Interim Management Report of Fund Performance
as at March 31, 2015
This interim Management Report of Fund Performance contains financial highlights but does not contain either interim or annual
financial statements of the investment fund. You can obtain a copy of the interim or annual financial statements at your request,
and at no cost, by calling 1-888-809-3333, by writing us at NEI Investments L.P., 151 Yonge Street Suite 1200, Toronto, ON M5C
2W7 or by visiting our website at www.neiinvestments.com or SEDAR at www.sedar.com.
Security holders 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.
Management Discussion of Performance
Investment Objective and Strategies
The investment objective of the Fund is to provide high level of current income with the potential for capital gains. The Fund will
invest its assets primarily in global fixed income instruments from both developed and emerging markets. The Fund can invest
across all sectors and credit qualities but will be primarily invested in investment grade securities rated BBB- and above by
Standard & Poor’s (or its equivalent by qualified rating agencies).
The Fund follows a socially responsible approach to investing.
Risk
The risks associated with investing in the Fund remain as discussed in the prospectus. The Fund is suitable for investors with a
low to medium tolerance for risk, particularly those who are investing for the medium term and are seeking primarily income
while maintaining diversity geographically.
Results of Operations
The NEI Global Total Return Bond Fund’s Series A units returned 10.41% for the six months ended March 31, 2015 compared
with a return of 8.45% for the benchmark explained below.
Unlike the benchmark return, the Fund’s returns are after the deduction of fees and expenses paid by the Fund. Performance
differences between series of units are mainly attributable to management fees charged to each series. Refer to the Past
Performance section for the details of returns by series.
Yearly Comparison of Holdings
Comparison Period -
September 30, 2014 to March 31, 2015
The following tables summarize material changes, new and exited positions of individual securities within the fund during the
period whereby materiality of changes is defined as 1% of the current year NAV.
Material Changes
New Positions
Name
Change in NAV Name
% of Current
Ownership (%)
Year NAV
Cash and Equivalents
5.52
Republic of Italy
4.48
Republic of Portugal
-2.45
Telecom Italia
-1.19
United Kingdom Government
2.71
Province of Québec
1.65
Obrigacoes do Tesouro
1.49
Republic of Croatia
1.65
Exited Positions
Caixa Geral
de Depósitos
Dexia Credit Local
Federal Republic of Germany, Series 04
Petrobras Global Finance
Rabobank
Rede Ferroviaria Nacional
Republic of South Africa
Romania Government
Santander Issuances, 7.300%, (floating rate from
2014-09-27)
Société Générale, 8.250%, (floating rate from
2018-11-29), P
SSE, 5.453%, (floating rate from 2015-10-01),
Perpetual
Wells Fargo & Company
Intesa Sanpaolo, floating rate
Prudential, floating rate
Unione di Banche Italiane
Allianz Finance II, 5.750%, (floating rate from
2021-07-08)
Arena, Series 2011-1, Class A2, floating rate
Banco Espirito Santo
Banco Popolare
Corpbanca
Dutch Residential M, Series 2011-16, Class A2,
floating rate
Gracechurch Mortgage Financing, Series 2011-1A,
Class 2A1, f
KBC Bank, 8.000%, (floating rate from 2018-01-25),
2023-01-
Petrobras International Finance Company
Prudential Financial
Rallye
Republic of Latvia
U.S. Treasury Bonds, Inflation-Indexed, 1.750%
ABN AMRO
Allied Irish Banks
Crédit Agricole, 8.125%, (floating rate from
2018-09-19), 20
E-Carat, Series 2014-1, Class A, floating rate
Government of Italy, Inflation-Indexed, 2.350%,
2024-09-15
Kingdom of Belgium, Series 68
Republic of Poland
Russian Federation
U.S. Treasury Bonds
Factors That Have Affected Performance
The fourth quarter of 2014 was characterised by three main themes: weakening global growth, sliding oil prices, and U.S. dollar’s
strength against most developed and emerging market currencies. The quarter opened with some volatility as global growth
forecasts for 2014 were generally downgraded across developed and developing markets. The U.S. stood out as a notable
exception as growth for the third quarter was revised upwards from 3.9% to 5%. Responding to this environment of weak
growth, high quality safe haven markets such as the U.S., Germany, and Japan saw bond yields sink to all-time low levels. Perhaps
the most prominent of the themes this quarter was the rapid decline in the price of crude oil from over $100 a barrel to around
$60. This was largely explained by weaker global demand and a decision by OPEC, the Middle Eastern oil consortium, to not cut
supply in an effort to undercut the new generation of U.S. shale oil producers and maintain market share. The third theme was
the appreciation of the U.S. dollar against almost all developed and emerging markets currencies, this was helped by the strong
pace of the U.S. recovery. Investment grade credit markets across both Europe and the U.S. continued to generate positive
returns as yields drifted downwards through the quarter.
The first quarter of 2015 quarter was led by an eventful January; the ECB finally confirmed plans to initiate quantitative easing in
the Eurozone, the Swiss National Bank (SNB) shocked markets by removing the CHF / EUR peg despite reiterating a commitment
to maintaining it as recently as December 2014. Greek elections saw Syriza, an anti-bailout party, win the general elections. In
Eastern Europe, Ukrainian and Russian tensions rose, quelling hopes for a quick resolution to the conflict. February brought some
calm and was marked with some divergence in the performance of key bond markets as worries about Greece and the tension
between Ukraine and Russia gave way to a focus on central bank actions. Despite the February FOMC meeting indicating that the
U.S. Fed’s tone had become a little more accommodating, U.S. treasury yields rose through February. In the Eurozone, as markets
anticipated the beginning of the ECB’s quantitative easing program from March, the yield curve steepened as short dated yields
fell and the long end remained stable. Periphery bonds, in particular Spain and Italy enjoyed meaningful declines in their yields
through February.
As the ECB’s QE got underway in March, the impact on major market yields was pronounced as witnessed by yields falling. In
what was anticipated as a prelude to an upcoming rates lift-off, the March FOMC meeting expressed a more dovish tone than
widely expected, despite the Fed dropping their ‘patient’ language, pushing expectations for a first rate hike towards the end of
this year. The 10yr Treasury yield dipped back down below 2% after its brief 2.25% peak at the beginning of the month.
Country selection added to relative returns. Particularly helpful was overweight exposure to the European periphery countries,
for example, Italy, Spain and Ireland. Yield curve allocation also helped, for example, selective overweight allocations to long
dated U.S. treasuries. Overweight allocation to investment grade European bonds and off-benchmark allocations to emerging
markets bonds also helped relative returns. Within currencies; an overweight allocation to the U.S. dollar and underweight
allocations to the euro and Japanese yen added value over the reporting period.
Underweight duration positioning relative to the benchmark in the G3 countries detracted as yields fell.
Recent Developments
The portfolio sub-advisor is constructive on prospects for U.S. economy and in particular, the outlook for U.S. dollar, which stands
to continue gaining against most developed markets currencies, the sub-advisor expects the dollar to trend stronger, and they
expect it to do so with some degree of volatility. Recent data releases from the U.S. have been weaker than expected (although
still better than other global regions) with no clear catalyst for the weakness. The sub-advisor expects that the recent weakness is
a temporary phenomenon and the economy will remain on track. They also believe that inflation appears to have bottomed,
helped by falling oil prices.
In the Eurozone, it is the sub-advisor’s opinion that the European Central Bank’s quantitative easing program will have a
profound impact on the fixed income landscape with even medium dated core European yields likely to approach zero if not
become outright negative. In other parts of Europe, the sub-advisor expects that the U.K. sterling will remain weak in the run up
to the elections given the large levels of uncertainty surrounding the outcome with the impact on U.K. yields likely to be in the
downward direction.
The portfolio sub-advisor is still positioned for a rates rise in the U.S., and anticipates that the U.K. will follow suit shortly
thereafter. The portfolio is therefore short U.S. treasuries, Gilts, and JGB, particularly at the short end where the impact of a yield
rise will be strongly felt. The portfolio generally remains overweight the long end of yield curves where rate rises have less impact
and where there is potential to roll down the yield curve.
The sub-advisor believes that key risks to the portfolio are a more sluggish than anticipated recovery to US economy and
negotiations with Greece become long and drawn out.
A short modified duration position relative to the benchmark continues to be maintained in light of negative to low real yields
that have kept G4 government bond yields at extremely expensive levels since the rebound in March 2009. This is also a hedge
against expectations of an impending U.S. rate rise.
The ECB’s commitment to undertake large scale bond buying, has made positions in peripheral EMU sovereigns such as Italy,
Spain and Ireland more attractive in the sub-advisor’s opinion, and the sub-advisor has exposure to these sovereign names. Yield
seeking institutional and foreign investors and the ECB provide support.
An overweight allocation to the U.S. dollar has been maintained, as the U.S. economy has improved. The long USD position is also
a hedge against events that create a flight to safe havens. A tactically managed broader allocation to emerging markets
currencies is also held.
An overweight allocation to investment grade corporate credit has been maintained. The portfolio sub-advisor believes that
most of the yield spread compression has already occurred, with returns for the rest of the year most likely to be derived from
income. The portfolio also holds a mix of off-benchmark emerging market hard and local currency bonds.
Financial Notes
HST
Following the introduction of a single harmonized tax ‘‘HST’’ levy and collection system on July 1st, 2010 Investment Funds had to
change the way in which government taxes are charged to the Funds. The new rules require HST to be calculated and charged
based on a blended tax rate derived from the residency of the unitholders and the current value of their units. This blended rate
is required to be calculated and updated periodically and the table below indicates the rate charged to the Fund for the relevant
reporting period plus the established rate for the next 12 month period.
NEI Global Total Return Bond Fund
For the Period Ending
September 30, 2014
September 30, 2015
Series A
6.32%
8.16%
Series F
6.51%
8.82%
Series T
5.00%
7.23%
Series P
5.00%
8.25%
Series PF
5.00%
10.18%
* The above series was launched after the Fund’s fiscal year-end. The default tax rate is 5% for the first 3 months and then a
blended rate implemented as described above.
Effective April 1st, 2013, British Columbia replaced the 12% HST with separate PST and GST. A 5% GST rate is applicable going
forward. Prince Edward Island introduced a new HST rate of 14%.
On January 1st, 2013, Quebec increased the combined tax rate charged on the QST portion of taxable services from 14.95% to
14.9975%.
Accounting Standards
Change in Accounting Framework – Transition to International Financial Reporting Standards (“IFRS”)
The Fund’s interim financial statements have been prepared in compliance with IFRS, as published by the International
Accounting Standards Board, applicable to the preparation of interim financial statements, including International Accounting
Standards (“IAS”) 34, “Interim Financial Reporting” and IFRS 1, “First-time Adoption of International Financial Reporting
Standards”. The Fund has adopted this basis of accounting effective January 1, 2014 as required by Canadian securities legislation
and the Canadian Accounting Standards Board. Previously, the Fund prepared its financial statements in accordance with
Canadian generally accepted accounting principles as defined in Part V of the Chartered Professional Accountant (“CPA”)
Handbook (“Canadian GAAP”). As a result of the adoption of IFRS, there was no impact on net asset value (“NAV”) per unit.
Related Party Transactions
Northwest and Ethical Investments L.P ‘‘NEILP’’ is the Manager, the Trustee, the Portfolio Manager and the Registrar of the Fund.
NEILP is 50% indirectly owned by the Federation des Caisses Desjardins du Quebec (Federation) and 50% owned by five Provincial
Credit Union Centrals.
NEILP charges the Funds a fixed administration fee in place of certain variable expenses. NEILP in turn, pays all operating
expenses of the Fund, other than specified fund costs (e.g. the fees and expense of the Independent Review Committee, taxes,
and brokerage commissions) which include payments to related parties of which the Federation is a significant owner. These
services are in the normal course of operations and are measured at an exchange amount that is consistent with other
independent parties.
At the end of the period, the accrued expenses payable to related third parties are listed below. Where applicable the amounts
received from underlying funds during the period are also presented.
March 2015
September 2014
Accrued Expenses Payable to Related Parties
$319,216
$140,255
The Fund’s sub advisors may place a portion of their portfolio transactions with brokerage firms which are affiliates of NEILP;
provided that the affiliates trade execution abilities and costs are comparable to those of non-affiliated qualified brokerage firms.
The Fund is distributed through Credential Asset Management Inc., Credential Securities Inc., Desjardins Securities Inc.,
Desjardins Financial Services Firm Inc., Desjardins Financial Securities Investments Inc., and Gestions SFL Inc., and other
nonrelated parties by way of shared ownership. NEILP pays to these parties distribution and servicing fees based on a percentage
of the daily values of the units of each held by the dealer’s clients and additionally, in some cases, on the amount of initial
purchase.
This document contains forward-looking statements. Such statements are generally identifiable by the terminology used, such as ‘‘plan’’, ‘‘anticipate’’, ‘‘intend’’, ‘‘expect’’, ‘‘estimate’’, or other similar wording. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in securities prices, fluctuation in interest rates and foreign currency exchange rates; and actions by governmental authorities. Future events and their effects on the fund may not be those anticipated by us. Actual results may differ materially from the results anticipated in these forward-looking statements. We do not undertake, and specifically disclaim, any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.
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 each
of the past five years, as applicable.
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series A
March 31
September 30
September 30
2015
2014
2013
$
$
$
Net assets, beginning of period
10.66
9.99
10.00
Increase (decrease) from operations:
Total revenue
-0.01
0.96
0.01
Total expenses
0.16
-0.22
0.00
Realized gains (losses)
0.62
0.22
-0.01
Unrealized gains (losses)
-0.11
-0.21
-0.02
Commissions and other portfolio transaction costs
(2)N/A
0.00
0.00
Total increase (decrease) from operations
(3)0.66
0.75
-0.02
Distributions:
From income (excluding dividends)
0.25
0.00
0.00
From dividends
0.00
0.00
0.00
From capital gains
0.17
0.00
0.00
Return of capital
0.00
0.00
0.00
Total Distributions
(4,5)0.42
0.00
0.00
Net Assets, End of Period
10.87
10.66
9.99
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund, Series A
March 31
September 30
September 30
2015
2014
2013
Total net asset value (000’s of $)
99,797.35
47,590.85
312.04
Number of units outstanding (000’s)
9,180.99
4,464.43
31.25
Management expense ratio (%)
(1)2.13
2.08
2.00
Management expense ratio before waivers and
absorptions (%)
2.13
2.08
2.00
Trading expense ratio (%)
(2)0.00
0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
1.06
Net asset value per unit ($)
10.87
10.66
9.99
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund,
Series
F
March 31
September 30
September 30
2015
2014
2013
Total net asset value (000’s of $)
102,656.63
43,210.74
62.90
Number of units outstanding (000’s)
9,409.41
4,015.87
6.30
Management expense ratio (%)
(1)1.21
1.22
1.21
Management expense ratio before waivers and
absorptions (%)
1.21
1.22
1.21
Trading expense ratio (%)
(2)0.00
0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
165.69
Net asset value per unit ($)
10.91
10.76
9.99
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series F
March 31
September 30
September 30
2015
2014
2013
$
$
$
Net assets, beginning of period
10.76
9.99
10.00
Increase (decrease) from operations:
Total revenue
-0.06
1.14
0.00
Total expenses
0.27
-0.13
0.00
Realized gains (losses)
0.55
0.33
-0.01
Unrealized gains (losses)
-0.06
-0.48
-0.01
Commissions and other portfolio transaction costs
(2)N/A
0.00
0.00
Total increase (decrease) from operations
(3)0.70
0.86
-0.02
Distributions:
From income (excluding dividends)
0.35
0.00
0.00
From dividends
0.00
0.00
0.00
From capital gains
0.17
0.00
0.00
Return of capital
0.00
0.00
0.00
Total Distributions
(4,5)0.52
0.00
0.00
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series I
March 31
September 30
September 30
2015
2014
2013
$
$
$
Net assets, beginning of period
10.89
9.99
10.00
Increase (decrease) from operations:
Total revenue
0.07
0.22
0.00
Total expenses
0.06
0.00
0.00
Realized gains (losses)
0.66
0.18
-0.01
Unrealized gains (losses)
0.00
0.50
0.00
Commissions and other portfolio transaction costs
(2)N/A
0.00
0.00
Total increase (decrease) from operations
(3)0.79
0.90
-0.01
Distributions:
From income (excluding dividends)
0.25
0.00
0.00
From dividends
0.00
0.00
0.00
From capital gains
0.18
0.00
0.00
Return of capital
0.00
0.00
0.00
Total Distributions
(4,5)0.43
0.00
0.00
Net Assets, End of Period
11.21
10.89
9.99
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund, Series I
March 31
September 30
September 30
2015
2014
2013
Total net asset value (000’s of $)
208,011.45
124,313.55
104,038.80
Number of units outstanding (000’s)
18,555.88
11,415.39
10,415.69
Management expense ratio (%)
(1)N/A
N/A
N/A
Management expense ratio before waivers and
absorptions (%)
N/A
N/A
N/A
Trading expense ratio (%)
(2)0.00
0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
165.69
Net asset value per unit ($)
11.21
10.89
9.99
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series T
March 31
September 30
2015
2014
$
$
Net assets, beginning of period
10.12
10.00
Increase (decrease) from operations:
Total revenue
-0.14
1.11
Total expenses
0.20
-0.04
Realized gains (losses)
0.75
-0.31
Unrealized gains (losses)
-0.11
-0.51
Commissions and other portfolio transaction costs
(2)N/A
0.00
Total increase (decrease) from operations
(3)0.70
0.25
Distributions:
From income (excluding dividends)
0.00
0.07
From dividends
0.00
0.00
From capital gains
0.13
0.00
Return of capital
0.19
0.00
Total Distributions
(4,5)0.32
0.07
Net Assets, End of Period
10.40
10.12
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund, Series T
March
31
September 30
2015
2014
Total net asset value (000’s of $)
2,666.78
210.12
Number of units outstanding (000’s)
256.42
20.76
Management expense ratio (%)
(1)2.14
1.99
Management expense ratio before waivers and
absorptions (%)
2.14
1.99
Trading expense ratio (%)
(2)0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
Net asset value per unit ($)
10.40
10.12
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series P
March 31
September 30
2015
2014
$
$
Net assets, beginning of period
10.19
10.00
Increase (decrease) from operations:
Total revenue
-0.08
0.57
Total expenses
0.24
-0.03
Realized gains (losses)
0.61
-0.12
Unrealized gains (losses)
-0.09
-0.18
Commissions and other portfolio transaction costs
(2)N/A
0.00
Total increase (decrease) from operations
(3)0.68
0.24
Distributions:
From income (excluding dividends)
0.21
0.00
From dividends
0.00
0.00
From capital gains
0.16
0.00
Return of capital
0.00
0.00
Total Distributions
(4,5)0.37
0.00
Net Assets, End of Period
10.43
10.19
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund, Series P
March
31
September 30
2015
2014
Total net asset value (000’s of $)
6,039.03
1,593.07
Number of units outstanding (000’s)
579.01
156.34
Management expense ratio (%)
(1)1.85
1.78
Management expense ratio before waivers and
absorptions (%)
1.85
1.78
Trading expense ratio (%)
(2)0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
Net asset value per unit ($)
10.43
10.19
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
Net Assets per Unit
(1)- NEI Global Total Return Bond Fund, Series PF
March 31
September 30
2015
2014
$
$
Net assets, beginning of period
10.20
10.00
Increase (decrease) from operations:
Total revenue
-0.07
0.57
Total expenses
0.19
-0.02
Realized gains (losses)
0.63
-0.17
Unrealized gains (losses)
-0.05
-0.16
Commissions and other portfolio transaction costs
(2)N/A
0.00
Total increase (decrease) from operations
(3)0.70
0.22
Distributions:
From income (excluding dividends)
0.24
0.00
From dividends
0.00
0.00
From capital gains
0.16
0.00
Return of capital
0.00
0.00
Total Distributions
(4,5)0.40
0.00
Net Assets, End of Period
10.45
10.20
(1) All per unit figures presented in 2015, other than the net assets beginning of period, are referenced to net assets determined in accordance with IFRS and are derived from the Fund's unaudited interim financial report for the period ended Mar. 31, 2015. The beginning of period net assets per unit of 2014 and net assets per unit for prior periods were derived from the Fund's audited annual financial statements that were prepared in accordance with Canadian GAAP as defined in Part V of the CPA Handbook for prior periods.
(2) From March 31, 2015, Commissions and other portfolio transaction costs are included in Expenses.
(3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period.
(4) Distributions were paid in cash or reinvested in additional units of the Fund.
(5) Distributions (if any) that may have been made that included return of capital in excess of short term earnings were made to minimize disruption and provide stability to investors who have elected to take their distributions in the form of cash, and as disclosed in the Simplified Prospectus. These amounts are reviewed at each calendar year-end and management engages in discussions with the sub-advisor to determine the most applicable strategy on a go forward basis and will take any action(s) as needed for the long term stability of the Fund.
Ratios and Supplemental Data - NEI Global Total Return Bond Fund, Series PF
March
31
September 30
2015
2014
Total net asset value (000’s of $)
26,561.07
8,905.64
Number of units outstanding (000’s)
2,541.73
873.10
Management expense ratio (%)
(1)1.00
1.00
Management expense ratio before waivers and
absorptions (%)
1.00
1.00
Trading expense ratio (%)
(2)0.00
0.00
Portfolio turnover rate (%)
(3)80.14
165.69
Net asset value per unit ($)
10.45
10.20
(1) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.
(2) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.
(3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages 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 period. The higher a fund’s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. Certain turnover rates for September 2011 were restated due to a formula inconsistency.
Management Fees
The Manager is responsible for the management, supervision and administration of the Fund. The Manager receives from the
Fund management fees, before HST, calculated daily on the net asset value of the Fund at an annual rate shown below.
The management fee covers the cost of investment advisory fees, sales, marketing, and distribution expenses of the Fund. In
addition, the Manager pays a trailer fee to dealers out of this management fee. The trailer fee is a percentage of the average
daily value of the units of the Fund held by the dealer’s clients.
The following table shows the major services paid for out of management fees as a percentage of the management fee for each
series of the Fund:
Management
Fee
Investment Advisory
and Other Fees
Trailer Fee
Series A
1.50%
68.66%
31.34%
Series F
0.75%
100.00%
N/A
(1)Series P
1.30%
42.33%
57.67%
Series PF
0.55%
100.00%
N/A
(1)Series T
1.50%
69.47%
30.53%
(1) No trailer fees are paid in respect of any Series F or PF units of the Fund
Past
Performance
The following charts and tables show the past performance for each series of units of the Fund and will not necessarily indicate
how the Fund will perform in the future. The information shown assumes that distributions made by the Fund in the periods
shown were reinvested in additional units of the relevant series of the Fund. In addition, the information does not take into
account sales, redemption, distribution or other optional charges that would have reduced returns or performance
Year-by-Year Returns
The following charts show the annual performance for each series of units of the Fund for each period shown and illustrate how
the Fund’s performance has varied from period to period. The charts indicate how much an investment made on the first day of
each financial period would have grown or decreased by the last day of each financial period.
NEI Global Total Return Bond Fund
Series A
6.80%
10.41%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Dec-06
Dec-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Mar-15
NEI Global Total Return Bond Fund
Series F
7.72%
11.37%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
NEI Global Total Return Bond Fund
Series I
8.99%
12.73%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Dec-06
Dec-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Mar-15
NEI Global Total Return Bond Fund
Series T
Historic performance reporting is not permitted until the series has at least 12 months of performance.
NEI Global Total Return Bond Fund
Series P
Historic performance reporting is not permitted until the series has at least 12 months of performance.
NEI Global Total Return Bond Fund
Series PF
Annualized Compound Returns
The following table shows the annual compound returns for all series of the Fund. All returns are in Canadian dollars, on a total
return basis, net of all fees. For comparison, the returns for the benchmark are included.
The benchmark index for this fund is Barclays Global Aggregate Total Returns Index (CAD Hedged).
The Barclays Capital Global Aggregate Bond Index (CAD Hedged) provides a broad-based measure of the global investment grade
fixed-rate debt markets, including government-related debt, corporate debt, and securitized debt. The index hedges each foreign
currency in the index back to the Canadian Dollar.
While the Fund uses this benchmark for long-term performance comparisons, it is not managed relative to the composition of the Index. As a result, the Fund
may experience periods when its performance is not aligned with the Index, either positively or negatively. Please see the "Results of Operations" section of this
report for a discussion of recent performance results.
Group/Investment
1 Yr
3 Yrs
5 Yrs
10 Yrs
Since Inception
Barclays Global Aggregate CAD Hedged
8.45
7.97
NEI Global Total Return Bond A
10.41
8.41
NEI Global Total Return Bond F
11.37
9.34
Summary of Investment Portfolio as at March 31, 2015
Total Net Asset Value: $445,687,286
Top 25 Positions (Long Positions) %
Holding
Share
1
Cash and Equivalents
10.1
2
Republic of Italy
7.1
3
United Kingdom Government
4.3
4
Republic of Portugal
2.2
5
Mexico Government, Series M 10
1.9
6
Sell EURO/USD-0.89483616892 Apr09/2015
1.8
7
Province of Québec
1.6
8
Republic of Croatia
1.6
9
Kingdom of Spain
1.5
10
Obrigacoes do Tesouro
1.5
11
Morgan Stanley
1.4
12
REFER-Rede Ferroviária Nacional
1.2
13
EDP Finance
1.2
14
Assicurazioni Generali, floating rate
1.1
15
BNP Paribas
1.1
16
Veolia Environnement, 4.850%, (floating rate
from 2018-04-16
1.0
17
Telecom Italia
1.0
18
Mex Bonos Desarr Fix RT, Series M
0.9
19
Deutsche Bank
0.9
20
Groupe BPCE, Private Placement, Series 144A
0.9
21
Intesa Sanpaolo, Private Placement, Series 144A
0.9
22
Barclays Bank
0.9
23
Intesa Sanpaolo
0.9
24
Allianz, 4.750%, (floating rate from 2023-10-24),
Perpetual
0.9
25
Verizon Communications
0.8
Total
48.6
There is no short position in this Fund or underlying funds.
"Others" geographic category includes all countries representing less than 5% of the Fund’s net asset value.
The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the investment fund.
