IA Clarington Investments Inc. Simplified Prospectus June 23, 2015 Money Market Funds Fixed Income Funds Canadian Equity Funds

Transcription

1 IA Clarington Investments Inc. Simplified Prospectus June 23, 2015 Offering Series A, Series B, Series DA, Series DF, Series E, Series E4, Series E5, Series E6, Series EX, Series EX5, Series EX6, Series F, Series F4, Series F5, Series F6, Series F8, Series F10, Series FE, Series FE4, Series FE5, Series FE6, Series FX, Series FX5, Series FX6, Series FX8, Series I, Series L, Series L4, Series L5, Series L6, Series L8, Series L10, Series LM, Series M, Series O, Series P, Series P4, Series P5, Series P6, Series T4, Series T5, Series T6, Series T8, Series T10, Series V, Series X and Series Y units or shares as indicated below: Money Market Funds IA Clarington Money Market Fund (Series A, B, DA, DF, F, I, L, O and X) Fixed Income Funds IA Clarington Bond Fund (Series A, F, I, L, O and X) IA Clarington Real Return Bond Fund (Series A, F, I, L and O) IA Clarington Short-Term Bond Fund (Series A, F and I) IA Clarington Short-Term Income Class* (Series A) IA Clarington Strategic Corporate Bond Fund (Series A, E, E5, F, F5, FE, FE5, I, L, L5, O, P, P5 and T5) IA Clarington Strategic Corporate Bond Class* (Series A, E, E5, F, F5, L, L5 and T5) IA Clarington Tactical Bond Fund (Series A, F, I, L and O) IA Clarington Tactical Bond Class* (Series A, F, F5, L, L5 and T5) IA Clarington Core Plus Bond Fund (Series A, E, E4, F, F4, FE, FE4, I, L, L4, O, P, P4 and T4) Floating Rate Debt Funds IA Clarington Floating Rate Income Fund (Series A, E, E5, F, F5, FE, FE5, I, L, L5, P, P5 and T5) Diversified Income Funds IA Clarington Growth & Income Fund (Series A, E, E5, F, F5, FE, FE5, L, L5, P, P5, T5) IA Clarington Inhance Monthly Income SRI Fund (Series E6, F6, FE, FE6, I, P6, T6 and V) IA Clarington Monthly Income Balanced Fund (Series F6, F8, I, L6, O, T6 and T8) IA Clarington Strategic Income Fund (Series A, E, E6, EX, EX6, F, F6, F8, I, L, L6, L8, O, P, P6, T6, T8 and Y) IA Clarington Strategic Income Class* (Series A, E, E6, F, F6, F8, L, L6, L8, T6 and T8) IA Clarington Tactical Income Fund (Series A, E, E6, EX, EX6, F, F6, F8, FE, FE6, FX, FX6, FX8, I, L, L6, L8, O, P, P6, T6, T8 and X) IA Clarington Tactical Income Class* (Series A, E, E6, F, F6, F8, L, L6, L8, T6 and T8) Canadian Balanced Funds IA Clarington Canadian Balanced Fund (Series A, E, E5, F, F5, FE, FE5, FX, FX5, I, L, L5, O, P, P5 and T5) IA Clarington Canadian Balanced Class* (Series A, E, E5, EX, EX5, F, F5, FE, FE5, FX, FX5, L, L5, P, P5 and T5) IA Clarington Focused Balanced Fund (Series A, E, E5, EX, EX5, F, F5, FE, FE5, I, L, L5, O, P, P5 and T5) IA Clarington Focused Balanced Class* (Series A, E, E5, F, F5, L, L5 and T5) IA Clarington Inhance Balanced SRI Portfolio (Series A, F, F6, I, O and T6) IA Clarington Inhance Conservative SRI Portfolio (Series F6 and T6) IA Clarington Inhance Growth SRI Portfolio (Series A, F and V) Canadian Equity Funds IA Clarington Canadian Conservative Equity Fund (Series A, F, F5, I, L, L5, O and T5) IA Clarington Canadian Conservative Equity Class* (Series A, E, E5, F, F5, FE, FE5, L, L5, P, P5 and T5) IA Clarington Canadian Dividend Fund (Series A, F, F6, I, T6 and X) IA Clarington Canadian Growth Class* (Series A, F, I and O) IA Clarington Canadian Leaders Class* (Series A, F, I, L and O) IA Clarington Canadian Small Cap Fund (Series A, E, F, FE, I, L, O and P) IA Clarington Canadian Small Cap Class* (Series A, E, F, FE and P) IA Clarington Dividend Growth Class* (Series E, E6, F6, F10, FE, FE6, I, L6, L10, O, P, P6, T6 and T10) IA Clarington Focused Canadian Equity Class* (Series A, E, E5, EX, EX5, F, F5, FE, FE5, I, L, L5, O, P, P5 and T5) IA Clarington Inhance Canadian Equity SRI Class* (Series A, F, I and V) IA Clarington North American Opportunities Class* (Series A, E, F, FE, L and P) IA Clarington Strategic Equity Income Fund (Series A, E, E6, F, F6, I, L, L6, O, T6 and Y) IA Clarington Strategic Equity Income Class* (Series A, E, E6, F, F6, FE, FE6, L, L6, L8, P, P6, T6 and T8) Global & U.S. Balanced Funds IA Clarington Global Growth & Income Fund (Series A, E, E5, F, F5, FE, FE5, I, L, L5, P, P5 and T5) IA Clarington Global Tactical Income Fund (Series A, E, E6, F, F6, F8, FE, FE6, I, L, L6, L8, O, P, P6, T6 and T8) IA Clarington Global Tactical Income Class* (Series A, F, F6, F8, L, L6, L8, T6 and T8) IA Clarington Strategic U.S. Growth & Income Fund (Series A, E, E6, F, F6, FE, FE6, I, L, L6, L8, O, P, P6,

2 T6 and T8) Global Equity Funds IA Clarington Global Equity Fund (Series A, E, F, F6, FE, L, L6, I, O, P, T6 and T8) IA Clarington Global Opportunities Fund (Series A, E, F, I, L and O) IA Clarington Global Opportunities Class* (Series A, E, EX, F, FE, L and P) IA Clarington Global Value Fund (Series A, E, F, FE, I, O and P) IA Clarington Inhance Global Equity SRI Class* (Series A, F, I and V) U.S. Equity Funds IA Clarington Focused U.S. Equity Class* (Series A, E, E5, F, F5, FE, FE5, I, L, L5, O, P, P5 and T5) IA Clarington Sarbit Activist Opportunities Class* (Series (collectively, the Funds ) A, E, F, FE, I and P) IA Clarington Sarbit U.S. Equity Fund (Series A, E, F, F6, FE, I, L, L6, O, P and T6) IA Clarington Sarbit U.S. Equity Class (Unhedged)* (Series A, E, F, F6, FE, L, L6, P and T6) IA Clarington U.S. Dividend Growth Fund (Series A, E, F, F6, FE, I, L, L6, O, P and T6) Distinction Portfolios Distinction Prudent Class* (Series A, M and O) Distinction Conservative Class* (Series A, L, LM, M and O) Distinction Balanced Class* (Series A, L, LM, M and O) Distinction Growth Class* (Series A, L, LM, M and O) Distinction Bold Class* (Series A, M and O) *each a class of shares of Clarington Sector Fund Inc. No securities regulatory authority has expressed an opinion about the merits of the Funds securities and it is an offence to claim otherwise. The Funds and the securities of the Funds offered under this Simplified Prospectus are not registered with the United States Securities and Exchange Commission and they are sold in the United States only in reliance on exemptions from registration. IA Clarington Investments Inc. also offers the IA Clarington Target Click Funds and may offer other IA Clarington mutual funds which are described in separate simplified prospectuses and annual information forms.

3 Table of Contents Page No. Introduction... 1 What is a Mutual Fund and What are the Risks of Investing in a Mutual Fund?... 4 What is a Mutual Fund?... 4 How is a Fund Structured?... 4 What are the General Risks of Investing in Mutual Funds?... 5 Different Mutual Funds have Different Risks... 5 What are the Specific Risks Associated with Mutual Funds?... 5 Organization and Management of the Funds Companies that Work with the Funds Fund of Funds Certain Changes without Securityholder Approval Purchases, Switches and Redemptions Valuation of a Fund Foreign Currencies Series of Securities How to Purchase Funds Switching Securities of the Funds How to Redeem Funds Short-Term Trading Fees Optional Services Pre-Authorized Chequing Plan Systematic Withdrawal Plan Systematic Switch Plan IA Clarington Elite Program Redirected Distributions and Dividends Registered Plans Dollar-Cost Averaging Service Fees and Expenses Fees and Expenses Payable by the Funds Fees and Expenses Payable Directly by You Impact of Sales Charges Dealer Compensation Sales Commissions Trailer Fees Dealer Advisor Fee Dealer Service Fee Other Sales Incentives i

4 Equity Interests Dealer Compensation from Management Fees Income Tax Considerations for Investors When You Earn Income Adjusted Cost Base Key Tax Differences Between Corporate Class Funds and Trust Funds Trust Funds Corporate Class Funds All Funds What Are Your Legal Rights? Specific Information about Each of the Mutual Funds Described in this Document Fund Specific Information IA Clarington Money Market Fund IA Clarington Bond Fund IA Clarington Real Return Bond Fund IA Clarington Short-Term Bond Fund IA Clarington Short-Term Income Class IA Clarington Strategic Corporate Bond Fund IA Clarington Strategic Corporate Bond Class IA Clarington Tactical Bond Fund IA Clarington Tactical Bond Class IA Clarington Core Plus Bond Fund IA Clarington Floating Rate Income Fund IA Clarington Growth & Income Fund IA Clarington Inhance Monthly Income SRI Fund IA Clarington Monthly Income Balanced Fund IA Clarington Strategic Income Fund IA Clarington Strategic Income Class IA Clarington Tactical Income Fund IA Clarington Tactical Income Class IA Clarington Canadian Balanced Fund IA Clarington Canadian Balanced Class IA Clarington Focused Balanced Fund IA Clarington Focused Balanced Class IA Clarington Inhance Balanced SRI Portfolio IA Clarington Inhance Conservative SRI Portfolio IA Clarington Inhance Growth SRI Portfolio IA Clarington Canadian Conservative Equity Fund IA Clarington Canadian Conservative Equity Class IA Clarington Canadian Dividend Fund IA Clarington Canadian Growth Class IA Clarington Canadian Leaders Class ii

5 IA Clarington Canadian Small Cap Fund IA Clarington Canadian Small Cap Class IA Clarington Dividend Growth Class IA Clarington Focused Canadian Equity Class IA Clarington Inhance Canadian Equity SRI Class IA Clarington North American Opportunities Class IA Clarington Strategic Equity Income Fund IA Clarington Strategic Equity Income Class IA Clarington Global Growth & Income Fund IA Clarington Global Tactical Income Fund IA Clarington Global Tactical Income Class IA Clarington Strategic U.S. Growth & Income Fund IA Clarington Global Equity Fund IA Clarington Global Opportunities Fund IA Clarington Global Opportunities Class IA Clarington Global Value Fund IA Clarington Inhance Global Equity SRI Class IA Clarington Focused U.S. Equity Class IA Clarington Sarbit Activist Opportunities Class IA Clarington Sarbit U.S. Equity Fund IA Clarington Sarbit U.S. Equity Class (Unhedged) IA Clarington U.S. Dividend Growth Fund Distinction Prudent Class Distinction Conservative Class Distinction Balanced Class Distinction Growth Class Distinction Bold Class iii

6 Introduction This Simplified Prospectus contains selected important information to help you make an informed investment decision and to help you understand your rights as an investor. Throughout this document: ACB refers to adjusted cost base as described on page 43, Administration Fee refers to the fixed rate administration fee described on page 30 under the sub-heading Operating Expenses, Advisor Service Charge Option refers to the Series L Securities purchase option of a Fund as described on page 20, Character Conversion Funds means IA Clarington Tactical Income Class, IA Clarington Strategic Corporate Bond Class, IA Clarington Strategic Income Class, IA Clarington Focused Balanced Class, IA Clarington Tactical Bond Class and IA Clarington Global Tactical Income Class. Character Conversion Transactions refers to forward agreements used to convert ordinary income into capital gains as described on page 19, Corporate Class Fund refers to a Fund that is a separate class of CSFI as denoted by Class at the end of its name, CRA refers to the Canada Revenue Agency, CSFI refers to Clarington Sector Fund Inc., Deferred Sales Charge Option refers to a purchase option of a Fund as described on page 20, Dollar-Cost Averaging Service refers to an optional service described on page 27, DSC Securities refers to Securities purchased under the Deferred Sales Charge Option, Eligible Account or Eligible Accounts refers to an account or accounts held by you (the investor), your spouse and your dependent minors residing at the same address as you, as well as related corporate accounts, subject to our approval, Eligible Holding or Eligible Holdings refers to an investment or investments in any series of any IA Clarington Fund, other than (i) Series I or Series O of any IA Clarington Fund, (ii) the Target Click Funds, (iii) IA Clarington Money Market Fund, (iv) IA Clarington Short-Term Income Class, (v) Series V of any of IA Clarington Inhance Monthly Income SRI Fund, IA Clarington Inhance Canadian Equity SRI Class, IA Clarington Inhance Global Equity SRI Class, IA Clarington Inhance Growth SRI Portfolio and (vi) Series F of IA Clarington Bond Fund, Free Redemption Amount refers to the redemption amount allowable before a redemption fee is charged, Front End Option refers to the purchase option of a Fund as described on page 19, Front End Securities refers to Securities purchased under the Front End Option, Fund Costs refers to the costs payable by a Fund as described on page 31. Funds refers to the mutual funds offered by IA Clarington under this simplified prospectus, Global Funds refers to IA Clarington Global Tactical Income Fund, IA Clarington Global Tactical Income Class, IA Clarington Strategic U.S. Growth & Income Fund, IA Clarington Global Equity Fund, IA Clarington Global Opportunities Fund, IA Clarington Global Growth & Income 1

7 Fund, IA Clarington Global Opportunities Class, IA Clarington Global Value Fund and IA Clarington Inhance Global Equity SRI Class, Gold ETFs refers to certain exchanged-traded funds that seek to provide daily results that replicate the performance of gold or the value of a specified derivative, the underlying interest of which is gold, on an unlevered basis, IA Clarington Funds refers collectively to the Funds, the Target Click Funds and other mutual funds managed by IA Clarington and offered under separate simplified prospectuses, other than Jov Leon Frazer Bond Fund, Jov Leon Frazer Dividend Fund, Jov Leon Frazer Preferred Equity Fund, Jov HAHN Conservative ETF Portfolio, Jov HAHN Income & Growth ETF Portfolio and Jov HAHN Growth ETF Portfolio, Industrial Alliance refers to Industrial Alliance Insurance and Financial Services Inc., Inhance SRI Funds refers to IA Clarington Inhance Monthly Income SRI Fund, IA Clarington Inhance Canadian Equity SRI Class, IA Clarington Inhance Global Equity SRI Class, IA Clarington Inhance Conservative SRI Portfolio, IA Clarington Inhance Balanced SRI Portfolio and IA Clarington Inhance Growth SRI Portfolio Leveraged ETFs refers to certain exchange-traded funds which seek to provide daily results that replicate the daily performance of a specified widely-quoted market index, Leveraged Gold ETFs refers to certain exchange-traded funds that seek to provide daily results that replicate the performance of gold or the value of a specified derivative, the underlying interest of which is gold on an unlevered basis, by a multiple of 200%, Low Load Option refers to a purchase of a Fund as described on page 20, Low Load Securities refers to Securities purchased under the Low Load Option, Money Market Funds, Fixed Income Funds, Floating Rate Debt Funds, Diversified Income Funds, Canadian Balanced Funds, Canadian Equity Funds, Global & U.S. Balanced Funds, Global Equity Funds, U.S. Equity Funds and Distinction Portfolios are categories of Funds listed on the front cover, NAV refers to the net asset value of a Fund, NI refers to National Instrument Investment Funds, as amended from time to time, No Load Option refers to a purchase option of a Fund as described on page 39, Operating Expenses refers to the expenses of a Fund, other than Fund Costs, paid by IA Clarington, PAC Plan refers to the Pre-Authorized Chequing Plan as described on page 25, Participating Series refers to each series of the IA Clarington Funds, other than Series I, Series O and Series V, Reference Fund refers to a mutual fund in which another mutual fund invests, or the performance of which is replicated by another mutual fund, Security or Securities refers to the units of the Trust Funds and the shares of the Corporate Class Funds, 2

8 securities lending transaction refers to a transaction where the Fund loans portfolio securities to a third party for a fee and can demand the return of the securities at any time. While the securities are on loan, the borrower provides the Fund with collateral consisting of cash and/or securities. Securityholder refers to an investor in one or more of the Trust Funds or the Corporate Class Funds, Starting NAV refers to the aggregate NAV of all Participating Series as at June 20, 2013, Target Click Funds refers to IA Clarington Target Click 2015 Fund, IA Clarington Target Click 2020 Fund, IA Clarington Target Click 2025 Fund and IA Clarington Target Click 2030 Fund, all mutual funds offered by IA Clarington under a separate simplified prospectus, Tax Act refers to the Income Tax Act, R.S.C., 1985, c.1, as amended from time to time, Transfer Funds refers to IA Clarington Strategic Corporate Bond Fund, IA Clarington Strategic Income Fund, IA Clarington Strategic Equity Income Fund, IA Clarington Tactical Income Fund, IA Clarington Global Tactical Income Fund, IA Clarington Canadian Balanced Fund, IA Clarington Canadian Balanced Class, IA Clarington Canadian Conservative Equity Fund, IA Clarington Canadian Conservative Equity Class, IA Clarington Focused Balanced Fund, IA Clarington Focused Canadian Equity Class, IA Clarington Global Opportunities Fund, IA Clarington Global Opportunities Class, IA Clarington Sarbit U.S. Equity Fund, IA Clarington Sarbit U.S. Equity Class (Unhedged), IA Clarington Sarbit Activist Opportunities Class and IA Clarington Dividend Growth Class (Series F6 and T6) into which Series DA or Series DF units of IA Clarington Money Market Fund are switched on an automatic basis under the Dollar-Cost Averaging Service, Transitional Adjustment Payment refers to the payment by the Funds to IA Clarington under the circumstances described on page 34, Trust Fund refers to a Fund that is a mutual fund trust, we, us, our, IA Clarington or the Manager refers to IA Clarington Investments Inc., and you refers to everyone who invests in our Funds, This document is divided into two parts: pages 1 to 52 contain general information applicable to all of the Funds, and pages 53 to 283 contain specific information about each Fund described in this document. Additional information about each Fund is available in the following documents: the Annual Information Form, the most recently filed Fund Facts, the most recently filed annual financial statements, any interim financial report filed after those annual financial statements, the most recently filed annual management report of fund performance, and any interim management report of fund performance filed after that annual management report of fund performance. These documents are incorporated by reference into this simplified prospectus, which means that they legally form part of this document just as if they were printed as part of this document. You can get a 3

9 copy of these documents, at your request and at no cost, by calling us toll free at or from your dealer. Some of these documents are also available on IA Clarington s Internet site at or by contacting the Funds at funds@iaclarington.com. These documents and other information about the Funds are also available at What is a Mutual Fund and What are the Risks of Investing in a Mutual Fund? What is a Mutual Fund? A mutual fund is a pool of money contributed by investors with similar investment objectives. Investors in the mutual fund share the income, expenses, gains and losses that the mutual fund makes on its investments according to the amount of the mutual fund they own. There are several benefits to investing in a mutual fund as opposed to investing by yourself. An investment in a mutual fund gives you the opportunity to participate with other investors with similar investment objectives in professionally managed investment portfolios. Professional portfolio managers make the investment decisions for the mutual fund in accordance with its investment objectives. Mutual funds also enable you to diversify your investment portfolio, which may be difficult for most individual investors to achieve. How is a Fund Structured? Trust or Corporation A mutual fund may be set up as a trust or a corporation. At IA Clarington, we have both types. Each Trust Fund is an open-ended mutual fund trust governed by a master declaration of trust or a trust agreement. The property and investments of the Trust Funds are held in trust by IA Clarington as trustee. There is no limit to the number of units of a Trust Fund you can buy. Each Corporate Class Fund is a separate class of CSFI. CSFI is a mutual fund corporation amalgamated under the laws of Ontario. Corporate Class Funds are primarily suitable for taxable investors, as they offer certain tax deferral benefits. See Income Tax Considerations for Investors on page 43 for more information. Series of Securities Most of the Funds issue Securities in more than one series. A series of Securities may be viewed as a subdivision of the Fund for certain purposes (e.g. calculation of fees), but for other purposes (e.g. investment activity) the Fund remains undivided. See Purchases, Switches and Redemptions Series of Securities on page 15 for more information. Many of the Funds offer Series A Securities. In addition, many of the Funds also offer Series E, Series E4, Series E5, Series E6, Series EX, Series EX5, Series EX6, Series F, Series F4, Series F5, Series F6, Series F8, Series F10, Series FE, Series FE4, Series FE5, Series FE6, Series FX, Series FX5, Series FX6, Series FX8, Series I, Series L, Series LM, Series L4, Series L5, Series L6, Series L8, Series L10, Series M, Series O, Series P, Series P4, Series P5, Series P6, Series T4, Series T5, Series T6, Series T8, Series T10, Series V, Series X and Series Y Securities. IA Clarington Money Market Fund also offers Series B, Series DA and Series DF units. Throughout this document, unless we specify otherwise, all references to Series E Securities include Series E, Series E4, Series E5, Series E6, Series EX, Series EX5, Series EX6 units or shares, all references to Series F Securities include Series F, Series F4, Series F5, Series F6, Series F8, Series F10 Series FX, Series FX5, Series FX6, Series FX8 units or shares, all references to Series FE Securities 4

10 include, Series FE, Series FE4, Series FE5, Series FE6 units or shares, all references to Series L Securities include Series L, Series LM, Series L4, Series L5, Series L6, Series L8 and Series L10 units or shares, all references to Series P Securities include Series P, Series P4, Series P5 and Series P6 units or shares and all references to Series T Securities include Series T4, Series T5, Series T6, Series T8, Series T10 and Series Y units or shares. What are the General Risks of Investing in Mutual Funds? Mutual funds own different types of investments, depending upon their investment objectives. The value of these investments will change from day to day, reflecting changes in interest rates, economic conditions and market and company news. As a result, the value of a mutual fund s Securities may go up and down and the value of your investment in a mutual fund may be more or less when you redeem it than when you purchased it. Securities held by a Fund that are traded on a public exchange are generally valued based on their most recent closing sale price. If the price is not available or if the price is not a true reflection of the value of the security, we will use another method to determine the value. This practice is called fair value pricing. It may happen for many reasons, including when the value is affected by events that occur after a market where the security is principally traded has closed or when there has been minimal or infrequent trading in a security. We use fair value pricing for all non-north American equity securities held by any of the Funds to avoid stale prices being used in calculating the net asset value of the Funds. The full amount of your investment in any of the Funds is not guaranteed. Unlike bank accounts or GICs, mutual fund securities are not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer. Under exceptional circumstances, a mutual fund may suspend redemptions. Please see Purchases, Switches and Redemptions on page 14 for more information. Different Mutual Funds have Different Risks All investments, including mutual funds, carry the risk that you will lose money or not make money. The degree of risk from one mutual fund to another varies considerably. Generally speaking, investments with the highest potential return carry the greatest risk. Money market funds are considered the least risky, but usually come with the lowest expected returns. The riskiest mutual funds tend to be aggressive growth mutual funds, but they also typically provide the highest potential return. We offer a selection of mutual funds within these two extremes. In deciding how much risk you are prepared to take, you should consider how soon you will need the money you are investing. The longer you can leave your money invested, the more time there is for shortterm market declines to be reversed. What are the Specific Risks Associated with Mutual Funds? Below are some of the specific risks that can affect the value of your investments in a Fund. The descriptions of each Fund, provided later in this document, identify which risks apply to each Fund. Activist Investor Risk An activist investor is an investor who attempts to use his or her rights as a shareholder of a publiclytraded company to bring about change to the company s policies or strategic direction. The goals of an activist investor range from financial (increase of shareholder value through changes in corporate policy, financing structure, management or board membership) to non-financial (disinvestment from particular countries or environmental policies). 5

11 The value of the securities of a company where an activist investor has disclosed the intention to seek change or influence the management or control of the company, or a company likely to become subject to such an action, may tend to be more volatile. There is no guarantee that an activist investor will be successful in changing or influencing the management or control of a company. The management of a company may resist the actions of an activist investor, resulting in uncertainty over a company s governance and potential litigation. An activist investor, like other shareholders of a company, is limited in the actions it can take to change or influence the management or control of a company. Voting rights attached to a company s shares are a common example of a method available to shareholders to influence or change the management or control of a company. There is no guarantee that an activist investor will hold a sufficient number of voting rights attached to its shares to change or influence the management or control of a company. Asset-Backed and Mortgage-Backed Securities Risk If a Fund invests in asset-backed or mortgage-backed securities and there are changes in the market s perception of the creditworthiness of the parties involved, or in the value of, or interest rate applicable to, the underlying assets or property, then the value of such securities (and the net asset value of the Fund which is invested in such securities) may be affected. These securities may also be subject to credit and default risk (see descriptions below). Capital Depletion Risk Certain Securities of certain Funds are designed to provide a monthly cash flow to investors. A significant portion of this cash flow will be paid as a return of capital. Returns of capital may reduce the net asset value per Security of the particular series of a Fund. As well, returns of capital may reduce the total assets of the Fund available for investment, which may reduce the ability of the Fund to generate future returns. Concentration Risk Some Funds may have a concentrated number of investments. As a result, the securities in which they invest may not be diversified across asset classes, sectors, regions or countries. By investing in a relatively small number of securities, the portfolio manager may also have a significant portion of the Fund invested in a single security. Concentrated portfolios may experience higher levels of volatility, as the value of the portfolio will vary more in response to changes in the market value of an individual security, asset class, sector, region or country. Corporate Class Risk Although each class of shares of CSFI has its own specific investments attributable to it, liabilities accruing to CSFI or any of the Corporate Class Funds represent obligations of the whole corporation. If the liabilities of one Corporate Class Fund exceed the assets attributable to that Corporate Class Fund, there is the risk of encroachment upon some or all of the assets attributable to the other Corporate Class Funds to satisfy those obligations. In addition, the tax position of any Corporate Class Fund will depend on the tax position of CSFI as a whole and, as a result, the tax implications of investing in a Corporate Class Fund may differ from the tax implications of investing in a Trust Fund. Further information concerning taxation of CSFI and its Securityholders is contained in the Annual Information Form of the Funds. CSFI may become subject to tax on certain income earned by the corporation. IF CSFI does become subject to tax, the board of directors of the corporation, in consultation with its management, will allocate the tax payable by the corporation against the net asset value of such series of such Corporate Class Funds that make up the corporation as it, in its absolute discretion, determines to be fair and equitable. Credit Risk This is the risk that the issuer of debt securities purchased by a Fund will not pay that obligation which will negatively impact the value of debt securities issued by the issuer (also see Default Risk ). Credit 6

12 risk includes the risk that an issuer may suffer adverse changes in its financial condition, causing its credit rating to be lowered which may increase the volatility of a security s price. Changes in the credit rating of an issuer may not only affect the value of their debt securities but also its liquidity, making it more difficult to sell (see Liquidity Risk ). Any of these events may negatively impact value and performance of a Fund holding such securities. Currency Risk Certain Funds invest in securities that are issued in foreign currencies. Changes in the value of the Canadian dollar, relative to these currencies, will affect the value of Canadian dollar denominated Funds and could negatively impact the performance of these Funds. For example, if a security is priced in a foreign currency and the value of the foreign currency declines relative to the Canadian dollar, the value of that security in Canadian dollars will decrease. This will have a negative effect on the value of the Fund. Default Risk This is the risk that a debt issuer may fail to pay interest or principal promptly when due which will impact the value of debt securities issued by the issuer. This risk is typically, but not exclusively, associated with securities of issuers that carry a below investment grade credit rating (also see Credit Risk ). The value of a Fund holding such securities may decline as a result. Deflation Risk Deflation risk occurs when the general level of prices fall. In the event deflation occurs, the interest payments on real return bonds would shrink and the market value of the real return bonds held by a Fund would be adjusted downward. Derivatives Risk A derivative is a contract between two parties, the value of which is based on the performance of other investments, such as equities, bonds, currencies or a market index. Derivatives may be traded in the overthe-counter market or on a stock exchange. A derivative is commonly a futures or a forward contract or an option, but there are other types of derivative instruments as well. Futures or forward contracts are agreements to buy or sell a security, commodity or currency for a certain price on a certain future date. Options give the buyer the right, but not the obligation, to buy or sell a security, commodity or currency for a certain price on or before a certain future date. Derivatives may be used to limit, or hedge against, losses that may occur because of a Fund s investment in a security or exposure to a currency (see Currency Risk ) or market. This is called hedging. Derivatives may also be used to obtain exposure to financial markets, reduce transaction costs, create liquidity or increase the speed of portfolio transactions. These investments are generally made for non-hedging purposes. The following risks are generally associated with using derivatives: the use of derivatives for hedging may not be effective. For example, when using derivatives to reduce risk associated with certain investments including, but not limited to, foreign markets, interest rates, currencies or specific stocks, there may be an imperfect correlation between changes in the market value of the investment being hedged and the hedging derivative. This is often referred to as basis risk. Furthermore, any past correlation may not be maintained during the hedging period. a derivative contract may not be obtained when desired by a Fund because: (i) there may be a lack of parties wanting to buy or sell a derivative contract, or (ii) the exchanges on which some derivatives are traded may set daily trading limits on futures contracts, preventing the Fund from closing a contract, 7

13 the other party to the derivative contract may not be able to meet its obligations and may default (also known as counterparty risk), if an exchange halts trading in a certain derivative, a Fund may not be able to close its position in that derivative, the cost of the derivative contract may increase, the price of a derivative may not accurately reflect the value of the underlying security or index, the costs associated with entering certain derivative contracts may impact the value and performance of a Fund the Tax Act, or its interpretation, may change in respect of the tax treatment of derivatives, and when a Fund enters certain derivative such as futures contracts, assets of the Fund may be placed on deposit with the futures dealer (or other similar counterparties), which exposes the Fund to credit and financial risk associated with these parties. Emerging Markets Risk In addition to the risks of investing in foreign investments generally, emerging markets investments are subject to greater risks arising from political or economic instability, nationalization or confiscatory taxation, currency exchange restrictions and an issuer s unwillingness or inability to make principal or interest payments on its obligations. Emerging market companies may be smaller and have shorter operating histories than companies in developed markets. Equity Market Risk This is the risk that the market value of a Fund s equity investments will rise or fall based on Canadian or international equity market conditions rather than the individual performance and characteristics of the companies that issued the securities. Equity markets can fluctuate with changes in general economic and financial conditions globally or in the countries where the markets are based. Political, social and environmental factors can also significantly affect equity markets and as a result the value of equity investments. Floating Rate Loan Liquidity Risk Floating rate loans may be subject to legal or contractual restrictions on resale. The liquidity of floating rate loans varies significantly over time and among individual floating rate loans. During periods of infrequent trading, valuing a floating rate loan can be more difficult, and buying and selling a floating rate loan at an acceptable price can be more difficult and delayed. Any difficulty in selling a floating rate loan can result in a financial loss to the Fund. The time required for trades of floating rate loans to settle is typically twenty business days. In comparison, floating rate notes and corporate bonds typically settle in three business days. Foreign Investment Risk There is a risk that investments in foreign companies outside Canada will be affected by world economic factors in addition to changes in the value of the Canadian dollar (also see Currency Risk ). In addition, information about foreign companies may not be as complete and may not be subject to the same accounting, auditing, financial reporting standards and practices and other disclosure requirements that apply in Canada. Different financial, political, social and environmental factors can significantly affect the value of a Fund s foreign investments. In some countries that exhibit political instability there may be risks such as nationalization, expropriation or currency controls. Foreign markets may be more volatile or lack liquidity, which may increase the price volatility of the foreign securities. The costs of buying and selling 8

14 securities in foreign markets may be higher than those involved in domestic transactions. These risks are generally higher with emerging market investments. Government Securities Risk Government securities are subject to the risk that the government that issued the securities may default on its obligations (also see Default Risk ). In addition, some government agency securities may be subject to a higher degree of credit risk than the government, particularly if they are not backed by the full faith and credit of the government (see Credit Risk ). Income Trust Risk Income trusts generally hold securities in, or are entitled to receive royalties from, an underlying active business. To the extent that an underlying business is susceptible to industry risks, interest rate fluctuations, commodity prices and other economic factors, investment returns from an income trust may be similarly affected. Although their returns are neither fixed nor guaranteed, income trusts are structured in part to provide a constant stream of income to investors. As a result, an investment in an income trust may be subject to interest rate risk. There is also a risk that where claims against an income trust are not satisfied by that trust, investors in that trust could be held liable for any outstanding obligations. Interest Rate Risk A Fund that invests in interest rate sensitive securities such as income trusts, bonds or other fixed income securities tend to be affected by changes in interest rates. If interest rates increase, the value of the security may decline. Variable and floating rate securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in general. Large Transaction Risk Securities of a Fund may be purchased by another Fund or a third party mutual fund (as part of that mutual fund s fund-of-funds portfolio), by large investors, or by a large group of smaller investors, or by or in respect of other investment products. For example, the Distinction Portfolios may invest in other Funds, and banks or other institutional investors may purchase Securities of a Fund for their own investment products. This could result in large investments in a Fund. Any significant transaction made by a large investor, or by a large group of smaller investors, could significantly impact a Fund s cash flow. If the investor(s) buys large amounts of Securities of a Fund, the Fund could temporarily have a high cash balance. Conversely, if the investor(s) redeems large amounts of Securities of a Fund, the Fund may be required to fund the redemption by selling securities from its portfolio at an inopportune time. This could include selling investments in a market cycle downturn when many investments have declined in value or at any other time when a particular investment may have to be sold below its anticipated worth. This can have a negative impact on the performance of the Fund. Leveraged ETF Risk The Funds, other than IA Clarington Money Market Fund, have received regulatory relief to invest in Leveraged ETFs which attempt to magnify returns by a multiple of 200% or an inverse multiple of up to 200% of a specified widely-quoted market index, referred to as a benchmark index. Leveraged ETFs typically achieve their objectives through the use of leverage or derivatives. This can result in the Leveraged ETF experiencing more volatility than the benchmark index, and achieving longer-term returns that deviate significantly from the benchmark index. An investment in a Leveraged ETF may therefore be highly speculative. In addition, Leveraged ETFs can magnify potential gains or losses, and as a result typically have a higher degree of risk than investing in an exchange-traded fund that simply tracks the benchmark index. The Funds will not invest in a Leveraged ETF with a benchmark index that is based on (i) a physical commodity, or (ii) a specified derivative of which the underlying interest is a physical commodity. 9

15 Liquidity Risk Liquidity generally refers to the speed and ease with which a security can be sold and converted into cash. Securities that exhibit very low liquidity ( illiquid securities ) may result in increased transaction time, unfavourable transaction prices or the complete inability to sell a particular security. Illiquidity can be a result of various factors such as legal restrictions, a lack of an organized and efficient marketplace to trade the security, limited demand for the security, the nature of the investment itself and certain economic events. If a Fund experiences difficulties with selling a security, that particular security may lose value before it is sold. The Fund may also incur additional transaction costs. Illiquid securities may also be more difficult to value accurately and may experience increased price fluctuations. Prepayment Risk Many types of debt instruments, including floating rate loans, can be prepaid, in whole or in part, prior to the instruments stated maturity. Prepayment may be caused by a variety of factors which are difficult to predict. Such securities that were purchased above par or at the prepayment price could result in a capital loss as a result of such prepayment which will negatively impact the value and performance of a Fund holding the particular security. In addition, proceeds from a prepayment may not be invested at similar or more favourable interest rates as the initial security (see Reinvestment Risk ). Reinvestment Risk Reinvestment risk generally refers to the risk that payments such as coupons from a bond or similar fixed income security may not be able to be reinvested at an interest rate similar or higher than the prevailing rate at which the security was initially purchased. Reinvestment risk is greater during periods of declining interest rates and as a result of early prepayment (see Prepayment Risk ). Repurchase and Reverse Repurchase Transactions and Securities Lending Risk Some of the Funds may enter into repurchase and reverse repurchase transactions and/or securities lending agreements. Investors will be given 60 days prior written notice before a Fund starts to enter into these types of transactions. A repurchase transaction is where a Fund sells portfolio securities that it owns to a third party for cash and simultaneously agrees to buy back the securities at a later date at a specified price using the cash received by the Fund from the third party. While the Fund retains its exposure to changes in the value of the portfolio securities, it also earns fees for participating in the repurchase transaction. A reverse repurchase transaction is where a Fund purchases securities from a third party and simultaneously agrees to sell the securities back to the third party at a later date at a specified price. The difference between the Fund s purchase price for the securities and the resale price provides the Fund with additional income. A securities lending agreement is similar to a repurchase agreement except that instead of selling the securities and agreeing to buy them back later, the Fund loans the securities for a fee and can demand the return of the securities at any time. While the securities are on loan, the borrower provides the Fund with collateral consisting of cash and/or securities. The risks associated with these types of transactions arise if the other party to the agreement defaults or goes bankrupt and the Fund experiences losses or delays in recovering its investment. In a repurchase or securities lending transaction, the Fund could incur a loss if the value of the securities sold or loaned has increased in value relative to the value of the cash or collateral held by the Fund. In the case of a reverse repurchase transaction, the Fund could incur a loss if the value of the securities purchased by the Fund decreases in value relative to the value of the collateral held by the Fund. To minimize these risks, a Fund will not enter into these types of transactions unless it is, at a minimum, fully collateralized by liquid securities with a value of at least 102% of the market value of the securities 10

16 sold, purchased or loaned, as the case may be. A Fund will not enter into a repurchase or securities lending agreement if, immediately thereafter, the aggregate market value of all securities loaned by the Fund and not yet returned to it or sold by the Fund and not yet repurchased would exceed 50% of the total assets of the Fund, exclusive of cash held by the Fund. To minimize the risk of loss to the Fund, these transactions will only be entered into with parties that have adequate resources and financial strength to meet their obligations under the agreement. Sector Risk Sector risk generally refers to the risk that changes in a market sector, for example Energy or Financials, will affect a Fund s investments that are heavily concentrated in that sector. The performance of securities of sector-specific companies can be highly correlated and, as a result, a Fund that has high sector concentrations may be impacted significantly by the performance of the overall sector. Series Risk Most of the Funds are available in more than one series of units or shares. Each series has its own fees and expenses, which the Fund tracks separately. If, for any reason, a Fund cannot pay the expenses of one series using its proportionate share of the Fund s assets, the Fund will be required to pay those expenses out of the other series proportionate share of the assets. This could lower the investment return of the other series. Short Selling Risk A short sale is where a mutual fund borrows securities from a lender and sells those securities in the open market. The short seller is obligated to return the borrowed securities in the future and may need to purchase them at short notice in order to satisfy this obligation. Where a Fund sells securities short, it will generally see a profit if the securities decrease in value and a loss if they increase in value. Unlike a purchase of securities, where the maximum amount of the loss is limited to the amount invested, there is theoretically no limit to the Fund s exposure on a short sale as the securities may need to be purchased at a higher price than at what the short sale took place. As a result the financial loss could be infinite. In addition, the securities loaned for the short sale may be recalled by the lender, and limitations on availability of securities may limit the Fund s freedom of action in connection with short sales. Smaller Capitalization Risk The value of smaller capitalization companies may be less stable than those of larger capitalization companies. The securities of smaller capitalization companies may also trade less frequently and in smaller volumes than securities of larger capitalization companies, which can expose the Fund to liquidity risk. Funds that invest in smaller capitalization companies are more likely to be exposed to volatility resulting from these characteristics. Tax Risk If the Trust Fund experiences a loss restriction event (i) the Fund will be deemed to have a year-end for tax purposes (which could result in the Fund being subject to tax unless it distributes its income and capital gains prior to such year-end), and (ii) the Fund will become subject to the loss restriction rules generally applicable to corporations that experience an acquisition of control, including a deemed realization of any unrealized capital losses and restrictions on their ability to carry forward losses. Generally, a Trust Fund will be subject to a loss restriction event when a person becomes a majorityinterest beneficiary of the Fund, or a group of persons becomes a majority-interest group of beneficiaries of the Fund, as those terms are defined in the affiliated persons rules contained in the Tax Act, with appropriate modifications. Generally, a majority-interest beneficiary of a Trust Fund will be a beneficiary who, together with the beneficial interests of persons and partnerships with whom the beneficiary is affiliated, has a fair market value that is greater than 50% of the fair market value of all the interests in the income or capital, respectively, in the Fund. Generally, a person will be deemed not to 11

17 have become a majority interest beneficiary, and a group of persons will be deemed not to have become a majority interest group of beneficiaries, of a Trust Fund where the Fund meets certain investment requirements and qualifies as an investment fund under the Tax Act. Tracking Risk Some of the Funds may seek to have all or a substantial portion of their returns linked to the performance of Securities of another mutual fund referred to as a Reference Fund by either directly purchasing securities similar to those held by the Reference Fund or by entering into forward contracts and other derivative instruments. The return (performance) of a Fund may be lower than that of its respective Reference Fund because the Fund bears its own fees and expenses, including the costs of any forward contracts and other derivatives that it may use to achieve its investment objectives. Additionally, there may be a delay between the time an investor buys Securities of a Fund and the time the Fund gets additional exposure to the Reference Fund. During this delay, the Fund may be unable to track the performance of its corresponding Reference Fund. Such performance lags and tracking errors could result in the security price of the Fund not precisely tracking the security price of its Reference Fund. Organization and Management of the Funds IA Clarington is a subsidiary of Industrial Alliance, a leading financial institution in Canada and an industry leader in the insurance and financial services sectors. Industrial Alliance is listed on the Toronto Stock Exchange under the symbol IAG. Companies that Work with the Funds Manager IA Clarington Investments Inc. 522 University Avenue, Suite 700 Toronto, Ontario, M5G 1Y Trustee IA Clarington Investments Inc. Toronto, Ontario Portfolio Manager Industrial Alliance Investment Management Inc. Québec City, Québec The manager manages the overall business of the Funds, including administration services, promoting sales of each Fund s Securities, arranging for the provision of other services and hiring each Fund s portfolio manager and/or sub-advisor. The Trust Funds are organized as trusts. When you invest in a Trust Fund, you buy units of a trust. The trustee holds legal title to the property of the Trust Funds for the benefit of all of the Securityholders of those Funds. The Corporate Class Funds are organized as classes of shares of a corporation, Clarington Sector Fund Inc., and do not have a trustee. The portfolio manager and the sub-advisors are companies retained to manage the investment portfolio of the Funds. It may be difficult to enforce any legal rights against any of the non-canadian subadvisors because they are foreign companies and their assets are located outside Canada. Industrial Alliance Investment Management Inc. acts as portfolio manager to all of the Funds. For many of the Funds, it has delegated its responsibilities to a sub-advisor. See Fund Details to find out the subadvisor responsible for each Fund. Industrial Alliance 12

18 Investment Management Inc. is an affiliate of IA Clarington Investments Inc. Custodian RBC Investor Services Trust Montréal, Québec CIBC Mellon Trust Company Toronto, Ontario Registrar and Transfer Agent IA Clarington Investments Inc. Toronto, Ontario Auditor PricewaterhouseCoopers LLP Montréal, Québec Independent Review Committee Stephen J. Griggs (Chair) Jean Morissette S. Robert Munroe RBC Investor Services Trust is the custodian for the Funds, except IA Clarington Core Plus Bond Fund, IA Clarington Floating Rate Income Fund, IA Clarington Growth & Income Fund and IA Clarington North American Opportunities Class. CIBC Mellon Trust Company is the custodian for IA Clarington Core Plus Bond Fund, IA Clarington Floating Rate Income Fund, IA Clarington Growth & Income Fund and IA Clarington North American Opportunities Class. The custodians are responsible for the safekeeping of the assets of the Funds. They may retain the services of subcustodians in Canada and throughout the world to hold the investments of the Funds. The registrar and transfer agent keeps track of the owners of Securities of each of the Funds, processes purchase, switch and redemption orders and issues investor account statements, trade confirmations and annual tax reporting information. The auditor audits the annual financial statements of the Funds. Securityholder approval will not be required for a change of auditor of a Fund if the independent review committee of the Fund has approved the change and notice of the change is sent to Securityholders of the Fund at least 60 days before the change. The independent review committee reviews matters that involve a conflict of interest within the meaning of National Instrument Independent Review Committee for Investment Funds. The independent review committee provides an annual report of its activities, which is available on IA Clarington s website at or, at your request and at no cost, by contacting us at funds@iaclarington.com or calling us toll free at Additional information about the independent review committee and fund governance is available in the Funds Annual Information Form. Fund of Funds Each of the Funds may invest directly in other mutual funds, referred to as Reference Funds, including mutual funds managed by IA Clarington or an affiliate of IA Clarington. IA Clarington Canadian Small Cap Class, IA Clarington Global Opportunities Class, the Distinction Portfolios, IA Clarington Inhance 13

19 Balanced SRI Portfolio, IA Clarington Inhance Conservative SRI Portfolio, IA Clarington Inhance Growth SRI Portfolio, IA Clarington Canadian Conservative Equity Class, IA Clarington Tactical Bond Class, IA Clarington Tactical Income Class, IA Clarington Global Tactical Income Class, IA Clarington Strategic Corporate Bond Class, IA Clarington Strategic Income Class, IA Clarington Strategic Equity Income Class and IA Clarington Canadian Balanced Class may invest primarily in other mutual funds, including any of the Funds and third-party mutual funds. Where IA Clarington is the manager of both a top fund and a Reference Fund, it will not vote the Securities of the Reference Fund held directly by the top fund. Instead, where applicable, IA Clarington may arrange for such Securities to be voted by the beneficial Securityholders of the applicable top fund. Certain Changes without Securityholder Approval A Fund may engage in a reorganization or transfer of assets with another mutual fund managed by us or an affiliate that meets certain criteria set out in NI without Securityholder approval, if the reorganization or transfer is approved by its independent review committee and the Fund sends written notice of the change to its Securityholders at least 60 days prior to making the change. Purchases, Switches and Redemptions Securities of the Funds may be purchased, switched (transferred from one Fund to another IA Clarington Fund) or redeemed through a registered dealer across Canada. Securities are purchased, switched or redeemed at their net asset value per security. See Valuation of a Fund below for details on how to calculate the net asset value for each series of securities. If we receive a completed purchase, switch or redemption order on or before 4:00 p.m. Eastern Time on a day that the Toronto Stock Exchange is open for business or before the Toronto Stock Exchange closes for the day, whichever is earlier, it will be processed at the net asset value per security on that day. If we receive the order after that time, it will be processed at the net asset value per security calculated on the next business day. Valuation of a Fund The value of a mutual fund is its net asset value, referred to as a NAV. We calculate a separate NAV for each series of Securities of the Funds. The NAV per series is calculated by adding together the total of the series share of a Fund s assets and subtracting the total of the liabilities allocated to that series of Securities. The NAV of each series of Securities of a Fund is calculated at the close of business on each day that the Toronto Stock Exchange is open for trading. Once the NAV of a series of Securities of a Fund is determined, the NAV for each security of that series can be calculated by dividing the series NAV by the total number of Securities outstanding in that series of the Fund. Further details concerning the valuation of each Fund s Securities are included in the Annual Information Form. Foreign Currencies Each Fund is valued in Canadian dollars for the purposes of purchases, switches and redemptions. However, you may elect to purchase the series of Securities of the Funds specified below in U.S. dollars: IA Clarington Growth & Income Fund (Series A, E, E5, F, F5, L, L5, P, P5, T5) IA Clarington North American Opportunities Class (Series A, E, F, L, P) IA Clarington Global Growth & Income Fund (Series A, E, E5, F, F5, FE, FE5, L, L5, P, P5, T5) IA Clarington Global Opportunities Fund (Series A, E, F, L) IA Clarington Global Opportunities Class (Series A, E, EX, F, FE, L, P) IA Clarington Sarbit U.S. Equity Class (Unhedged) (Series A, E, F, F6, FE, L, L6, P, T6) 14

20 IA Clarington U.S. Dividend Growth Fund (Series A, E, F, F6, FE, L, L6, P and T6) IA Clarington Focused U.S. Equity Class (Series A, E, E5, F, F5, FE, FE5, L, L5, P, P5, T5) IA Clarington Global Equity Fund (Series A, E, F, F6, FE, I, L, L6, P, T6, T8) IA Clarington Global Tactical Income Fund (Series A, E, E6, F, F6, FE, FE6, L6, L8, P, P6, T6, T8) IA Clarington Core Plus Bond Fund, IA Clarington Floating Rate Income Fund, IA Clarington Strategic U.S. Growth & Income Fund and IA Clarington Sarbit U.S. Equity Fund are no longer available for purchases and switches in U.S. dollars. If you purchase Securities using U.S. dollars, we will determine the U.S. dollar NAV per security by converting the Canadian dollar NAV per security at the exchange rate on the day your order is received. You must redeem Securities of a Fund in the same currency in which the Securities were purchased. The overall performance of your investment is the same, regardless of the currency in which you make your purchase, as the same series is sold under either option. Reported returns to clients who select the CAD $ purchase option are commonly stated in CAD $ terms. Reported returns to clients who select the US $ purchase option are commonly stated in US $ terms. The economic return experienced by you under either option is the same. The option to purchase Securities in U.S. dollars is offered as a convenience for investors who prefer to transact in U.S. dollars. Securities available for purchase in U.S. dollars are the same Securities that are available for purchase in Canadian dollars. This purchase option does not hedge, or protect, against losses caused by fluctuations in the exchange rate between Canadian and U.S. dollars. Series I and Series O Securities may also be available for purchase or redemption in currencies other than Canadian dollars. Any such privileges must be specified in the Series I agreement or Series O agreement pertaining to those Securities. For the purposes of purchases, switches and redemptions made pursuant to the Dollar-Cost Averaging Service, each Transfer Fund is valued only in Canadian dollars. You may not elect to purchase or redeem any Securities of the Transfer Funds in U.S. dollars. Series of Securities Each Fund is permitted to have an unlimited number of series of Securities and may issue an unlimited number of Securities of each series. Please refer to Fund Details in the description of each Fund to determine what series of Securities each Fund offers. Certain series of the Funds may be subject to minimum investment amounts. These amounts are determined from time to time by IA Clarington in its sole discretion. They may also be waived by us and are subject to change without prior notice. The consideration that you and other investors pay to purchase securities of any series is tracked on a series by series basis in your Fund s administration records. However, the assets of all series of a Fund are combined in a single pool to create one portfolio for investment purposes. Series A and T Securities Series A and Series T Securities of the Funds are available to all investors. Other than the amount of the monthly distribution and, in some cases, the management and administration fees, Series T Securities have the same general features as Series A Securities of the Funds. Series T Securities are designed to provide a tax-efficient cash flow to investors by making monthly distributions as described under Monthly Distribution Series on page 17. Series B Securities Series B units of IA Clarington Money Market Fund are available to investors who invest at least $100,000 in a Fund. Series DA and DF Securities Series DA and Series DF units of IA Clarington Money Market Fund are available to all investors who invest at least $1,000 and $10,000, respectively, in a Fund. They are designed to allow investors the opportunity to systematically invest in pre-selected Transfer Funds over time using the Dollar-Cost 15