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Mawer Global Small Cap Fund
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Interim Management Report of Fund
Performance
For the Period Ended June 30, 2016 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 may obtain a copy of the interim or annual financial statements at your request, and at no cost, by calling 1‐888‐549‐6248, by writing to us at Suite 600, 517 – 10th Avenue SW, Calgary, Alberta T2R 0A8, or by visiting our website at www.mawer.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 Fund
Performance
INVESTMENT OBJECTIVE AND STRATEGIES
The objective of the Mawer Global Small Cap Fund (the “Fund”) is to invest for above‐average long‐term returns in securities of smaller companies around the world. This is done by choosing companies that we believe will be wealth‐creating in the long‐term and are trading at a discount to their intrinsic value. We prefer companies with enduring competitive advantages that will allow them to earn a return greater than their cost of capital over the long‐term. The Fund has a long‐term buy‐and‐hold strategy and seeks to keep turnover low. RISK
This Fund is suitable for investors seeking long‐term growth and who have a moderate to high tolerance for risk. General risks of investing in this Fund are outlined in the Prospectus and include the possibility of reduction in value of any given investment, liquidity risk, interest rate risk, and currency risk amongst others. The Manager reduces the exposure to these risks by not concentrating more than 20% of the net assets of the Fund in a particular industry (i.e., sub‐sector) as defined by the S&P/TSX Composite Index Industry Classifications. It is also the Manager’s policy to have no more than 10% of the net assets in any one common share of a corporation, at the time of purchase. The Fund typically owns between 50 and 100 positions in global corporations with a market capitalization of $3 billion (USD) or less at the time of purchase. It is the Manager’s intention to be generally fully invested (less than 5% in cash). The Fund was invested in 9 of the 10 Global Industry Classification (GICS) sectors at June 30, 2016. The Fund’s largest sector weightings were in Industrials (24%), Financials (18%), and Information Technology (14%). Combined, the weight in the three largest sectors represented 56% of the portfolio which is an uptick from 55% at the end of 2015. In aggregate, the ten largest individual holdings accounted for 33% of the portfolio which down from 37% as of December 31, 2015. RESULTS OF OPERATIONS
The Fund’s net assets decreased 3.8% to $1,857.7 million from $1,930.6 million at the end of 2015. Of this change, ($117.2) million was attributable to negative investment performance and $44.4 million was due to net contributions into the Fund. Over the past six months, the Fund’s Series A units were down 6.7% (after management fees) versus a ‐
5.0% return for the Russell Global Small Cap Index. All performance values provided are in Canadian dollar terms. When assessing relative performance by Russell Global Scheme sectors, the Fund’s relative return is attributable to security selection. Negative selection is due to the underperformance of the Fund’s Mawer Global Small Cap Fund
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Technology, Producer Durables, and Consumer Staples holdings. Meanwhile, sector allocation had a positive effect due largely to the Fund’s underweight in Health Care which was the weakest performing sector over the period. When examining relative return from a geographic perspective, the Fund’s underperformance is attributable to its distribution across countries relative to the index. Negative allocation is due to the Fund’s overweight exposure to the U.K. Positive security selection was due to the outperformance of the Fund’s British companies. Notably, cash in the portfolio benefitted the Fund’s performance relative to the Russell Global Small Cap Index. Overall the top contributors to the Fund’s performance were Innophos Holdings Inc., Cetip SA, and Addlife AB. Conversely, NCC Group plc, Loomis AB, and Origin Enterprises plc were the biggest year‐
to‐date detractors. The Fund initiated 6 new positions: 
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Douglas Dynamics Inc. Heineken Malaysia Bhd. (formerly Guinness Anchor Bhd.) Jardine Lloyd Thompson Group LIC Housing Finance Ltd. M. Dias Branco SA Sixt Leasing AG The Fund exited 1 position: 
Restaurant Group plc RECENT DEVELOPMENTS
It is too soon to know the full consequences of BREXIT. Domestically, some businesses may benefit from the fall of their currency while the impacts on trade and business activity from the uncertainty may easily offset or outstrip these gains. Globally, there is potential for further turmoil in currency markets and more stimulus from central banks increasing the likelihood of lower interest rates for longer. After BREXIT, there may be other countries on the horizon that will entertain the thought of leaving the EU, potentially causing further reactionary market turbulence. The U.S. Federal Reserve may find it difficult to normalize their interest rates at the speed some previously anticipated given factors such as BREXIT and weaker global economic conditions. A steady march of domestic inflation growth could eventually force the Fed to raise rates, but it remains unclear on when, or if that will occur while lower rates continue to allow for the inflation of asset values. China’s slowing growth and economic reforms remain key macroeconomic considerations even if news out of China has been largely overshadowed by BREXIT this past quarter. Although China has substantial resources, enabling a smooth transition of their growth source from heavy industry and exports to consumer spending and services, we are paying attention to how the banking system performs in the face of increasing corporate debt and a more uncertain global economy. Going forward, we remain sensitive to the tepid growth outlook for the world economy and its influence on equity markets. We continue to favor wealth creating companies, run by excellent management teams and purchased at a discount to our estimate of intrinsic value. RELATED PARTY TRANSACTIONS
As Portfolio Advisors to the Fund, Mawer Investment Management Ltd. (“Mawer”) receives management fees which are calculated as 1.5% per annum of the net asset value of the Fund on a daily basis. Management fees for Series O Units are payable directly to the Manager by Series O investors and not by the Fund. The terms of the Management Agreement were amended January 4, 1994, to grant the managers of the Funds the ability, at their discretion, to reduce the management fees for large investors. This reduction is effected by means of a management fee Mawer Global Small Cap Fund
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distribution and will be automatically reinvested in additional units of the particular Fund at the net asset value of the particular Fund on the date of distribution. Mawer also receives fees for performing administrative services. As at June 30, 2016 the Fund owes Mawer $45,513 related to these administrative services. 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 for each of the past five years ended December 31 as applicable. This information is derived from the Fund’s unaudited interim financial statements and audited annual financial statements. (Notes: This Fund’s start date was October 2, 2007.) THE FUND’S NET ASSET VALUE (NAV) PER UNIT
SERIES A
2016
2015
2014
2013
2012
2011
Net Assets, beginning of period
13.87
10.83
9.72
6.77
5.23
5.29
Increase (decrease) from
operations:
Total revenue
Total expenses
0.25 0.37 0.30 0.24 0.20 0.18
(0.12) (0.25) (0.22) (0.17) (0.11) (0.11)
3
Realized gains (losses) for the period
Unrealized gains (losses) for the
period
Total increase (decrease) from
0.11
0.58
0.58
0.56
0.04
0.08
(1.15)
2.33
0.42
2.78
1.42
(0.17)
operations¹
Distributions:
From income (excluding dividends)
From dividends
(0.91)
3.03
1.08
3.41
1.55
(0.02)
-
(0.08) (0.05) (0.10) (0.07) (0.04)
-
From capital gains
Return of capital
Total Distributions²
Net Assets, end of period³
12.94
(0.04) (0.01) (0.14)
- (0.02)
(0.12) (0.06) (0.24) (0.07) (0.06)
13.87 10.83 9.72 6.73 5.23
SERIES O
3
Net Assets, beginning of period
2016
2015
2014
2013
2012
2011
14.11
11.08
9.94
6.89
5.30
5.35
0.25
0.37
0.30
0.24
0.21
0.18
Increase (decrease) from
operations:
Total revenue
Total expenses
Realized gains (losses) for the period
Unrealized gains (losses) for the
(0.01) (0.03) (0.04) (0.03) (0.01) (0.01)
0.11 0.61 0.56 0.49 0.04 0.07
period
Total increase (decrease) from
operations¹
Distributions:
(1.17)
2.47
0.60
2.71
1.44
(0.16)
(0.82)
3.42
1.42
3.41
1.68
0.08
From income (excluding dividends)
From dividends
From capital gains
Return of capital
Total Distributions²
Net Assets, end of period³
-
(0.28) (0.23) (0.20) (0.15) (0.13)
(0.01)
(0.14) (0.02) (0.14)
- (0.02)
13.28
(0.43) (0.25) (0.34) (0.15) (0.15)
14.11 11.08 9.94 6.85 5.30
(1) Net asset value 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. (2) Distributions were reinvested in additional units of the Fund. (3 The six months ended June 30, 2016 and the years ended 2015, 2014 and 2013 are presented in accordance with IFRS. For all other periods, the financial information is presented in accordance with Canadian GAAP. Specifically, Section 3855 results in a difference between the Transactional NAV and the GAAP NAV due to the differences in valuation techniques of certain investments. For investments that are traded in an active market where quoted prices are readily and regularly available, Section 3855 requires bid prices (for investments held) or ask prices (for investments sold short) to be used in the fair valuation of investments, rather than the use of closing sale prices used for the purpose of determining Transactional NAV. RATIOS AND SUPPLEMENTAL DATA
SERIES A
1,5
Net Assets (000's)
Number of units outstanding (000's)¹
Management expense ratio²
2016
2015
2014
2013
2012
2011
508,363
510,452
237,290
179,452
52,078
21,989
39,283
1.75%
36,802
1.74%
21,909
1.82%
18,463
1.82%
7,684
1.88%
4,160
1.92%
Management expense ratio before
waivers or absorptions
1.75%
1.74%
1.82%
1.82%
1.88%
1.92%
Portfolio turnover rate³
2.71%
12.03%
12.00%
14.45%
5.22%
19.86%
Trading expense ratio
Closing market price or pricing NAV,
4
0.06%
0.09%
0.10%
0.08%
0.21%
0.21%
(if applicable)
12.94
13.87
10.83
9.72
6.78
5.29
Mawer Global Small Cap Fund
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SERIES O
1,5
Net Assets (000's)
Number of units outstanding (000's)¹
Management expense ratio²
2016
2015
2014
2013
2012
2011
1,349,363
1,420,099
946,302
621,101
380,487
158,576
101,602
0.04%
100,616
0.04%
85,418
0.08%
62,472
0.10%
55,163
0.09%
29,608
0.10%
Past Performance
Management expense ratio before
waivers or absorptions
0.04%
0.04%
0.08%
0.10%
0.09%
0.10%
Portfolio turnover rate³
2.71%
12.03%
12.00%
14.45%
5.22%
19.86%
Trading expense ratio
Closing market price or pricing NAV,
4
0.06%
0.09%
0.10%
0.08%
0.21%
0.21%
(if applicable)
13.28
14.11
11.08
9.94
6.90
5.36
(1) This information is provided as at June 30 or December 31 of the year shown. (2) Management expense ratio is based on total expenses for the stated year and is expressed as an annualized percentage of daily average net assets during the year. The Manager, at its discretion, absorbed certain expenses otherwise payable by each Series. The Manager may change the amount absorbed or discontinue absorbing these expenses at any time without notice. (3) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio adviser 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 year. The higher a fund’s portfolio turnover rate in a year, the greater the trading costs payable by the fund in the year, and 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 a fund. (4) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during the period. (5) The six months ended June 30, 2016 and the years ended 2015, 2014 and 2013 are presented in accordance with IFRS. For all other years, the financial information is presented in accordance with Canadian GAAP. Specifically, Section 3855 results in a difference between the Transactional NAV and the GAAP NAV due to the differences in valuation techniques of certain investments. For investments that are traded in an active market where quoted prices are readily and regularly available, Section 3855 requires bid prices (for investments held) or ask prices (for investments sold short) to be used in the fair valuation of investments, rather than the use of closing sale prices used for the purpose of determining Transactional NAV. Sales commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any investor that would have reduced returns. Mutual funds are not guaranteed. Their value changes frequently and past performance may not be repeated. The Fund’s performance numbers assume that all distributions are reinvested in additional units of the Fund. If you hold this Fund outside of a registered plan, income and capital gains distributions that are paid to you increase your income for tax purposes whether paid to you in cash or reinvested in additional units. The amount of the reinvested taxable distributions is added to the adjusted cost base of the units that you own. This would decrease your capital gains or increase your capital loss when you later redeem from the Fund, thereby ensuring that you are not taxed on this amount again. Please consult your tax advisor regarding your personal tax situation. The past performance of the Fund is set out in the following charts. Mawer Global Small Cap Fund
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YEAR-BY-YEAR RETURNS
SUMMARY OF INVESTMENT PORTFOLIO
The bar charts below show the Fund’s annual performance in each of the past 10 years to December 31, 2015 plus the interim period to June 30, 2016. The charts show in percentage terms how an investment made on January 1 would have increased or decreased by December 31 of the fiscal year. A summary of the Fund as at June 30, 2016 is as follows: Series A
50
47.0
39.7
29.5
30
29.1
16.3
12.1
10
0.3
-10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jun16
-6.7
-29.9
-30
Series O
50
30
49.1
42.2
31.6
18.5
-10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jun16
-5.9
-28.5
-30
The Fund’s start date was October 2, 2007. Treasury bills Total short‐term 6.7
6.7
Equities Asia Europe Latin America Middle East North America South Asia South Pacific Total equities Total portfolio Totals may not add to 100% due to rounding. 14.0
2.2
%
2.7
2.7
31.3
10
Cash Total cash 15.6
48.2
1.3
2.4
15.7
4.0
3.5
90.7
100.1
Mawer Global Small Cap Fund
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The following table lists the 25 largest holdings of the Fund as at June 30, 2016. Percentage of Transactional Net Asset Value
Issuer DCC PLC 5.0%
NCC Group PLC 4.1%
Constellation Software Inc. 3.6%
Loomis AB Cl. B 3.3%
PayPoint PLC 3.3%
Amsterdam Commodities NV 3.0%
Cineworld Group PLC 2.8%
Bank of Hawaii Corporation 2.7%
Origin Enterprises PLC 2.5%
VZ Holding AG 2.4%
Haw Par Corp. Ltd. 2.4%
Diploma plc 2.3%
PC Jeweller Limited 2.2%
XP Power Ltd. 2.0%
Hansen Technologies Ltd. 1.9%
Indutrade AB 1.8%
Cembra Money Bank AG 1.7%
ATN International Inc. 1.6%
Addtech AB Series B 1.5%
Balkrishna Industries Limited 1.4%
ARA Asset Management Limited 1.4%
John Wiley & Sons, Inc. Cl. A 1.3%
Oslo Bors VPS Holding ASA 1.3%
Home Capital Group Inc. Cl. B Sub. Voting 1.2%
Tikkurila OYJ 1.2%
The investments and percentages may have changed by the time you purchase units of this fund. The top holdings are made available quarterly, 60 days after quarter‐end and may be obtained by contacting your registered representative or by contacting Mawer toll‐free at 1‐888‐549‐6248 or by contacting Mawer at [email protected]. This document is for information purposes only. Before investing, please consult our Mawer Mutual Funds information including the Simplified Prospectus, Fund Facts and other disclosure documents available at www.mawer.com/ourfund/documents or at www.sedar.com. Mutual funds are not guaranteed. Values can change frequently and past performance is not indicative of future performance. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual fund securities, including the Money Market Funds, are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per share at a constant amount or that the full amount of your investment in the fund will be returned to you. Please read the prospectus before investing. Performance returns for the Mawer Mutual Funds are calculated by Mawer Investment Management Ltd. These returns are historical simple returns for the 1 year period and are annualized compounded total returns for periods after 1 year. They include changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mawer Global Small Cap Fund
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