied on the approval, positive recommendation or standing instruction from the Fund s Independent Review Committee with respect to any related party transactions. NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

4 Ninepoint Short-Term Bond Fund June 30, 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 June 30, and each of the previous twelve-month periods ended December 31 shown, unless otherwise indicated. The Fund s Net Assets per Unit 1 Series A Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.08) (0.09) (0.09) (0.10) (0.08) (0.08) Realized gains (losses) for the period 0.05 (0.07) (0.04) Unrealized gains (losses) for the period (0.03) (0.03) (0.03) (0.03) (0.03) Total increase (decrease) from operations Distributions: From income (excluding dividends) Total annual distributions Net assets, end of period Series F Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.07) (0.06) (0.07) (0.07) (0.06) (0.06) Realized gains (losses) for the period 0.06 (0.06) (0.05) Unrealized gains (losses) for the period (0.03) (0.05) (0.02) (0.03) (0.01) Total increase (decrease) from operations Distributions: From income (excluding dividends) Total annual distributions Net assets, end of period NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

5 Ninepoint Short-Term Bond Fund June 30, Series I Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.04) (0.01) (0.01) (0.02) Realized gains (losses) for the period 0.06 (0.06) (0.05) Unrealized gains (losses) for the period (0.03) 0.01 (0.04) (0.10) (0.02) Total increase (decrease) from operations Distributions: From income (excluding dividends) Total annual distributions Net assets, end of period Series I1 4 Net assets, beginning of period Increase (decrease) from operations: Total revenue Total expenses (0.05) - Realized gains (losses) for the period 0.05 (0.02) Unrealized gains (losses) for the period (0.05) - Total increase (decrease) from operations Distributions: From income (excluding dividends) Total annual distributions Net assets, end of period This information is derived from the Fund s interim and audited annual financial statements. 2 The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period. Net assets and distributions are based on the actual number of units outstanding at the relevant time. This table is not intended to be a reconciliation of beginning to ending net assets per unit. 3 Distributions were reinvested in additional units of the Fund. 4 Information provided is for the period November 15, (first issuance) to December 31, for Series I1. 5 The final allocation of distributions for the period ended June 30, between income, dividends, capital gains and return of capital will be determined at December 31,. NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

6 Ninepoint Short-Term Bond Fund June 30, Ratios and Supplemental Data Series A Total net asset value (000s) 1 3,070 3,539 4,600 3,121 2,568 7,345 Number of units outstanding 1 314, , , , , ,832 Management expense ratio % 0.92% 0.94% 0.98% 0.84% 0.84% Management expense ratio before waivers or absorptions % 1.30% 1.43% 1.80% 1.41% 1.22% Trading expense ratio 4 Portfolio turnover rate % 63.13% 57.02% 51.41% 90.86% 45.23% Net asset value per unit Series F Total net asset value (000s) 1 3,083 3,949 6,023 5,024 6,173 10,032 Number of units outstanding 1 315, , , , ,706 1,029,273 Management expense ratio % 0.66% 0.66% 0.69% 0.57% 0.57% Management expense ratio before waivers or absorptions % 1.03% 1.19% 1.52% 1.15% 0.95% Trading expense ratio 4 Portfolio turnover rate % 63.13% 57.02% 51.41% 90.86% 45.23% Net asset value per unit Series I Total net asset value (000s) 1 5,303 6,341 9,802 4,804 1,465 1,934 Number of units outstanding 1 539, , , , , ,957 Management expense ratio % 0.08% 0.11% 0.19% 0.00% 0.00% Management expense ratio before waivers or absorptions % 0.47% 0.59% 0.98% 0.61% 0.38% Trading expense ratio 4 Portfolio turnover rate % 63.13% 57.02% 51.41% 90.86% 45.23% Net asset value per unit Series I1 Total net asset value (000s) Number of units outstanding 1 26,863 10,000 Management expense ratio % 0.28% Management expense ratio before waivers or absorptions % 0.75% Trading expense ratio 4 Portfolio turnover rate % 63.13% Net asset value per unit The information is provided as at June 30, and December 31 of the years shown prior to. 2 Management expense ratio ( MER ) is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of the daily average net asset value during the period. 3 The Manager may waive or absorb a portion of the operating expenses of the Fund. Waivers and absorption can be terminated at any time. 4 The trading expense ratio ( TER ) represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The TER includes dividend expense and securities borrowing expense paid by the Fund in connection with securities sold short. 5 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser trades its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. The portfolio turnover is expressed as a non-annualized percentage. NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

7 Ninepoint Short-Term Bond Fund June 30, Past Performance The indicated rates of return are the historical total returns including changes in unit values and assume reinvestment of all distributions in additional units of the relevant Series of the Fund. These returns do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that may reduce returns. Please note that past performance is not indicative of future performance. All rates of return are calculated based on the Net Asset Value of the particular Series of the Fund. Year-by-Year Returns The following chart indicates the performance of each Series of the Fund for the six-month period ended June 30, and each of the previous twelve-month periods ended December 31 shown, unless otherwise noted. The chart shows, in percentage terms, how much an investment made on the first day of each period would have grown or decreased by the last day of each period. 10 Return (%) * ** Series A Series F Series I Series I1 * Return from August 5, 2010 (launch date) for Series A and F and December 7, 2010 for Series I, to December 31, 2010 (not annualized). ** Return from November 15, to December 31, for Series I1 (not annualized). NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

8 Ninepoint Short-Term Bond Fund June 30, Summary of Investment Portfolio As at June 30, Portfolio Allocation All Long Positions % of Net Asset Value Issuer % of Net Asset Value Long Positions TD Capital Trust III, 7.23%, Corporate Bonds 98.3 VW Credit Canada Inc., 2.22%, Mar 30, Government Bonds 0.9 Manulife Bank of Canada, 1.98%, Jan 27, Total Long Positions 99.2 Bruce Power LP, 2.84%, Jun 23, Cash 0.3 Central 1 Credit Union, 2.09%, Feb 5, Other Net Assets 0.5 Molson Coors International LP, 2.25%, Sep 18, 6.0 Total Net Asset Value Loblaw Companies Ltd., 3.75%, Mar 12, Ford Credit Canada Ltd., 3.14%, Jun 14, HSBC Bank Canada, 2.49%, May 13, Laurentian Bank of Canada, 2.39%, Oct 22, Canadian Imperial Bank of Commerce, 2.35%, Jun 24, Toyota Credit Canada Inc., 2.25%, May 23, Canadian Western Bank, 2.38%, Jan 23, Canadian Natural Resources Ltd., 2.05%, Jun 1, RioCan Real Estate Investment Trust, 2.19%, Aug 26, Daimler Canada Finance Inc., 1.42%, Oct 2, 3.4 Ford Credit Canada Ltd., 2.45%, May 7, Finning International Inc., 2.84%, Sep 29, Canadian Government Bond, 0.75%, May 1, Cash 0.3 All long positions as a percentage of net asset value 99.5 The Fund held no short positions as at June 30,. This summary of investment portfolio may change due to the ongoing portfolio transactions of the Fund. Quarterly updates of the Fund s investment portfolio are available on the Internet at NINEPOINT PARTNERS LP INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

9 Corporate Information Corporate Address Ninepoint Partners LP Royal Bank Plaza, South Tower 200 Bay Street, Suite 2700, P.O. Box 27 Toronto, Ontario M5J 2J1 T TOLL-FREE F E invest@ninepoint.com For additional information visit our website: Call our mutual fund information line for daily closing prices: or Auditors KPMG LLP Bay Adelaide Centre 333 Bay Street Suite 4600 Toronto, Ontario M5H 2S5 Legal Counsel Borden Ladner Gervais LLP Bay Adelaide Centre, East Tower 22 Adelaide Street West Suite 3400 Toronto, Ontario M5H 4E3 M 08 E