Simplified Prospectus - Scotiabank · Simplified Prospectus May 16, ... Scotia Fixed Income Blend...

12DEC201417494427

ScotiaFunds� 2016Simplified ProspectusMay 16, 2016

Scotia Conservative Government Bond Capital Yield Class (Series A shares)

Scotia Fixed Income Blend Class (Series A shares)

Scotia Canadian Dividend Class (Series A shares)

Scotia Canadian Equity Blend Class (Series A shares)

Scotia U.S. Equity Blend Class (Series A shares)

Scotia Global Dividend Class (Series A shares)

Scotia International Equity Blend Class (Series A shares)

Scotia INNOVA Income Portfolio Class (Series A shares)

Scotia INNOVA Balanced Income Portfolio Class (Series A and Series T shares)

Scotia INNOVA Balanced Growth Portfolio Class (Series A and Series T shares)

Scotia INNOVA Growth Portfolio Class (Series A and Series T shares)

Scotia INNOVA Maximum Growth Portfolio Class (Series A and Series T shares)

Scotia Partners Balanced Income Portfolio Class (Series A and T shares)

Scotia Partners Balanced Growth Portfolio Class (Series A and T shares)

Scotia Partners Growth Portfolio Class (Series A and T shares)

Scotia Partners Maximum Growth Portfolio Class (Series A and T shares)

Each of the foregoing Funds and Portfolios are classes of Scotia CorporateClass Inc.

No securities regulatory authority has expressed an opinion about thesesecurities. It is an offence to claim otherwise.

The Funds and the securities they offer under this simplified prospectusare not registered with the U.S. Securities and Exchange Commission.Securities of the Funds may be offered and sold in the United States onlyin reliance on exemptions from registration.

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iFund specific information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Scotia Conservative Government Bond Capital Yield

Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Scotia Fixed Income Blend Class . . . . . . . . . . . . . . . . . . . . . . . . 6Scotia Canadian Dividend Class . . . . . . . . . . . . . . . . . . . . . . . . . 8Scotia Canadian Equity Blend Class . . . . . . . . . . . . . . . . . . . . . 10Scotia U.S. Equity Blend Class . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Scotia Global Dividend Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Scotia International Equity Blend Class . . . . . . . . . . . . . . . . . 16Scotia INNOVA Income Portfolio Class . . . . . . . . . . . . . . . . . . 18Scotia INNOVA Balanced Income Portfolio Class . . . . . . . 21Scotia INNOVA Balanced Growth Portfolio Class . . . . . . . 24Scotia INNOVA Growth Portfolio Class . . . . . . . . . . . . . . . . . 27Scotia INNOVA Maximum Growth Portfolio Class . . . . . . 30Scotia Partners Balanced Income Portfolio Class . . . . . . . 33Scotia Partners Balanced Growth Portfolio Class . . . . . . . 36Scotia Partners Growth Portfolio Class . . . . . . . . . . . . . . . . . 39Scotia Partners Maximum Growth Portfolio Class . . . . . . 42

What is a mutual fund and what are the risks ofinvesting in a mutual fund? . . . . . . . . . . . . . . . . . . . . . . . 45

Organization and management of the funds . . . . . . 53Purchases, switches and redemptions . . . . . . . . . . . . . . 55Optional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Impact of sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Dealer compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Income tax considerations for investors . . . . . . . . . . . 63What are your legal rights? . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Introduction

In this document, unless the context requires otherwise: ScotiaFunds refers to all of our mutual funds and the seriesthereof that are offered under separate simplified prospec-

Board means the board of directors of the Corporation;tuses under the ScotiaFunds� brand and includes the Scotiamutual funds offered under this simplified prospectus;Corporation means Scotia Corporate Class Inc.;

securities of a Fund refers to units or shares of a Fund, asCorporate Funds refers to the ScotiaFunds that are classesapplicable;of the Corporation and Corporate Fund refers to any

of them;securityholder refers to shareholders of a Corporate Fund orto unitholders of a Trust Fund or an LP Fund, as applicable;Fund or Funds means a Corporate Fund, including a Portfo-

lio, that is offered for sale under this simplified prospectusTax Act means the Income Tax Act (Canada);

and where the context requires, refers to ScotiaFunds,whether a Corporate Fund, a Trust Fund or an LP Fund; Trust Funds refers to the ScotiaFunds that are structured as

mutual fund trusts and issue units; andLP Funds refers to an investment fund structured as alimited partnership established from time to time in which underlying fund refers to an investment fund (either aone or more Corporate Funds may invest, and LP Fund refers ScotiaFund or other investment fund) in which ato any of them; fund invests.

Manager, 1832 LP, we, us, and our refer to 1832 Asset This simplified prospectus contains selected important infor-Management L.P.; mation to help you make an informed investment decision

about the Funds and to understand your rights as an inves-Portfolios or Portfolio Classes refers to the Scotia INNOVA

tor. It is divided into two parts. The first part, from pages 1Portfolio Classes and Scotia Partners Portfolio Classes that

to 44, contains specific information about each of the Fundsare offered for sale under this simplified prospectus and

offered for sale under this simplified prospectus. The secondPortfolio or Portfolio Class refers to any of them;

part, from pages 45 to 65, contains general information thatapplies to all of the Funds offered for sale under thisReference Funds refers to Scotia Private Short-Mid Govern-simplified prospectus and the risks of investing in mutualment Bond Pool, Scotia Private Canadian Corporate Bondfunds generally, as well as the names of the firms responsiblePool, Scotia Canadian Income Fund and Reference Fundfor the management of the Funds.refers to any of them;

Additional information about each Fund is available in itsReference Securities means the portfolio securities held by aannual information form, its most recently filed Fund Facts,Reference Fund;its most recently filed interim financial reports and annual

Scotiabank includes The Bank of Nova Scotia (Scotiabank�) financial statements and its most recently filed annual andand its affiliates, including 1832 Asset Management L.P., interim management reports of fund performance. TheseScotia Securities Inc. and Scotia Capital Inc. (including documents are incorporated by reference into this simplifiedScotiaMcLeod� and Scotia iTRADE�, each a division of prospectus. That means they legally form part of this simpli-Scotia Capital Inc.); fied prospectus just as if they were printed in it.

Scotia INNOVA Portfolio Classes refers to Scotia INNOVA You can get a copy of the Funds’ annual information form, itsIncome Portfolio Class, Scotia INNOVA Balanced Income most recently filed Fund Facts, financial statements andPortfolio Class, Scotia INNOVA Balanced Growth Portfolio management reports of fund performance at no charge byClass, Scotia INNOVA Growth Portfolio Class and Scotia calling 1-800-268-9269 (416-750-3863 in Toronto) for English,INNOVA Maximum Growth Portfolio Class; or 1-800-387-5004 for French, or by asking your mutual fund

representative. You will also find these documents on ourScotia Partners Portfolio Classes refers to Scotia Partnerswebsite at www.scotiafunds.com.Balanced Income Portfolio Class, Scotia Partners Balanced

Growth Portfolio Class, Scotia Partners Growth Portfolio These documents and other information about the Funds areClass and Scotia Partners Maximum Growth Portfolio Class; also available at www.sedar.com.

i

Fund specific information

The Funds offered under this simplified prospectus are part majority of votes cast at a meeting of securityholders calledof the ScotiaFunds family of funds. Each Fund is a separate for that purpose.class of mutual fund shares of the Corporation, and eachclass is divided into one or more separate series. Each Fund About derivativesis associated with an investment portfolio having specific

Derivatives are investments that derive their value from theinvestment objectives. Each share of a series represents anprice of another investment or from anticipated movementsequal, undivided interest in the portion of the Fund’s netin interest rates, currency exchange rates or market indexes.assets attributable to that series. Expenses of each series areDerivatives are usually contracts with another party to buy ortracked separately and a separate share price is calculatedsell an asset at a later time and at a set price. Examples offor each series. All of the Funds offered under this simplifiedderivatives are options, forward contracts, futures contractsprospectus offer Series A shares and some of the Funds alsoand swaps.offer Series T shares.• Options generally give holders the right, but not the

The series have different management fees and are intendedobligation, to buy or sell an asset, such as a security or

for different investors. Series A and Series T shares arecurrency, at a set price and a set time. Option holders

available to all investors. You will find more informationnormally pay the other party a cash payment, called a

about the different series of shares under About the seriespremium, for agreeing to give them the option.

of shares.• Forward contracts are agreements to buy or sell an asset,

such as a security or currency, at a set price and a setAbout the Fund descriptionstime. The parties have to complete the deal, or sometimes

On the following pages, you will find detailed descriptions of make or receive a cash payment, even if the price haseach of the Funds to help you make your investment deci- changed by the time the deal closes. Forward contractssions. Here is what each section of the fund descriptions are generally not traded on organized exchanges and aretells you: not subject to standardized terms and conditions.

• Futures contracts, like forward contracts, are agreementsFund details to buy or sell an asset, such as a security or currency, at a

set price and a set time. The parties have to complete theThis section gives you some basic information about each

deal, or sometimes make or receive a cash payment, evenFund, such as its start date and its eligibility for registered

if the price has changed by the time the deal closes.plans, including trusts governed by registered retirement

Futures contracts are normally traded on a registeredsavings plans (‘‘RRSPs’’), registered retirement income funds

futures exchange. The exchange usually specifies certain(‘‘RRIFs’’), registered education savings plans (‘‘RESPs’’),

standardized terms and conditions.deferred profit sharing plans, registered disability savings

• Swaps are agreements between two or more parties toplans (‘‘RDSPs’’) and tax-free savings accounts (‘‘TFSAs’’)exchange principal amounts or payments based on returns(collectively, ‘‘Registered Plans’’).on different investments. Swaps are not traded on organ-

All of the Funds offered under this simplified prospectus are, ized exchanges and are not subject to standardized termsor are expected to be, qualified investments under the and conditions.Tax Act for Registered Plans. In certain cases, we may

A Fund can use derivatives as long as it uses them in a wayrestrict purchases of shares of certain Funds by certainthat is consistent with the Fund’s investment objectives andRegistered Plans.with Canadian securities regulations. All of the Funds mayuse derivatives to hedge their investments against lossesWhat do the Funds invest in?from changes in currency exchange rates, interest rates and

This section tells you the fundamental investment objectives stock market prices. Some of the Funds may also use deriva-of each Fund and the investment strategies each Fund uses tives to gain exposure to financial markets or to investin trying to achieve those objectives. Any change to the indirectly in securities or other assets. This can be lessfundamental investment objectives must be approved by a expensive than buying securities or assets directly.

1

When a Fund uses derivatives for purposes other than hedg- Each Portfolio Class is diversified by asset class, capitaliza-ing, it holds enough cash or money market instruments to tion, geographic location and investment style. We regularlyfully cover its positions, as required by securities regulations. monitor the underlying funds in which or to which the

Portfolio Classes are invested or exposed and consider theunderlying funds’ quantitative and qualitative attributes, andInvesting in other investment fundsthe diversification benefits that they bring to each of the

Each of the Funds may, from time to time, invest some or all Portfolio Classes. When deciding to invest in an underlyingof their assets in underlying funds that are managed by us, fund, we may consider a variety of criteria, including man-including other ScotiaFunds, or our affiliates or associates, agement style, investment performance and consistency, riskor by third party investment managers. When deciding to attributes and the quality of the underlying fund’s managerinvest in, or obtain exposure to, other investment funds, the or portfolio advisor.portfolio advisor may consider a variety of criteria, includingmanagement style, investment performance and consistency, Funds that engage in repurchase and reverserisk attributes and the quality of the underlying fund’s repurchase transactionsmanager or portfolio advisor.

Some of the Funds may enter into repurchase or reverseThe Portfolio Classes are part of a family of mutual funds repurchase agreements to generate additional income fromproviding investors with professionally managed solutions securities held in a Fund’s portfolio. When a mutual funddesigned to suit their investment profile. Each of the Portfo- agrees to sell a security at one price and buy it back on alio Classes may invest in, or obtain exposure to, a mix of specified later date (usually at a lower price), it is enteringother investment funds, each of which follows a different into a repurchase transaction. When a mutual fund agrees toinvestment objective and strategy. In addition, a Portfolio buy a security at one price and sell it back on a specifiedClass may also choose to obtain exposure to a particular later date (usually at a higher price), it is entering into ainvestment strategy by investing directly in equity securities reverse repurchase transaction. For a description of theand fixed income securities. Each Portfolio Class will follow strategies the Funds use to minimize the risks associateda strategic asset allocation investment strategy. with these transactions, see the discussion under Repur-

chase and reverse repurchase transaction risk.The Portfolio Classes give you:

• strategic asset allocation;Funds that lend their securities

• market capitalization diversification;Some of the Funds may enter into securities lending transac-

• geographic diversification;tions to generate additional income from securities held in a

• portfolio advisor style diversification; Fund’s portfolio. A mutual fund may lend securities held inits portfolio to qualified borrowers who provide adequate• ongoing oversight of the asset mix, fund selection andcollateral. For a description of the strategies the Funds useindividual security selection; andto minimize the risks associated with these transactions, see• ongoing portfolio rebalancing to ensure that the appropri-the discussion under Securities lending risk.ate long-term asset mix is maintained.

The selection of investments for the Portfolio Classes is Funds that engage in short sellingsubject to a multi-step investment process. Prior to investing,

Mutual funds may be permitted to engage in a limitedwe conduct a thorough review of appropriate investmentamount of short selling under securities regulations. A ‘‘shortfunds and determine if the Portfolio Class will invest in, orsale’’ is where a mutual fund borrows securities from aobtain exposure to, an investment fund or if the Portfoliolender which are then sold in the open market (or ‘‘soldClass will invest directly in similar securities as are held byshort’’). At a later date, the same number of securities arean investment fund.repurchased by the mutual fund and returned to the lender.

When determining whether to include a particular mutual In the interim, the proceeds from the first sale are depositedfund or investment, we consider the asset mix of each of the with the lender and the mutual fund pays interest to thePortfolio Classes which are designed for different types of lender. If the value of the securities declines between theinvestors with unique risk or reward profiles. time that the mutual fund borrows the securities and the

time it repurchases and returns the securities, the mutualfund makes a profit for the difference (less any interest the

2

mutual fund is required to pay to the lender). In this way, Who should invest in this Fund?the mutual fund has more opportunities for gains when

This section can help you decide if the Fund might bemarkets are generally volatile or declining.

suitable for your investment portfolio. It is meant as ageneral guide only. For advice about your investment portfo-

What are the risks of investing in the Fund?lio, you should consult your mutual fund representative. Ifyou do not have a mutual fund representative, you can speakThis section tells you the risks of investing in the Fund. Youwith one of our representatives at any Scotiabank branch orwill find a description of each risk in Specific risks ofby calling a Scotia Securities Inc. office.mutual funds.

Dividend policyInvestment risk classification methodology

This section tells you when the Fund pays dividends. Divi-A risk classification rating is assigned to each Fund todends on shares held in Registered Plans and non-registeredprovide you with information to help you determine whetheraccounts are reinvested in additional shares of the Fund,the Fund is appropriate for you. Each Fund is assigned a riskunless you tell your mutual Fund representative that yourating in one of the following categories: low, low to medium,want to receive cash distributions. For information aboutmedium, medium to high or high. The investment risk ratinghow dividends are taxed, see Income tax considerationsfor each Fund is reviewed at least annually as well as if therefor investors.is a material change in a Fund’s investment objective or

investment strategies.Fund expenses indirectly borne by investors

The methodology used to determine the risk rating of a Fundfor purposes of disclosure in this simplified prospectus is This is an example of how much the Fund might pay inbased on a combination of the qualitative aspects of the expenses. It is intended to help you compare the cost ofmethodology recommended by the Fund Risk Classification investing in the Fund with the cost of investing in otherTask Force of the Investment Fund Institute of Canada and mutual funds. Each Fund pays its own expenses, but theythe Manager’s quantitative analysis of the Fund’s historic affect you because they reduce the Fund’s returns.volatility. In particular, the standard deviation of each Fund

The table shows how much the Fund would pay in expensesis reviewed. Standard deviation is a common statistic used to

on a $1,000 investment with a 5% annual return. The infor-measure the volatility and risk of an investment. Funds with

mation in the tables assumes that the Fund’s managementhigher standard deviations are generally classified as being

expense ratio was the same throughout each period shown asmore risky. The Manager takes into account other qualitative

it was during its last completed financial year. If a Fund didfactors in making its final determination of each Fund’s risk

not offer or distribute Series A or Series T shares prior torating. Qualitative factors taken into account include key

December 31, 2015, no Fund expenses information is availa-investment policy guidelines which may include but are not

ble for that series. You will find more information about feeslimited to regional, sectoral and market capitalization

and expenses in Fees and expenses.restrictions as well as asset allocation policies.

The Manager recognizes that other types of risk, both mea-surable and non-measurable, may exist and that historicalperformance may not be indicative of future returns and aFund’s historic volatility may not be indicative of its futurevolatility.

The methodology that the Manager uses to identify theinvestment risk level of the Funds is available on request atno cost by contacting us toll free at 1-800-268-9269(or 416-750-3863 in Toronto) for English or1-800-387-5004 for French or by email [email protected] or by writing to us at the addresson the back cover of this simplified prospectus.

3

Scotia Conservative Government Bond Capital Yield ClassThe Fund is currently closed to new purchases or switches of The average term to maturity of the Fund’s and the underly-securities from other funds into this Fund. The Fund may be ing fund’s investments will vary, depending on market condi-re-opened at a later date. tions. The portfolio advisor of the Fund, when investing

directly in such securities, and of the underlying fund adjuststhe average term to maturity to try to maximize returnsFund detailswhile minimizing interest rate risk.

Fund type Fixed income fund

Start date Series A shares: May 28, 2012 The Fund, when investing directly in such securities, and theType of securities Series A shares of a mutual fund underlying fund use interest rate and yield curve analysis to

corporationselect individual investments and to manage the Fund or the

Eligible for YesRegistered Plans? underlying Fund’s average term to maturity, and analysesPortfolio advisor 1832 Asset Management L.P. credit risk to identify securities that offer the potential for

Toronto, Ontariohigher yields at an acceptable level of risk. The Fund mayalso retain cash to fund its expenses and/or meet its redemp-

What does the Fund invest in? tion requirements to securityholders. The Fund may alsoinvest in money market instruments.Investment objectives

The Fund and underlying fund may also invest up to 30% ofThe Fund’s objective is to provide income and modest capitalits assets in foreign securities.gains by primarily providing exposure to bonds and treasury

bills issued or guaranteed by Canadian federal, provincial The Fund and the underlying fund may use derivatives suchand municipal governments or agency of such governments, as options, forwards and swaps to adjust the Fund’s averageand money market instruments of Canadian issuers, includ- term to maturity, to gain or reduce exposure to income-ing commercial paper, bankers’ acceptances, asset-backed or producing securities and to hedge against changes in interestmortgage-backed securities and guaranteed investment rates. They will only use derivatives as permitted by securi-certificates. ties regulations.

The Fund will obtain such exposure in one or more of the The Fund and the underlying fund also may enter intofollowing ways, in any combination: securities lending transactions, repurchase transactions and

reverse repurchase transactions, to the extent permitted by• by investing directly in such fixed income securities;securities regulations, to earn additional income or enhance• by investing in units of the Scotia Private Short-Midreturns. For more information about repurchase, reverseGovernment Bond Pool (the ‘‘underlying fund’’); andrepurchase and securities lending transactions and how the

• by investing in units of an LP Fund which makes use of Fund limits the risks associated with them see Specific risksforward contracts, deposit notes or other derivatives to of mutual funds – Repurchase and reverse repurchasegain exposure to the return of the Reference Fund. transaction risk.

Any change to the fundamental investment objectives must The Fund and the underlying fund may also engage in shortbe approved by a majority of votes cast at a meeting of selling on the conditions permitted by Canadian securitiessecurityholders called for that purpose. rules. In determining whether securities of a particular

issuer should be sold short, the portfolio advisor utilizes theInvestment strategies same analysis that is described above for deciding whether to

purchase the securities. Where the analysis generally pro-Securities with a maturity of one year or less will generallyduces a favourable outlook, the issuer is a candidate forhave a credit rating of R1 (low) or better by Dominion Bondpurchase. Where the analysis produces an unfavourable out-Rating Service Limited (DBRS), or an equivalent rating bylook, the issuer is a candidate for a short sale. For a moreanother designated rating organization. Securities with adetailed description of short selling and the limits withinmaturity of more than one year must have a credit rating ofwhich the underlying fund may engage in short selling,BBB (low) or better by DBRS, or an equivalent rating by

another designated rating organization.

4

SC

OT

IA C

ON

SE

RV

AT

IVE

GO

VE

RN

ME

NT

BO

ND

CA

PIT

AL

YIE

LD

CL

AS

S

please refer to Specific risks of mutual funds – Short You will find details about each risk under Specific risks ofselling risk. mutual funds.

Additional information about the underlying fund is set out During the 12 months preceding April 26, 2016, up to 105.3%in its simplified prospectus, Fund Facts and annual of the net assets of the portfolio were invested in Scotiainformation form. Private Short-Mid Government Bond Pool Series I.

The Fund may invest in other investment funds that areWho should invest in this Fund?

managed by us, an affiliate or associate of ours or otherinvestment fund managers. You will find more information This Fund may be suitable for you if you:about investing in other investment funds under Investing in

• want exposure similar to that of a well-diversified portfolioother investment funds.

of fixed income securities issued or guaranteed by Cana-dian federal, provincial and municipal governments or any

What are the risks of investing in the Fund? agency thereof and Canadian money market instruments;

To the extent that the Fund invests in or has exposure to • are planning to hold your investment in a non-registeredunderlying funds, it has the same risks as the underlying account;funds it holds. The Fund takes on the risks of an underlying • are looking for low to medium risk; andfund in proportion to its investment in, or exposure to

• are investing for the medium to long term.that fund.

Please see Investment risk classification methodology for aThe risks of investing in this Fund include the following:

description of how we determined the classification of this• asset-backed and mortgage-backed securities risk Fund’s risk level.• class risk

Dividend policy• commodity risk

• concentration risk The Fund will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors of• credit riskthe Corporation. Generally, the Corporation pays any ordi-

• currency risknary dividend in December and any capital gains dividends

• derivatives risk within 60 days following the year end or at such other times• foreign investment risk as may be determined by the Board of Directors of the

Corporation, but only to the extent necessary to minimize• fund-of-funds riskthe tax liability of the Corporation.

• interest rate riskWe automatically reinvest all dividends in additional shares• issuer-specific riskof the Fund, unless you tell your mutual fund representative

• liquidity riskthat you want to receive them in cash.

• repurchase and reverse repurchase transaction risk

• securities lending risk Fund expenses indirectly borne by investors

• series risk This example shows the Fund’s expenses on a $1,000 invest-• short selling risk ment with a 5% annual return.

• significant securityholder risk Fees and expensespayable over 1 year 3 years 5 years 10 years• U.S. withholding tax riskSeries A shares $ 14.15 44.59 78.16 177.92

For additional information refer to ‘‘Fees and expenses’’ laterin this document.

5

SC

OT

IA C

ON

SE

RV

AT

IVE

GO

VE

RN

ME

NT

BO

ND

CA

PIT

AL

YIE

LD

CL

AS

S

Scotia Fixed Income Blend ClassThe Fund is currently closed to new purchases or switches of The Fund may hold a portion of its assets in cash or moneysecurities from other funds into this Fund. The Fund may be market instruments while seeking investment opportunitiesre-opened at a later date. or for defensive purposes.

The Fund may invest or be exposed to up to 30% of its assetsFund details

in foreign securities.

Fund type Fixed income fundThe Fund and an underlying fund may use derivatives, such

Start date Series A shares: November 26, 2012as options, forwards and swaps, in order to adjust credit risk,Type of securities Series A shares of a mutual fund

corporation to gain or reduce exposure to income-producing securities,Eligible for Yes and to hedge against changes in interest rates and foreignRegistered Plans?

currency exchange rates. They will only use derivatives asPortfolio advisor 1832 Asset Management L.P.Toronto, Ontario permitted by securities regulations.

The Fund and an underlying fund may also engage in shortWhat does the Fund invest in? selling on the conditions permitted by Canadian securities

rules. In determining whether securities of a particularInvestment objectivesissuer should be sold short, the portfolio advisor utilizes the

The Fund’s objective is to provide income and modest capital same analysis that is described above for deciding whether togains by investing primarily in fixed income securities. purchase the securities. For a more detailed description of

short selling and the limits within which the underlying fundThe Fund will obtain such exposure in one or more of themay engage in short selling, please refer to Specific risks offollowing ways, in any combination:mutual funds – Short selling risk.

• by investing directly in such fixed income securities;The Fund and an underlying fund, to the extent permitted by• by investing in units of mutual funds managed by ussecurities regulations, may enter into securities lendingand/or other mutual fund managers that invest in fixedtransactions, repurchase and reverse repurchase transac-income securities; andtions to achieve the Fund’s overall investment objectives and

• by investing in units of an LP Fund which makes use of to earn additional income or enhance returns. For moreforward contracts, or other derivatives to gain exposure to information about repurchase, reverse repurchase and secur-the return of an underlying fund. ities lending transactions and how the Fund limits the risks

associated with them, see Specific risks of mutual funds –Any change to the fundamental investment objectives mustSecurities lending risk and Repurchase and reverse repur-be approved by a majority of votes cast at a meeting ofchase transaction risk.securityholders called for that purpose.

The Fund may invest in other investment funds that areInvestment strategies managed by us, an affiliate or associate of ours or other

investment fund managers. You will find more informationThe Fund invests primarily in underlying funds, includingabout investing in other investment funds under Investing inexchange-traded funds that invest in fixed income securitiesother investment funds.and may also invest in a wide variety of fixed income

securities.What are the risks of investing in the Fund

Where the Fund invests in underlying funds, the weightingsTo the extent that the Fund invests in or has exposure toof those underlying funds may be rebalanced periodically, atunderlying funds, it has the same risks as the underlyingthe discretion of Manager, so as to allow the Manager to usefunds it holds. The Fund takes on the risks of an underlyingan investment approach that manages risk and increasesfund in proportion to its investment in that Fund.potential return to the Fund.

6

SC

OT

IA F

IXE

D I

NC

OM

E B

LE

ND

CL

AS

S

The risks of investing in this Fund include the following: • can accept low to medium risk; and

• asset-backed and mortgage-backed risk • are investing for the medium to long term.

• class risk Please see Investment risk classification methodology for a• commodity risk description of how we determined the classification of this

Fund’s risk level.• concentration risk

• credit riskDividend policy

• currency riskThe Fund will pay ordinary dividends and/or capital gains

• derivatives riskdividends only when declared by the Board of Directors of

• emerging markets risk the Corporation. Generally, the Corporation pays any ordi-• foreign investment risk nary dividend in December and any capital gains dividends

within 60 days following the year end or at such other times• fund-of-funds riskas may be determined by the Board of Directors of the

• interest rate riskCorporation, but only to the extent necessary to minimize

• issuer-specific risk the tax liability of the Corporation.

• liquidity riskWe automatically reinvest all dividends in additional shares

• repurchase and reverse repurchase risk transaction risk of the Fund, unless you tell your mutual fund representativethat you want to receive them in cash.• securities lending risk

• short selling riskFund expenses indirectly borne by investors

• significant securityholder riskThis example shows the Fund’s expenses on a $1,000 invest-• underlying ETFs riskment with a 5% annual return.

• U.S. withholding tax risk

Fees and expensesYou will find details about each risk under Specific risks of payable over 1 year 3 years 5 years 10 years

Series A shares $ 16.20 51.05 89.49 203.70mutual funds.

During the 12 months preceding April 26, 2016, up to 50.1% For additional information refer to ‘‘Fees and expenses’’ laterof the net assets of the portfolio were invested in Scotia in this document.Canadian Income Fund Series I, up to 15.3% of the net assetsof the portfolio were invested in Scotia Private Short-MidGovernment Bond Pool Series I, up to 15.2% of the net assetsof the portfolio were invested in Scotia Private CanadianCorporate Bond Pool Series I, up to 10.3% of the net assets ofthe portfolio were invested in Scotia Private AmericanCore-Plus Bond Pool Series I, and up to 10.1% of the netassets of the portfolio were invested in Scotia Private HighYield Income Pool Series I.

Who should invest in this Fund?

This Fund may be suitable for you if you:

• want exposure to fixed income securities;

• are planning to hold your investment in a non-registeredaccount;

7

SC

OT

IA F

IXE

D I

NC

OM

E B

LE

ND

CL

AS

S

Scotia Canadian Dividend ClassFund details The Fund and the underlying fund can invest up to 30% of its

assets in foreign securities anywhere in the world.Fund type Canadian equity fund

Start date Series A shares: May 28, 2012 The Fund and the underlying fund may use derivatives suchType of securities Series A shares of a mutual fund as options, forward contracts and swaps to hedge against

corporationlosses from changes in stock prices, commodity prices, mar-Eligible for Yes

Registered Plans? ket indexes or currency exchange rates, and to gain exposurePortfolio advisor 1832 Asset Management L.P. to financial markets. They will only use derivatives as per-

Toronto, Ontariomitted by securities regulations.

The Fund and underlying fund may, to the extent permittedWhat does the Fund invest in?by securities regulations, also participate in repurchase,

Investment objectives reverse repurchase and securities lending transactions toachieve the Fund’s overall investment objectives and earnThe Fund’s objective is to achieve a high level of dividendadditional income or to enhance returns. For more informa-income with some potential for long-term total investmenttion about repurchase, reverse repurchase and securitiesreturn, consisting of dividend income and long term capitallending transactions and how the Fund limits the risksgrowth. It invests primarily in dividend-paying commonassociated with them see Specific risks of mutual funds –shares and preferred shares of Canadian companies.Repurchase and reverse repurchase transaction risk.

Any change to the fundamental investment objectives mustThe Fund and the underlying fund may also engage in shortbe approved by a majority of votes cast at a meeting ofselling on the conditions permitted by Canadian securitiessecurityholders called for that purpose.rules. In determining whether securities of a particularissuer should be sold short, the portfolio advisor utilizes theInvestment strategiessame analysis that is described above for deciding whether to

The Fund may obtain exposure to such investments in one or purchase the securities. Where the analysis generally pro-more of the following ways, in any combination: duces a favourable outlook, the issuer is a candidate for

purchase. Where the analysis produces an unfavourable out-• by investing directly in such securities;look, the issuer is a candidate for a short sale. For a more• by investing in units of Scotia Canadian Dividend Funddetailed description of short selling and the limits within(the ‘‘underlying fund’’); andwhich the underlying fund may engage in short selling,

• through the use of derivatives to gain exposure to common please refer to Specific risks of mutual funds – Shortshares and preferred shares. selling risk.

The portfolio advisor of the Fund and the underlying fund Additional information about the underlying fund is set outuses fundamental analysis to identify investments that pay in its simplified prospectus, Fund Facts, and annualdividends and income and have the potential for capital information form.growth over the long term. This involves evaluating the

The Fund may invest in other investment funds that arefinancial condition and management of each company, asmanaged by us, an affiliate or associate of ours or otherwell as its industry and the economy. The Fund’s direct andinvestment fund managers. You will find more informationindirect investments and the underlying fund’s assets, whenabout investing in other investment funds under Investing inconsidered as a whole, are diversified by industry and com-other investment funds.pany to help reduce risk.

What are the risks of investing in the Fund?

To the extent that the Fund invests in or has exposure tounderlying funds, it has the same risks as the underlyingfunds it holds. The Fund takes on the risks of an underlying

8

SC

OT

IA C

AN

AD

IAN

DIV

IDE

ND

CL

AS

S

fund in proportion to its investment in, or exposure to, Dividend policythat fund.

The Fund will pay ordinary dividends and/or capital gainsThe risks of investing in this Fund include the following: dividends only when declared by the Board of Directors of

the Corporation. Generally, the Corporation pays any ordi-• class risknary dividend in December and any capital gains dividends

• commodity riskwithin 60 days following the year end or at such other times

• concentration risk as may be determined by the Board of Directors of theCorporation, but only to the extent necessary to minimize• credit riskthe tax liability of the Corporation.

• currency risk

We automatically reinvest all dividends in additional shares• derivatives riskof the Fund, unless you tell your mutual fund representative

• equity riskthat you want to receive them in cash.

• foreign investment risk

• fund-of-funds risk Fund expenses indirectly borne by investors

• interest rate riskThis example shows the Fund’s expenses on a $1,000 invest-

• issuer-specific risk ment with a 5% annual return.

• liquidity riskFees and expensespayable over 1 year 3 years 5 years 10 years• repurchase and reverse repurchase transaction riskSeries A shares $ 18.25 57.52 100.82 229.49

• securities lending risk

• series risk For additional information refer to ‘‘Fees and expenses’’ laterin this document.• short selling risk

• significant securityholder risk


You will find details about each risk under Specific risks ofmutual funds.

During the 12 months preceding April 26, 2016, up to 101.4%of the net assets of the portfolio were invested in ScotiaCanadian Dividend Fund Series I.



• want some potential for long term capital growth;


• can accept medium risk; and

• are investing for the long term.

Please see Investment risk classification methodology for adescription of how we determined the classification of thisFund’s risk level.

9

SC

OT

IA C

AN

AD

IAN

DIV

IDE

ND

CL

AS

S

Scotia Canadian Equity Blend ClassFund details The Fund and an underlying fund may also engage in short

selling on the conditions permitted by Canadian securitiesFund type Canadian equity fund

rules. In determining whether securities of a particularStart date Series A shares: November 26, 2012

issuer should be sold short, the portfolio advisor utilizes theType of securities Series A shares of a mutual fundcorporation same analysis that is described above for deciding whether to

Eligible for Yes purchase the securities. For a more detailed description ofRegistered Plans?

short selling and the limits within which the underlying fundPortfolio advisor 1832 Asset Management L.P.Toronto, Ontario may engage in short selling, please refer to Specific risks of

mutual funds – Short selling risk.

What does the Fund invest in? The Fund and an underlying fund may, to the extent permit-ted by securities regulations, enter into securities lendingInvestment objectivestransactions, repurchase and reverse repurchase transac-

The Fund’s objective is to provide long-term capital growth. tions to achieve the Fund’s overall investment objectives andIt invests primarily in a mix of mutual funds managed by us to earn additional income or enhance returns. For moreand/or other mutual fund managers that invest in Canadian information about repurchase, reverse repurchase and secur-equity securities, and/or directly in Canadian equity ities lending transactions and how the Fund limits the riskssecurities. associated with them, see Specific risks of mutual funds –

Securities lending risk and Repurchase and reverse repur-Any change to the fundamental investment objectives mustchase transaction risk.be approved by a majority of votes cast at a meeting of

securityholders called for that purpose. The Fund may invest in other investment funds that aremanaged by us, an affiliate or associate of ours or other

Investment strategies investment fund managers. You will find more informationabout investing in other investment funds under Investing inThe Fund invests primarily in underlying funds that invest inother investment funds.Canadian equity securities and may also invest in a wide

variety of Canadian equity securities.What are the risks of investing in the Fund

Where the Fund invests in underlying funds, the weightingsTo the extent that the Fund invests in underlying funds, itof those underlying funds may be rebalanced periodically, athas the same risks as the underlying funds it holds. Thethe discretion of the Manager, so as to allow the Manager toFund takes on the risks of an underlying fund in proportionuse an investment approach that manages risk and increasesto its investment in that Fund.potential return to the Fund.

The risks of investing in this Fund include the following:The Fund may hold a portion of its assets in cash or moneymarket instruments while seeking investment opportunities • class riskor for defensive purposes. • commodity risk

The Fund may invest up to 30% of its assets in foreign • concentration risksecurities. • credit risk

The Fund and an underlying fund may use derivatives, such • currency riskas options, forwards and swaps, in order to adjust credit risk, • derivatives riskto gain or reduce exposure to income-producing securities,

• emerging markets riskand to hedge against changes in interest rates and foreign• foreign investment riskcurrency exchange rates. They will only use derivatives as

permitted by securities regulations. • fund-of-funds risk

• interest rate risk

10

SC

OT

IA C

AN

AD

IAN

EQ

UIT

Y B

LE

ND

CL

AS

S

• issuer-specific risk as may be determined by the Board of Directors of theCorporation, but only to the extent necessary to minimize• liquidity riskthe tax liability of the Corporation.

• repurchase and reverse repurchase risk transaction riskWe automatically reinvest all dividends in additional shares• securities lending riskof the Fund, unless you tell your mutual fund representative

• short selling riskthat you want to receive them in cash.


• small company risk Fund expenses indirectly borne by investors

• U.S. withholding tax risk This example shows the Fund’s expenses on a $1,000 invest-ment with a 5% annual return.You will find details about each risk under Specific risks of

mutual funds. Fees and expensespayable over 1 year 3 years 5 years 10 years

During the 12 months preceding April 26, 2016, up to 29.9% Series A shares $ 23.88 75.29 131.97 300.39

of the net assets of the portfolio were invested in CI Cam-bridge Canadian Equity Corporate Class Series I, up to 20.7% For additional information refer to ‘‘Fees and expenses’’ laterof the net assets of the portfolio were invested in Scotia in this document.Canadian Blue Chip Fund Series I, up to 20.1% of the netassets of the portfolio were invested in Dynamic SmallBusiness Fund Series O, up to 19.9% of the net assets of theportfolio were invested in Dynamic Dividend Advantage FundSeries O, and up to 10.3% of the net assets of the portfoliowere invested in Scotia Private Canadian Small Cap PoolSeries I.



• want the growth potential of investing in a broad range ofCanadian equity securities;


• can accept medium risk; and



Dividend policy

The Fund will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors ofthe Corporation. Generally, the Corporation pays any ordi-nary dividend in December and any capital gains dividendswithin 60 days following the year end or at such other times

11

SC

OT

IA C

AN

AD

IAN

EQ

UIT

Y B

LE

ND

CL

AS

S

Scotia U.S. Equity Blend ClassFund details The Fund and an underlying fund may also engage in short

selling on the conditions permitted by Canadian securitiesFund type U.S. equity fund




short selling and the limits within which the underlying fundPortfolio advisor 1832 Asset Management L.P.Toronto, Ontario may engage in short selling, please refer to Specific risks of

mutual funds – Short selling risk.


The Fund’s objective is to provide long-term capital growth. tions to achieve the Fund’s overall investment objectives andIt invests primarily in a mix of mutual funds managed by us to earn additional income or enhance returns. For moreand/or other mutual fund managers that invest in U.S. equity information about repurchase, reverse repurchase and secur-securities, and/or directly in U.S. equity securities. ities lending transactions and how the Fund limits the risks

associated with them, see Specific risks of mutual funds –Any change to the fundamental investment objectives mustSecurities lending risk and Repurchase and reverse repur-be approved by a majority of votes cast at a meeting ofchase transaction risk.securityholders called for that purpose.

The Fund may invest in other investment funds that areInvestment strategies managed by us, an affiliate or associate of ours or other

investment fund managers. You will find more informationThe Fund invests primarily in underlying funds, includingabout investing in other investment funds under Investing inexchange-traded funds that invest in U.S. equity securitiesother investment funds.and may also invest in a wide variety of U.S equity securities.

Where the Fund invests in underlying funds, the weightings What are the risks of investing in the Fundof those underlying funds may be rebalanced periodically, at

To the extent that the Fund invests in underlying funds, itthe discretion of the Manager, so as to allow the Manager tohas the same risks as the underlying funds it holds. Theuse an investment approach that manages risk and increasesFund takes on the risks of an underlying fund in proportionpotential return to the Fund.to its investment in that fund.

The Fund may hold a portion of its assets in cash or moneyThe risks of investing in this Fund include the following:market instruments while seeking investment opportunities

or for defensive purposes. • class risk

• commodity riskThe Fund may invest up to 100% of its assets in foreignsecurities, including up to 30% of its assets in securities • concentration risklisted outside the U.S. as well as in ADRs of foreign domiciled • credit riskcompanies.

• currency riskThe Fund and an underlying fund may use derivatives, such • derivatives riskas options, forwards and swaps, in order to adjust credit risk,

• emerging markets riskto gain or reduce exposure to income-producing securities,• foreign investment riskand to hedge against changes in interest rates and foreign

currency exchange rates. They will only use derivatives as • fund-of-funds riskpermitted by securities regulations.

• interest rate risk

12

SC

OT

IA U

.S.

EQ

UIT

Y B

LE

ND

CL

AS

S


• repurchase and reverse repurchase risk transaction riskWe automatically reinvest all dividends in additional shares• securities lending riskof the Fund, unless you tell your mutual fund representative

• short selling riskthat you want to receive them in cash.


• small company risk Fund expenses indirectly borne by investors

• underlying ETFs risk This example shows the Fund’s expenses on a $1,000 invest-• U.S. withholding tax risk ment with a 5% annual return.

You will find details about each risk under Specific risks of Fees and expensespayable over 1 year 3 years 5 years 10 yearsmutual funds.Series A shares $ 25.01 78.84 138.20 314.58

During the 12 months preceding April 26, 2016, up to 30.1%For additional information refer to ‘‘Fees and expenses’’ laterof the net assets of the portfolio were invested in Scotiain this document.Private U.S. Large Cap Growth Pool Series I, up to 30.0% of

the net assets of the portfolio were invested in Scotia PrivateU.S. Value Pool Series I, up to 20.1% of the net assets of theportfolio were invested in CI American Small CompaniesFund Class I, up to 10.1% of the net assets of the portfoliowere invested in Scotia U.S. Opportunities Fund Series I, andup to 10.1% of the net assets of the portfolio were invested inDynamic Power American Growth Series O.



• want the growth potential of investing in equity securitiesof a broad range of U.S. companies;


• can accept medium to high risk; and



Dividend policy

The Fund will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors ofthe Corporation. Generally, the Corporation pays any ordi-nary dividend in December and any capital gains dividendswithin 60 days following the year end or at such other times

13

SC

OT

IA U

.S.

EQ

UIT

Y B

LE

ND

CL

AS

S

Scotia Global Dividend ClassFund details • conducts company interviews, where possible.

Fund type Global equity fund When deciding to buy or sell an investment, the portfolioStart date Series A shares: May 28, 2012 advisor considers whether the investment is a good valueType of securities Series A shares of a mutual fund relative to its current price.

corporation

Eligible for Yes The Fund may invest up to 100% of its assets in foreignRegistered Plans?securities.Portfolio advisor 1832 Asset Management L.P.

Toronto, OntarioPortfolio CI Investments, Inc. The Fund and the underlying fund are normally diversifiedsub-advisor Toronto, Ontario

across different countries and regions, however this may varyfrom time to time, depending upon the portfolio advisor’s

What does the Fund invest in? view of specific investment opportunities and macro-eco-nomic factors.Investment objectives

The Fund and the underlying fund may hold cash, and mayThis Fund aims to achieve high total investment return. Itinvest in fixed income securities of any quality or term andinvests primarily in equity securities of companies anywhereother income producing securities, where the quality andin the world that pay, or may be expected to pay, dividends asterm of each investment is selected according to marketwell as in other types of securities that may be expected toconditions.distribute income.

The Fund and the underlying fund may use warrants andAny change to the fundamental investment objectives mustderivatives such as options, futures, forward contracts andbe approved by a majority of votes cast at a meeting ofswaps to gain exposure to individual securities and marketssecurityholders called for that purpose.instead of buying the securities directly to hedge againstlosses from changes in the prices of the Fund’s investmentsInvestment strategiesand from exposure to foreign currencies. They will only use

The Fund may obtain exposure to such investments in one or derivatives as permitted by securities regulations.more of the following ways, in any combination:

This Fund and the underlying fund also may enter into• by investing directly in such equity and/or other income securities lending transactions, repurchase transactions and

producing securities; reverse repurchase transactions, to the extent permitted by• by investing in units of Scotia Global Dividend Fund securities regulations, to earn additional income or enhance

(the ‘‘underlying fund’’); and returns. For more information about repurchase, reverserepurchase and securities lending transactions and how the• through the use of derivatives to gain exposure to suchFund limits the risks associated with them see Specific risksequity and/or other income producing securities.of mutual funds – Repurchase and reverse repurchase

The portfolio advisor of the Fund and the underlying fund transaction risk.identifies companies that have the potential for success in

The Fund and the underlying fund may also engage in shorttheir industry and then considers the impact of economicselling on the conditions permitted by Canadian securitiestrends.rules. In determining whether securities of a particular

The portfolio advisor uses techniques such as fundamental issuer should be sold short, the portfolio advisor utilizes theanalysis to assess growth potential and valuation. This means same analysis that is described above for deciding whether toevaluating the financial condition and management of each purchase the securities. Where the analysis generally pro-company, its industry and the overall economy. As part of this duces a favourable outlook, the issuer is a candidate forevaluation, the portfolio advisor: purchase. Where the analysis produces an unfavourable out-

look, the issuer is a candidate for a short sale. For a more• analyzes financial data and other information sourcesdetailed description of short selling and the limits within• assesses the quality of managementwhich the underlying fund may engage in short selling,

14

SC

OT

IA G

LO

BA

L D

IVID

EN

D C

LA

SS

please refer to Specific risks of mutual funds – Short • securities lending riskselling risk. • short selling risk

In the event of adverse market, economic and/or political • significant securityholder riskconditions, the assets of the Fund and the underlying fund • U.S. withholding tax riskmay be primarily invested in a combination of equity securi-

You will find details about each risk under Specific risks ofties and cash and cash equivalent securities. The portfoliomutual funds.advisor may engage in active or frequent trading of invest-

ments. This increases the possibility that an investor will During the 12 months preceding April 26, 2016, up to 100.1%receive taxable distributions. This can also increase trading of the net assets of the portfolio were invested in Scotiacosts, which lower the Fund’s returns. Global Dividend Fund Series I.

Additional information about the underlying fund is set outWho should invest in this Fund?in its simplified prospectus, Fund Facts, and annual

information form. This Fund may be suitable for you if you:

The Fund may invest in other investment funds that are • want the potential for long term growth from investing inmanaged by us, an affiliate or associate of ours or other companies anywhere in the world;investment fund managers. You will find more information • are planning to hold your investment in a non-registeredabout investing in other investment funds under Investing in account;other investment funds.


• are investing for the long term.What are the risks of investing in the Fund?

Please see Investment risk classification methodology for aTo the extent that the Fund invests in underlying funds, itdescription of how we determined the classification of thishas the same risks as the underlying funds it holds. TheFund’s risk level.Fund takes on the risks of an underlying fund in proportion

to its investment in that Fund. To the extent it investsDividend policydirectly in equity and other income-producing securities, the

Fund will have the risks associated with investing directly in The Fund will pay ordinary dividends and/or capital gainssuch equity and other income-producing securities. dividends only when declared by the Board of Directors of

the Corporation. Generally, the Corporation pays any ordi-The risks of investing in this Fund include the following:nary dividend in December and any capital gains dividends

• class riskwithin 60 days following the year end or at such other times

• commodity risk as may be determined by the Board of Directors of the• concentration risk Corporation, but only to the extent necessary to minimize

the tax liability of the Corporation.• credit risk

• currency risk We automatically reinvest all dividends in additional sharesof the Fund, unless you tell your mutual fund representative• derivatives riskthat you want to receive them in cash.• emerging markets risk

• equity risk Fund expenses indirectly borne by investors• foreign investment risk

This example shows the Fund’s expenses on a $1,000 invest-• fund-of-funds risk ment with a 5% annual return.• income trust risk

Fees and expensespayable over 1 year 3 years 5 years 10 years• interest rate riskSeries A shares $ 26.55 83.69 146.69 333.91

• issuer-specific risk

• liquidity risk For additional information refer to ‘‘Fees and expenses’’ laterin this document.• repurchase and reverse repurchase transaction risk

15

SC

OT

IA G

LO

BA

L D

IVID

EN

D C

LA

SS

Scotia International Equity Blend ClassFund details The Fund and an underlying fund may also engage in short

selling on the conditions permitted by Canadian securitiesFund type International equity fund




short selling and the limits within which the underlying fundPortfolio advisor 1832 Asset Management L.P.Toronto, Ontario may engage in short selling, please refer to Specific Risks of

Mutual Funds – Short selling risk.


The Fund’s objective is to provide long-term capital growth. tions to achieve the Fund’s overall investment objectives andIt invests primarily in a diversified mix of mutual Funds to earn additional income or enhance returns. For moremanaged by us and/or other mutual fund managers that information about repurchase, reverse repurchase and secur-invest in companies located outside of the U.S and Canada, ities lending transactions and how the Fund limits the risksand/or directly in equity securities of companies that are associated with them, see Specific risks of mutual funds –located outside of the U.S. and Canada. Securities lending risk and Repurchase and reverse repur-

chase transaction risk.Any change to the fundamental investment objectives mustbe approved by a majority of votes cast at a meeting of The Fund may invest in other investment funds that aresecurityholders called for that purpose. managed by us, an affiliate or associate of ours or other

investment fund managers. You will find more informationInvestment strategies about investing in other investment funds under Investing in

other investment funds.The Fund invests primarily in underlying funds that invest inequity securities of companies located outside of the U.S.

What are the risks of investing in the Fundand Canada and may also invest in equity securities ofcompanies located outside of the U.S. and Canada. To the extent that the Fund invests underlying funds, it has

the same risks as the underlying funds it holds. The FundWhere the Fund invests in underlying funds, the weightingstakes on the risks of an underlying fund in proportion to itsof those underlying funds may be rebalanced periodically, atinvestment in that Fund.the discretion of Manager, so as to allow the Manager to use

an investment approach that manages risk and increases The risks of investing in this Fund include the following:potential return to the Fund.

• class riskThe Fund may hold a portion of its assets in cash or money • commodity riskmarket instruments while seeking investment opportunities

• concentration riskor for defensive purposes.• credit risk

The Fund may invest up to 100% of its assets in foreign• currency risksecurities.• derivatives risk

The Fund and an underlying fund may use derivatives, such• emerging markets riskas options, forwards and swaps, in order to adjust credit risk,• foreign investment riskto gain or reduce exposure to income-producing securities,

and to hedge against changes in interest rates and foreign • fund-of-funds riskcurrency exchange rates. They will only use derivatives as

• interest rate riskpermitted by securities regulations.

16

SC

OT

IA I

NT

ER

NA

TIO

NA

L E

QU

ITY

BL

EN

D C

LA

SS

• issuer-specific risk the Corporation. Generally, the Corporation pays any ordi-nary dividend in December and any capital gains dividends• liquidity riskwithin 60 days following the year end or at such other times

• repurchase and reverse repurchase risk transaction riskas may be determined by the Board of Directors of the

• securities lending risk Corporation, but only to the extent necessary to minimizethe tax liability of the Corporation.• short selling risk

• significant securityholder risk We automatically reinvest all dividends in additional sharesof the Fund, unless you tell your mutual fund representative• small company riskthat you want to receive them in cash.


You will find details about each risk under Specific risks of Fund expenses indirectly borne by investorsmutual funds.

This example shows the Fund’s expenses on a $1,000 invest-During the 12 months preceding April 26, 2016, up to 59.8% ment with a 5% annual return.of the net assets of the portfolio were invested in Scotia

Fees and expensesPrivate International Equity Pool Series I, up to 10.6% of thepayable over 1 year 3 years 5 years 10 years

net assets of the portfolio were invested in Scotia Private Series A shares $ 28.50 89.83 157.45 358.41

International Small to Mid Cap Value Pool Series I, upto 10.4% of the net assets of the portfolio were invested in For additional information refer to ‘‘Fees and expenses’’ laterScotia Private Emerging Markets Pool Series I, up to 10.2% of in this document.the net assets of the portfolio were invested in CI BlackCreek International Equity Corporate Class, Class I, and upto 10.1% of the net assets of the portfolio were invested inCI International Value Fund, Class I.

As at April 26, 2016, one investor held approximately 14.6% ofthe outstanding units of the fund.



• want the growth potential of investing in equity securitiesof companies located outside the U.S. and Canada;





Dividend policy

The Fund will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors of

17

SC

OT

IA I

NT

ER

NA

TIO

NA

L E

QU

ITY

BL

EN

D C

LA

SS

Scotia INNOVA Income Portfolio ClassThe Portfolio is currently closed to new purchases or equity and fixed income securities. The underlying funds,switches of securities from other funds into this Portfolio. The equity securities and fixed income securities in which thePortfolio may be re-opened at a later date. Portfolio invests may change from time to time, but in

general we will keep the weighting for each asset class nomore than 20% above or below the amounts set out above.Fund detailsYou will find more information on investing in underlying

Fund type Asset allocation fund funds in Investing in other investment funds.Start date Series A shares: May 28, 2012

Type of securities Series A shares of a mutual fund Although up to 100% of the Portfolio’s assets may be investedcorporation

in underlying funds, the Portfolio may hold a portion of itsEligible for YesRegistered Plans? assets in cash or money market instruments while seekingPortfolio advisor 1832 Asset Management L.P. investment opportunities or for defensive purposes.

Toronto, Ontario

As part of its mandate, the portfolio advisor uses a taxmanaged strategy in which it seeks to minimize net taxableWhat does the Portfolio invest in?income which is accomplished through a yield management

Investment objectives strategy, designed to achieve lower net income, while manag-ing portfolio risk. The yield management strategy entails aThe Portfolio’s objective is to achieve a balance of incomeshift in portfolio asset holdings from higher-yielding fixedand long term capital appreciation, with a significant biasincome securities to lower yielding fixed income securitiestowards income. It invests primarily in a diversified mix ofthat have lower volatility. This strategy is a tax-managedmutual funds, and/or equity securities and/or fixed incomestrategy because it shifts from higher-yielding fixed incomesecurities located anywhere in the world.securities to lower-yielding fixed income securities that pro-

It may also invest a portion of its assets in units of one or duce less gross income. In order to manage the potentialmore LP Funds which make use of forward contracts, deposit change in volatility resulting from a shift from higher-yield-notes or other derivatives in order to gain exposure to the ing fixed income securities to lower-yielding fixed incomereturn of mutual funds managed by the Manager or an securities, there may be a shift to lower volatility equityaffiliate thereof. securities.

Any change to the fundamental investment objectives must Up to 40% of the Portfolio’s assets may be exposed to foreignbe approved by a majority of votes cast at a meeting of securities.securityholders for that purpose.

The Portfolio and each underlying fund may use derivativessuch as options, forward contracts and swaps to hedge

Investment strategiesagainst losses from changes in the prices of investments,

The Portfolio is an asset allocation fund that allocates your commodity prices, interest rates, credit risk, market indicesinvestment between two asset classes: fixed income or currency exchange rates, to gain exposure to financialand equities. markets, and to adjust the average term to maturity. They

will only use derivatives as permitted by securitiesThe table below outlines the target weighting for each asset

regulations.class in which the Portfolio invests.

The Portfolio and the underlying funds also may enter intoTarget

securities lending transactions, repurchase transactions andAsset Class WeightingFixed Income 75% reverse repurchase transactions, to the extent permitted byEquities 25% securities regulations, to achieve their investment objectives

and to enhance their returns. For more information aboutThe Portfolio is diversified by asset class, investment style, repurchase, reverse repurchase and securities lending trans-geography and market capitalization and may invest, directly actions and how the Portfolio limits the risks associated withor indirectly through underlying funds, in a wide variety of

18

SC

OT

IA I

NN

OV

A I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

them see Specific risks of mutual funds – Repurchase and • foreign investment riskreverse repurchase transaction risk. • fund-of-funds risk

The Portfolio and the underlying funds may also engage in • interest rate riskshort selling on the conditions permitted by Canadian securi- • issuer-specific riskties rules. In determining whether securities of a particular

• liquidity riskissuer should be sold short, the portfolio advisor utilizes the

• repurchase and reverse repurchase transaction risksame analysis that is described above for deciding whether topurchase the securities. Where the analysis generally pro- • securities lending riskduces a favourable outlook, the issuer is a candidate for

• significant securityholder riskpurchase. Where the analysis produces an unfavourable out-

• short selling risklook, the issuer is a candidate for a short sale. For a moredetailed description of short selling and the limits within • small company riskwhich the underlying fund may engage in short selling, • underlying ETFs riskplease refer to Specific risks of mutual funds – Short

• U.S. withholding tax riskselling risk.

You will find details about each risk under Specific risks ofAdditional information about each underlying fund is set out

mutual funds.in its simplified prospectus, Fund Facts and annual informa-tion form or in equivalent disclosure documents that the During the 12 months preceding April 26, 2016, up to 16.9%underlying fund makes available. of the net assets of the portfolio were invested in Scotia

Private Canadian Corporate Bond Pool Series I, up to 14.4%The Portfolio may invest in other mutual funds that are

of the net assets of the portfolio were invested in Scotiamanaged by us, an affiliate or associate of ours or other

Floating Rate Income Fund Series I, up to 11.3% of the netmutual fund managers. You will find more information about

assets of the portfolio were invested in Scotia Total Returninvesting in other mutual funds under Investing in other

Bond LP Series I, and up to 10.3% of the net assets of theinvestment funds.

portfolio were invested in 1832 AM Tactical Asset Alloca-tion LP Series I.

What are the risks of investing in the Portfolio?

To the extent that the Portfolio invests in or has exposure to Who should invest in this Portfolio?underlying funds, it has the same risks as the underlying

This Portfolio may be suitable for you if you:funds it holds. The Portfolio takes on the risks of an underly-

• want a balanced holding with a significant bias towardsing fund in proportion to its investment in, or has exposurefixed income securities, which is diversified by asset class,to, that fund.investment style, geography and market capitalization;

The risks of investing in this Portfolio include the following:• are planning to hold your investment in a non-registered

• asset-backed and mortgage-backed securities risk account;• class risk • can accept low to medium risk; and• commodity risk • are investing for the medium to long term.• concentration risk

Please see Investment risk classification methodology for a• credit risk description of how we determined the classification of this• currency risk Portfolio’s risk level.

• derivatives risk

• emerging markets risk

• equity risk

19

SC

OT

IA I

NN

OV

A I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

Dividend policy

The Portfolio will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors ofthe Corporation. Generally, the Corporation pays any ordi-nary dividend in December and any capital gains dividendswithin 60 days following the year end or at such other timesas may be determined by the Board of Directors of theCorporation, but only to the extent necessary to minimizethe tax liability of the Corporation.

We automatically reinvest all dividends in additional sharesof the Portfolio, unless you tell your mutual fund representa-tive that you want to receive them in cash.

Portfolio expenses indirectly borne by investors

This example shows the Portfolio’s expenses on a $1,000investment with a 5% annual return.

Fees and expensespayable over 1 year 3 years 5 years 10 yearsSeries A shares $ 19.68 62.04 108.74 247.53


20

SC

OT

IA I

NN

OV

A I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

Scotia INNOVA Balanced Income Portfolio ClassFund details general we will keep the weighting for each asset class no

more than 20% above or below the amounts set out above.Fund type Asset allocation fund

You will find more information on investing in underlyingStart date Series A shares: May 28, 2012

funds in Investing in other investment funds.Series T shares: May 26, 2014

Type of securities Series A and T shares of a mutual fundcorporation Although up to 100% of the Portfolio’s assets may be invested

Eligible for Yes in underlying funds, the Portfolio may hold a portion of itsRegistered Plans?

assets in cash or money market instruments while seekingPortfolio advisor 1832 Asset Management L.P.

Toronto, Ontario investment opportunities or for defensive purposes.

As part of its mandate, the portfolio advisor uses a taxWhat does the Portfolio invest in? managed strategy in which it seeks to minimize net taxable

income which is accomplished through a yield managementInvestment objectivesstrategy, designed to achieve lower net income, while manag-

The Portfolio’s objective is to achieve a balance of income ing portfolio risk. The yield management strategy entails aand long term capital appreciation, with a bias towards shift in portfolio asset holdings from higher-yielding fixedincome. It invests primarily in a diversified mix of mutual income securities to lower yielding fixed income securitiesfunds, and/or equity securities and/or fixed income securities that have lower volatility. This strategy is a tax-managedlocated anywhere in the world. strategy because it shifts from higher-yielding fixed income

securities to lower-yielding fixed income securities that pro-It may also invest a portion of its assets in units of one orduce less gross income. In order to manage the potentialmore LP Funds which make use of forward contracts, depositchange in volatility resulting from a shift from higher-yield-notes or other derivatives in order to gain exposure to theing fixed income securities to lower-yielding fixed incomereturn of mutual funds managed by the Manager or ansecurities, there may be a shift to lower volatility equityaffiliate thereof.securities.

Any change to the fundamental investment objectives mustUp to 60% of the Portfolio’s assets may be exposed to foreignbe approved by a majority of votes cast at a meeting ofsecurities.securityholders for that purpose.

The Portfolio and each underlying fund may use derivativesInvestment strategies such as options, forward contracts and swaps to hedge

against losses from changes in the prices of investments,The Portfolio is an asset allocation fund that allocates your

commodity prices, interest rates, credit risk, market indicesinvestment between two asset classes: fixed income

or currency exchange rates, to gain exposure to financialand equities.

markets, and to adjust the average term to maturity. Theywill only use derivatives as permitted by securitiesThe table below outlines the target weighting for each assetregulations.class in which the Portfolio invests.

The Portfolio and the underlying funds also may enter intoTargetAsset Class Weighting securities lending transactions, repurchase transactions andFixed Income 60%

reverse repurchase transactions, to the extent permitted byEquities 40%securities regulations, to achieve their investment objectivesand to enhance their returns. For more information aboutThe Portfolio is diversified by asset class, investment style,repurchase, reverse repurchase and securities lending trans-geography and market capitalization and may invest, directlyactions and how the Portfolio limits the risks associated withor indirectly through underlying funds, in a wide variety ofthem see Specific risks of mutual funds – Repurchase andequity and fixed income securities. The underlying funds,reverse repurchase transaction risk.equity securities and fixed income securities in which the

Portfolio invests may change from time to time, but in

21

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS




• series riskpurchase. Where the analysis produces an unfavourable out-

• significant securityholder risklook, the issuer is a candidate for a short sale. For a moredetailed description of short selling and the limits within • short selling riskwhich the underlying fund may engage in short selling, • small company riskplease refer to Specific risks of mutual funds – Short

• underlying ETFs riskselling risk.

• U.S. withholding tax riskAdditional information about each underlying fund is set out

You will find details about each risk under Specific risks ofin its simplified prospectus, Fund Facts and annual informa-mutual funds.tion form or in equivalent disclosure documents that the

underlying fund makes available.During the 12 months preceding April 26, 2016, up to 13.8%of the net assets of the portfolio were invested in ScotiaThe Portfolio may invest in other mutual funds that arePrivate Canadian Corporate Bond Pool Series I.managed by us, an affiliate or associate of ours or other

mutual fund managers. You will find more information aboutinvesting in other mutual funds under Investing in other Who should invest in this Portfolio?investment funds.

This Portfolio may be suitable for you if you:

• want a balanced holding with a bias towards fixed incomeWhat are the risks of investing in the Portfolio?securities, which is diversified by asset class, investment

To the extent that the Portfolio invests in or has exposure to style, geography and market capitalization;underlying funds, it has the same risks as the underlying

• are planning to hold your investment in a non-registeredfunds it holds. The Portfolio takes on the risks of an underly-

account;ing fund in proportion to its investment in, or exposure to,

• can accept low to medium risk; andthat fund.• are investing for the medium to long term.

The risks of investing in this Portfolio include the following:Please see Investment risk classification methodology for a• asset-backed and mortgage-backed securities riskdescription of how we determined the classification of this

• class riskPortfolio’s risk level.

• commodity risk

• concentration risk Dividend policy

• credit risk The Portfolio will pay ordinary dividends and/or capital gains• currency risk dividends only when declared by the Board of Directors of

the Corporation. Generally, the Corporation pays any ordi-• derivatives risknary dividend in December and any capital gains dividends

• emerging markets riskwithin 60 days following the year end or at such other times

• equity risk as may be determined by the Board of Directors of theCorporation, but only to the extent necessary to minimize• foreign investment riskthe tax liability of the Corporation.

• fund-of-funds risk

22

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

Investors holding Series T shares will receive stable monthly Portfolio expenses indirectly borne by investorsdistributions, which will likely represent return of capital,

This example shows the Portfolio’s expenses on a $1,000but may also include ordinary dividends and/or capital gains

investment with a 5% annual return.dividends.

Fees and expensesThe dollar amount of the monthly distribution to investors of payable over 1 year 3 years 5 years 10 yearsSeries A shares $ 20.81 65.60 114.97 261.72Series T shares may be reset at the beginning of eachSeries T shares $ 20.71 65.27 114.41 260.43calendar year. The distribution amount will be a factor of the

payout rate for Series T shares (which is currently expectedFor additional information refer to ‘‘Fees and expenses’’ laterto remain at or about 4%) and the number of Series T sharesin this document.of the Portfolio such investors hold at the time of the

distribution.

The payout rate for Series T shares of the Portfolio may beadjusted in the future, if we determine that conditionsrequire an adjustment of distributions or that payment of adistribution would have a negative effect on the investors inthe Portfolio. As a result, the dollar amount of your monthlydistribution is not guaranteed and may change atour discretion.

Investors in Series T shares should not confuse the return ofcapital or dividend distribution with the rate of return oryield of Series T shares.

The payout rate on Series T shares of the Portfolio may begreater than the return on the Portfolio’s investments. Areturn of capital made to you is not taxable, but generallywill reduce the adjusted cost base of your shares for taxpurposes. However, if the distributions are reinvested inadditional shares of the Portfolio, the adjusted cost base willincrease by the amount reinvested.

Please see Income tax considerations for investors for moredetails.


23

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

Scotia INNOVA Balanced Growth Portfolio ClassFund details general we will keep the weighting for each asset class no










The Portfolio’s objective is to achieve a balance of income ing portfolio risk. The yield management strategy entails aand long term capital appreciation, with a bias towards shift in portfolio asset holdings from higher-yielding fixedcapital appreciation. It invests primarily in a diversified mix income securities to lower yielding fixed income securitiesof mutual funds, and/or equity securities and/or fixed income that have lower volatility. This strategy is a tax-managedsecurities located anywhere in the world. strategy because it shifts from higher-yielding fixed income


Any change to the fundamental investment objectives mustUp to 80% of the Portfolio’s assets may be exposed to foreignbe approved by a majority of votes cast at a meeting ofsecurities.securityholders called for that purpose.









24

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS









underlying fund makes available.Who should invest in this Portfolio?

The Portfolio may invest in other mutual funds that aremanaged by us, an affiliate or associate of ours or other This Portfolio may be suitable for you if you:mutual fund managers. You will find more information about • want a balanced holding with a bias towards equity, whichinvesting in other mutual funds under Investing in other is diversified by asset class, investment style, geographyinvestment funds. and market capitalization;

• are planning to hold your investment in a non-registeredWhat are the risks of investing in the Portfolio?

account;

To the extent that the Portfolio invests in or has exposure to • can accept medium risk; andunderlying funds, it has the same risks as the underlying

• are investing for the medium to long term.funds it holds. The Portfolio takes on the risks of an underly-ing fund in proportion to its investment in, or exposure to, Please see Investment risk classification methodology for athat fund. description of how we determined the classification of this

Portfolio’s risk level.The risks of investing in this Portfolio include the following:

• asset-backed and mortgage-backed securities risk Dividend policy• class risk

The Portfolio will pay ordinary dividends and/or capital gains• commodity risk dividends only when declared by the Board of Directors of• concentration risk the Corporation. Generally, the Corporation pays any ordi-

nary dividend in December and any capital gains dividends• credit riskwithin 60 days following the year end or at such other times

• currency riskas may be determined by the Board of Directors of the

• derivatives risk Corporation, but only to the extent necessary to minimizethe tax liability of the Corporation.• emerging markets risk

• equity risk Investors holding Series T shares will receive stable monthlydistributions, which will likely represent return of capital,• foreign investment riskbut may also include ordinary dividends and/or capital gains

• fund-of-funds riskdividends.

25

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

The dollar amount of the monthly distribution to investors ofSeries T shares may be reset at the beginning of eachcalendar year. The distribution amount will be a factor of thepayout rate for Series T shares (which is currently expectedto remain at or about 5%) and the number of Series T sharesof the Portfolio such investors hold at the time of thedistribution.


Investors Series T shares should not confuse the return ofcapital or dividend distribution with the rate of return oryield of Series T shares.






Fees and expensespayable over 1 year 3 years 5 years 10 yearsSeries A shares $ 21.83 68.83 120.64 274.61Series T shares $ 21.83 68.83 120.64 274.61


26

SC

OT

IA I

NN

OV

A B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Scotia INNOVA Growth Portfolio ClassFund details general we will keep the weighting for each asset class no










The Portfolio’s objective is to achieve a balance of long term ing portfolio risk. The yield management strategy entails acapital appreciation and income, with a significant bias shift in portfolio asset holdings from higher-yielding fixedtowards capital appreciation. It invests primarily in a diversi- income securities to lower yielding fixed income securitiesfied mix of mutual funds, and/or equity securities and/or that have lower volatility. This strategy is a tax-managedfixed income securities located anywhere in the world. strategy because it shifts from higher-yielding fixed income


Any change to the fundamental investment objectives mustUp to 100% of the Portfolio’s assets may be exposed to foreignbe approved by a majority of votes cast at a meeting ofsecurities.securityholders for that purpose.









27

SC

OT

IA I

NN

OV

A G

RO

WT

H P

OR

TF

OL

IO C

LA

SS









underlying fund makes available.During the 12 months preceding April 26, 2016, up to 10.6%of the net assets of the portfolio were invested in ScotiaThe Portfolio may invest in other mutual funds that arePrivate International Equity Pool Series I.managed by us, an affiliate or associate of ours or other

mutual fund managers. You will find more information aboutinvesting in other mutual funds under Investing in other Who should invest in this Portfolio?investment funds.

This Portfolio may be suitable for you if you:

• want the growth potential of a balanced holding with aWhat are the risks of investing in the Portfolio?significant bias towards equity, which is diversified by

To the extent that the Portfolio invests in, or has exposure to asset class, investment style, geography and marketunderlying funds, it has the same risks as the underlying capitalization;funds it holds. The Portfolio takes on the risks of an underly-

• are planning to hold your investment in a non-registereding fund in proportion to its investment in, or exposure to,

account;that fund.

• can accept medium risk; andThe risks of investing in this Portfolio include the following:

• are investing for the long term.• asset-backed and mortgage-backed securities risk

Please see Investment risk classification methodology for a• class risk

description of how we determined the classification of this• commodity risk Portfolio’s risk level.

• concentration riskDividend policy• credit risk

• currency risk The Portfolio will pay ordinary dividends and/or capital gainsdividends only when declared by the Board of Directors of• derivatives riskthe Corporation. Generally, the Corporation pays any ordi-

• emerging markets risknary dividend in December and any capital gains dividends

• equity risk within 60 days following the year end or at such other timesas may be determined by the Board of Directors of the• foreign investment riskCorporation, but only to the extent necessary to minimize

• fund-of-funds riskthe tax liability of the Corporation.

28

SC

OT

IA I

NN

OV

A G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Investors holding Series T shares will receive stable monthlydistributions, which will likely represent return of capital,but may also include ordinary dividends and/or capital gainsdividends.

The dollar amount of the monthly distribution Series Tshares may be reset at the beginning of each calendar year.The distribution amount will be a factor of the payout ratefor Series T shares (which is currently expected to remain ator about 5%) and the number of Series T shares of thePortfolio such investors hold at the time of the distribution.


Investors of Series T shares should not confuse the return ofcapital or dividend distribution with the rate of return oryield of Series T shares.








29

SC

OT

IA I

NN

OV

A G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Scotia INNOVA Maximum Growth Portfolio ClassFund details that have lower volatility. This strategy is a tax-managed

strategy because it shifts from higher-yielding fixed incomeFund type Asset allocation fund

securities to lower-yielding fixed income securities that pro-Start date Series A shares: May 28, 2012

duce less gross income. In order to manage the potentialSeries T shares: May 26, 2014

Type of securities Series A and T shares of a mutual fund change in volatility resulting from a shift from higher-yield-corporation

ing fixed income securities to lower-yielding fixed incomeEligible for Yes

securities, there may be a shift to lower volatility equityRegistered Plans?

Portfolio advisor 1832 Asset Management L.P. securities.Toronto, Ontario

Up to 100% of the Portfolio’s assets may be exposed to foreignsecurities.

What does the Portfolio invest in?

The Portfolio and each underlying fund may use derivativesInvestment objectivessuch as options, forward contracts and swaps to hedge

The Portfolio’s objective is long term capital appreciation. It against losses from changes in the prices of investments,invests primarily in a diversified mix of mutual funds and/or commodity prices, interest rates, credit risk, market indicesequity securities located anywhere in the world. or currency exchange rates, to gain exposure to financial

markets, and to adjust the average term to maturity. TheyAny change to the fundamental investment objectives mustwill only use derivatives as permitted by securitiesbe approved by a majority of votes cast at a meeting ofregulations.securityholders for that purpose.

The Portfolio and the underlying funds also may enter intoInvestment strategies securities lending transactions, repurchase transactions and

reverse repurchase transactions, to the extent permitted byThe Portfolio is an asset allocation fund. The Portfolio’s

securities regulations, to achieve their investment objectivestarget weighting is 100% in equities. The portfolio advisor

and to enhance their returns. For more information aboutmay invest up to 20% of the Portfolio’s assets in fixed income

repurchase, reverse repurchase and securities lending trans-securities and may reduce exposure to equities by up to 20%.

actions and how the Portfolio limits the risks associated withthem see Specific risks of mutual funds – Repurchase andThe Portfolio is diversified by investment style, geographyreverse repurchase transaction risk.and market capitalization and may invest, directly or indi-

rectly through underlying funds, in a wide variety of equityThe Portfolio and the underlying funds may also engage in

and fixed income securities. The underlying funds, equityshort selling on the conditions permitted by Canadian securi-

securities and fixed income securities in which the Portfolioties rules. In determining whether securities of a particular

invests may change from time to time. You will find moreissuer should be sold short, the portfolio advisor utilizes the

information on investing in underlying funds in Investing insame analysis that is described above for deciding whether to

other investment funds.purchase the securities. Where the analysis generally pro-duces a favourable outlook, the issuer is a candidate forAlthough up to 100% of the Portfolio’s assets may be investedpurchase. Where the analysis produces an unfavourable out-in underlying funds, the Portfolio may hold a portion of itslook, the issuer is a candidate for a short sale. For a moreassets in cash or money market instruments while seekingdetailed description of short selling and the limits withininvestment opportunities or for defensive purposes.which the underlying fund may engage in short selling,

As part of its mandate, the portfolio advisor uses a taxplease refer to Specific risks of mutual funds – Short

managed strategy in which it seeks to minimize net taxableselling risk.

income which is accomplished through a yield managementAdditional information about each underlying fund is set outstrategy, designed to achieve lower net income, while manag-in its simplified prospectus, Fund Facts and annual informa-ing portfolio risk. The yield management strategy entails ation form or in equivalent disclosure documents that theshift in portfolio asset holdings from higher-yielding fixedunderlying fund makes available.income securities to lower yielding fixed income securities

30

SC

OT

IA I

NN

OV

A M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

The Portfolio may invest in other mutual funds that are net assets of the portfolio were invested in Scotiamanaged by us, an affiliate or associate of ours or other U.S. Dividend Growers LP Series I, up to 10.7% of the netmutual fund managers. You will find more information about assets of the portfolio were invested in 1832 AM Canadianinvesting in other mutual funds under Investing in other Dividend LP Series I, and up to 10.1% of the net assets of theinvestment funds. portfolio were invested in Scotia Global Low Volatility

Equity LP Series I.

What are the risks of investing in the Portfolio?Who should invest in this Portfolio?

To the extent that the Portfolio invests in underlying funds,it has the same risks as the underlying funds it holds. The This Portfolio may be suitable for you if you:Portfolio takes on the risks of an underlying fund in propor- • want an all equity holding, which is diversified by invest-tion to its investment in that fund. ment style, geography and market capitalization;

The risks applicable to the Portfolio include: • are planning to hold your investment in a non-registeredaccount;• class risk

• can accept medium to high risk; and• commodity risk• are investing for the long term.• concentration risk

• credit risk Please see Investment risk classification methodology for adescription of how we determined the classification of this• currency riskPortfolio’s risk level.

• derivatives risk

• emerging markets risk Dividend policy• equity risk

The Portfolio will pay ordinary dividends and/or capital gains• foreign investment risk dividends only when declared by the Board of Directors of• fund-of-funds risk the Corporation. Generally, the Corporation pays any ordi-

nary dividend in December and any capital gains dividends• interest rate riskwithin 60 days following the year end or at such other times

• issuer-specific riskas may be determined by the Board of Directors of the

• liquidity risk Corporation, but only to the extent necessary to minimizethe tax liability of the Corporation.• repurchase and reverse repurchase transaction risk

• securities lending risk Investors holding Series T shares will receive stable monthlydistributions, which will likely represent return of capital,• series riskbut may also include ordinary dividends and/or capital gains

• short selling riskdividends.

• significant securityholder riskThe dollar amount of the monthly distribution to investors of

• small company riskSeries T shares may be reset at the beginning of each

• underlying ETFs risk calendar year. The distribution amount will be a factor of the• U.S. withholding tax risk payout rate for Series T shares (which is currently expected

to remain at or about 5%) and the number of Series T sharesYou will find details about each of these risks under Specific

of the Portfolio such investors hold at the time of therisks of mutual funds.

distribution.

During the 12 months preceding April 26, 2016, up to 13.3%The payout rate for Series T shares of the Portfolio may be

of the net assets of the portfolio were invested in Scotiaadjusted in the future, if we determine that conditions

Private International Equity Pool Series I, up to 12.2% of therequire an adjustment of distributions or that payment of a

31

SC

OT

IA I

NN

OV

A M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

distribution would have a negative effect on the investors inthe Portfolio. As a result, the dollar amount of your monthlydistribution is not guaranteed and may change atour discretion.








For additional information refer to ‘‘Fees and Expenses’’ laterin this document.

32

SC

OT

IA I

NN

OV

A M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Scotia Partners Balanced Income Portfolio ClassPortfolio details Although up to 100% of the Portfolio’s assets may be invested

in underlying funds, the Portfolio may hold a portion of itsFund type Asset allocation fund

assets in cash or money market instruments while seekingStart date Series A shares: February 1, 2016

investment opportunities or for defensive purposes.Series T shares: February 1, 2016

Type of securities Series A and Series T shares of a mutualfund corporation As part of its mandate, the portfolio advisor uses a tax

Eligible for Yes managed strategy in which it seeks to minimize net taxableRegistered Plans?

income which is accomplished through a yield managementPortfolio advisor 1832 Asset Management L.P.

Toronto, Ontario strategy, designed to achieve lower net income, while manag-ing portfolio risk. The yield management strategy entails ashift in portfolio asset holdings from higher-yielding fixed

What does the Portfolio invest in?income securities to lower yielding fixed income securities

Investment objectives that have lower volatility. This strategy is a tax-managedstrategy because it shifts from higher-yielding fixed incomeThe Portfolio’s objective is to achieve a balance of incomesecurities to lower-yielding fixed income securities that pro-and long term capital appreciation, with a bias towardsduce less gross income. In order to manage the potentialincome. It invests primarily in a diversified mix of equity andchange in volatility resulting from a shift from higher-yield-income mutual funds managed by other mutual fund manag-ing fixed income securities to lower-yielding fixed incomeers and by us.securities, there may be a shift to lower volatility equity

Any change to the fundamental investment objectives must securities.be approved by a majority of votes cast at a meeting of

Up to 60% of the Portfolio’s assets may be exposed to foreignsecurityholders for that purpose.securities.

Investment strategies The Portfolio and each underlying fund may use derivativessuch as options, forward contracts and swaps to hedge

The Portfolio is an asset allocation fund that allocates youragainst losses from changes in the prices of investments,

investment between two asset classes: fixed incomecommodity prices, interest rates, credit risk, market indices

and equities.or currency exchange rates, to gain exposure to financialmarkets, and to adjust the average term to maturity. TheyThe table below outlines the target weighting for each assetwill only use derivatives as permitted by securitiesclass in which the Portfolio invests.regulations.

TargetAsset Class Weighting The Portfolio and the underlying funds also may enter intoFixed Income 65%

securities lending transactions, repurchase transactions andEquities 35%reverse repurchase transactions, to the extent permitted bysecurities regulations, to achieve their investment objectivesThe Portfolio is diversified by asset class, investment style,and to enhance their returns. For more information aboutgeography and market capitalization and may invest, directlyrepurchase, reverse repurchase and securities lending trans-or indirectly through underlying funds, in a wide variety ofactions and how the Portfolio limits the risks associated withequity and fixed income securities. The underlying funds,them see Specific risks of mutual funds – Repurchase andequity securities and fixed income securities in which thereverse repurchase transaction risk.Portfolio invests may change from time to time, but in

general we will keep the weighting for each asset class no The Portfolio and the underlying funds may also engage inmore than 20% above or below the amounts set out above. short selling on the conditions permitted by Canadian securi-You will find more information on investing in underlying ties rules. In determining whether securities of a particularfunds in Investing in other investment funds. issuer should be sold short, the portfolio advisor utilizes the

same analysis that is described above for deciding whether to

33

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

purchase the securities. Where the analysis generally pro- • securities lending riskduces a favourable outlook, the issuer is a candidate for • series riskpurchase. Where the analysis produces an unfavourable out-

• short selling risklook, the issuer is a candidate for a short sale. For a more

• significant securityholder riskdetailed description of short selling and the limits withinwhich a fund may engage in short selling, please refer to • small company riskSpecific risks of mutual funds – Short selling risk.

• underlying ETFs risk

Additional information about each underlying fund is set out • U.S. withholding tax riskin its simplified prospectus, Fund Facts and annual informa-

You will find details about each risk under Specific risks oftion form or in equivalent disclosure documents that themutual funds.underlying fund makes available.

During the 12 months preceding April 26, 2016, up to 16.8%The Portfolio may invest in other mutual funds that areof the net assets of the portfolio were invested in Scotiamanaged by us, an affiliate or associate of ours or otherPrivate Canadian Corporate Bond Pool Series I, up to 12.8%mutual fund managers. You will find more information aboutof the net assets of the portfolio were invested in Scotiainvesting in other mutual funds under Investing in otherCanadian Income Fund Series I, and up to 10.1% of the netinvestment funds.assets of the portfolio were invested in Dynamic Aurion TotalReturn Bond Fund Series O.

What are the risks of investing in the Portfolio?

To the extent that the Portfolio invests in or has exposure to Who should invest in this Portfolio?underlying funds, it has the same risks as the underlying

This Portfolio may be suitable for you if you:funds it holds. The Portfolio takes on the risks of an underly-ing fund in proportion to its investment in that fund. • want a core balanced holding with a bias towards income,

which is diversified by asset class, investment style, geog-The risks of investing in this Portfolio include the following:

raphy and market capitalization;• asset-backed and mortgage-backed securities risk

• are planning to hold your investment in a non-registered• class risk account;

• commodity risk • can accept low to medium risk; and

• concentration risk • are investing for the medium to long term.

• credit riskPlease see Investment risk classification methodology for a

• currency risk description of how we determined the classification of thisPortfolio’s risk level.• derivatives risk

• emerging markets riskDividend policy

• equity riskThe Portfolio will pay ordinary dividends and/or capital gains• foreign investment riskdividends only when declared by the Board of Directors of

• fund-of-funds riskthe Corporation. Generally, the Corporation pays any ordi-

• income trust risk nary dividend in December and any capital gains dividendswithin 60 days following the year end or at such other times• interest rate riskas may be determined by the Board of Directors of the

• issuer-specific riskCorporation, but only to the extent necessary to minimize

• liquidity risk the tax liability of the Corporation.• repurchase and reverse repurchase transaction risk

34

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS









Portfolio expense information is not shown for the Series Aor Series T shares of the Portfolio as these shares were notoperational at the end of the last completed financial year.Please refer to Fees and Expenses later in this document.

35

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D I

NC

OM

E P

OR

TF

OL

IO C

LA

SS

Scotia Partners Balanced Growth Portfolio ClassPortfolio details Although up to 100% of the Portfolio’s assets may be invested









Investment objectives that have lower volatility. This strategy is a tax-managedstrategy because it shifts from higher-yielding fixed incomeThe Portfolio’s objective is to achieve a balance of incomesecurities to lower-yielding fixed income securities that pro-and long term capital appreciation, with a small bias towardsduce less gross income. In order to manage the potentialcapital appreciation. It invests primarily in a diversified mixchange in volatility resulting from a shift from higher-yield-of equity and income mutual funds managed by other mutualing fixed income securities to lower-yielding fixed incomefund managers and by us.securities, there may be a shift to lower volatility equity


Up to 80% of the Portfolio’s assets may be exposed to foreignsecurityholders called for that purpose.securities.









36

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS







During the 12 months preceding April 26, 2016, up to 16.2%The Portfolio may invest in other mutual funds that areof the net assets of the portfolio were invested in Scotiamanaged by us, an affiliate or associate of ours or otherCanadian Income Fund Series I and up to 10.1% of the netmutual fund managers. You will find more information aboutassets of the portfolio were invested in Scotia Private Cana-investing in other mutual funds under Investing in otherdian Corporate Bond Pool Series I.investment funds.

As at April 26, 2016, one investor held approximately 11.1% ofWhat are the risks of investing in the Portfolio? the outstanding units of the fund.

To the extent that the Portfolio invests in or has exposure toWho should invest in this Portfolio?underlying funds, it has the same risks as the underlying

funds it holds. The Portfolio takes on the risks of an underly- This Portfolio may be suitable for you if you:ing fund in proportion to its investment in that fund.

• want a core balanced holding, which is diversified by assetThe risks of investing in this Portfolio include the following: class, investment style, geography and market

capitalization;• asset-backed and mortgage-backed securities risk• are planning to hold your investment in a non-registered• class risk

account;• commodity risk

• can accept medium risk; and• concentration risk

• are investing for the medium to long term.• credit risk

Please see Investment risk classification methodology for a• currency riskdescription of how we determined the classification of this

• derivatives riskPortfolio’s risk level.

• emerging markets risk

• equity risk Dividend policy

• foreign investment risk The Portfolio will pay ordinary dividends and/or capital gains• fund-of-funds risk dividends only when declared by the Board of Directors of

the Corporation. Generally, the Corporation pays any ordi-• income trust risknary dividend in December and any capital gains dividends

• interest rate riskwithin 60 days following the year end or at such other times



37

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS










38

SC

OT

IA P

AR

TN

ER

S B

AL

AN

CE

D G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Scotia Partners Growth Portfolio ClassPortfolio details Although up to 100% of the Portfolio’s assets may be invested









Investment objectives that have lower volatility. This strategy is a tax-managedstrategy because it shifts from higher-yielding fixed incomeThe Portfolio’s objective is to achieve a balance of incomesecurities to lower-yielding fixed income securities that pro-and long term capital appreciation, with a bias towardsduce less gross income. In order to manage the potentialcapital appreciation. It invests primarily in a diversified mixchange in volatility resulting from a shift from higher-yield-of equity and income mutual funds managed by other mutualing fixed income securities to lower-yielding fixed incomefund managers and by us.securities, there may be a shift to lower volatility equity


Up to 100% of the Portfolio’s assets may be exposed to foreignsecurityholders for that purpose.securities.









39

SC

OT

IA P

AR

TN

ER

S G

RO

WT

H P

OR

TF

OL

IO C

LA

SS







During the 12 months preceding April 26, 2016, up to 10.5%The Portfolio may invest in other mutual funds that areof the net assets of the portfolio were invested in Scotiamanaged by us, an affiliate or associate of ours or otherCanadian Income Fund Series I.mutual fund managers. You will find more information about

investing in other mutual funds under Investing in other As at April 26, 2016, one investor held approximately 16.6% ofinvestment funds. the outstanding units of the fund.

What are the risks of investing in the Portfolio? Who should invest in this Portfolio?

To the extent that the Portfolio invests in or has exposure to This Portfolio may be suitable for you if you:underlying funds, it has the same risks as the underlying

• want a core balanced holding with a bias towards capitalfunds it holds. The Portfolio takes on the risks of an underly-

appreciation, which is diversified by asset class, invest-ing fund in proportion to its investment in that fund.

ment style, geography and market capitalization;The risks of investing in this Portfolio include the following: • are planning to hold your investment in a non-registered• asset-backed and mortgage-backed securities risk account;

• class risk • can accept medium risk; and

• commodity risk • are investing for the long term.

• concentration risk Please see Investment risk classification methodology for a• credit risk description of how we determined the classification of this

Portfolio’s risk level.• currency risk

• derivatives riskDividend policy

• emerging markets riskThe Portfolio will pay ordinary dividends and/or capital gains

• equity riskdividends only when declared by the Board of Directors of

• foreign investment risk the Corporation. Generally, the Corporation pays any ordi-• fund-of-funds risk nary dividend in December and any capital gains dividends

within 60 days following the year end or at such other times• income trust riskas may be determined by the Board of Directors of the

• interest rate riskCorporation, but only to the extent necessary to minimize

• issuer-specific risk the tax liability of the Corporation.

• liquidity risk


40

SC

OT

IA P

AR

TN

ER

S G

RO

WT

H P

OR

TF

OL

IO C

LA

SS










41

SC

OT

IA P

AR

TN

ER

S G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

Scotia Partners Maximum Growth Portfolio ClassPortfolio details that have lower volatility. This strategy is a tax-managed

strategy because it shifts from higher-yielding fixed incomeFund type Asset allocation fund

securities to lower-yielding fixed income securities that pro-Start date Series A shares: February 1, 2016

duce less gross income. In order to manage the potentialSeries T shares: February 1, 2016

Type of securities Series A and Series T shares of a mutual change in volatility resulting from a shift from higher-yield-fund corporation

ing fixed income securities to lower-yielding fixed incomeEligible for Yes

securities, there may be a shift to lower volatility equityRegistered Plans?

Portfolio advisor 1832 Asset Management L.P. securities.Toronto, Ontario

Up to 100% of the Portfolio’s assets may be exposed to foreignsecurities.

What does the Portfolio invest in?

The Portfolio and each underlying fund may use derivativesInvestment objectivessuch as options, forward contracts and swaps to hedge

The Portfolio’s objective is long term capital appreciation. It against losses from changes in the prices of investments,invests primarily in a diversified mix of equity mutual funds commodity prices, interest rates, credit risk, market indicesmanaged by other mutual fund managers and by us. or currency exchange rates, to gain exposure to financial

markets, and to adjust the average term to maturity. TheyAny change to the fundamental investment objectives mustwill only use derivatives as permitted by securitiesbe approved by a majority of votes cast at a meeting ofregulations.securityholders for that purpose.

The Portfolio and the underlying funds also may enter intoInvestment strategies securities lending transactions, repurchase transactions and

reverse repurchase transactions, to the extent permitted byThe Portfolio is an asset allocation fund. The Portfolio’s

securities regulations, to achieve their investment objectivestarget weighting is 100% in equities. The portfolio advisor

and to enhance their returns. For more information aboutmay invest up to 20% of the Portfolio’s assets in fixed income

repurchase, reverse repurchase and securities lending trans-securities and may reduce exposure to equities by up to 20%.

actions and how the Portfolio limits the risks associated withthem see Specific risks of mutual funds – Repurchase andThe Portfolio is diversified by investment style, geographyreverse repurchase transaction risk.and market capitalization and may invest, directly or indi-

rectly through underlying funds, in a wide variety of equityThe Portfolio and the underlying funds may also engage in

and fixed income securities. The underlying funds, equityshort selling on the conditions permitted by Canadian securi-

securities and fixed income securities in which the Portfolioties rules. In determining whether securities of a particular

invests may change from time to time. You will find moreissuer should be sold short, the portfolio advisor utilizes the

information on investing in underlying funds in Investing insame analysis that is described above for deciding whether to

other investment funds.purchase the securities. Where the analysis generally pro-duces a favourable outlook, the issuer is a candidate forAlthough up to 100% of the Portfolio’s assets may be investedpurchase. Where the analysis produces an unfavourable out-in underlying funds, the Portfolio may hold a portion of itslook, the issuer is a candidate for a short sale. For a moreassets in cash or money market instruments while seekingdetailed description of short selling and the limits withininvestment opportunities or for defensive purposes.which a fund may engage in short selling, please refer to

As part of its mandate, the portfolio advisor uses a taxSpecific risks of mutual funds – Short selling risk.

managed strategy in which it seeks to minimize net taxableAdditional information about each underlying fund is set outincome which is accomplished through a yield managementin its simplified prospectus, Fund Facts and annual informa-strategy, designed to achieve lower net income, while manag-tion form or in equivalent disclosure documents that theing portfolio risk. The yield management strategy entails aunderlying fund makes available.shift in portfolio asset holdings from higher-yielding fixed

income securities to lower yielding fixed income securities

42

SC

OT

IA P

AR

TN

ER

S M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

The Portfolio may invest in other mutual funds that are You will find details about each risk under Specific risks ofmanaged by us, an affiliate or associate of ours or other mutual funds.mutual fund managers. You will find more information about

During the 12 months preceding April 26, 2016, up to 12.6%investing in other mutual funds under Investing in other

of the net assets of the portfolio were invested in Dynamicinvestment funds.

Value Fund of Canada, Series O and up to 10.5% of the netassets of the portfolio were invested in CI Cambridge Cana-

What are the risks of investing in the Portfolio?dian Equity Corporate Class, Class I.

To the extent that the Portfolio invests in or has exposure toAs at April 26, 2016, three investors held approximately

underlying funds, it has the same risks as the underlying43.1%, 12.6% and 11.7% of the outstanding units of the fund.

funds it holds. The Portfolio takes on the risks of an underly-ing fund in proportion to its investment in that fund.

Who should invest in this Portfolio?The risks of investing in this Portfolio include the following:

This Portfolio may be suitable for you if you:• asset-backed and mortgage-backed securities risk

• want primarily an all equity holding, which is diversified• class risk by investment style, geography and market capitalization;• commodity risk • are planning to hold your investment in a non-registered• concentration risk account;

• credit risk • can accept medium to high risk; and

• currency risk • are investing for the long term.

• derivatives risk Please see Investment risk classification methodology for a• emerging markets risk description of how we determined the classification of this

Portfolio’s risk level.• equity risk

• foreign investment riskDividend policy

• fund-of-funds riskThe Portfolio will pay ordinary dividends and/or capital gains

• income trust riskdividends only when declared by the Board of Directors of

• interest rate risk the Corporation. Generally, the Corporation pays any ordi-• issuer-specific risk nary dividend in December and any capital gains dividends

within 60 days following the year end or at such other times• liquidity riskas may be determined by the Board of Directors of the

• repurchase and reverse repurchase transaction riskCorporation, but only to the extent necessary to minimize

• securities lending risk the tax liability of the Corporation.

• series riskInvestors holding Series T shares will receive stable monthly

• short selling risk distributions, which will likely represent return of capital,but may also include ordinary dividends and/or capital gains• significant securityholder riskdividends.

• small company risk

The dollar amount of the monthly distribution to investors of• underlying ETFs riskSeries T shares may be reset at the beginning of each

• U.S. withholding tax riskcalendar year. The distribution amount will be a factor of thepayout rate for Series T shares (which is currently expectedto remain at or about 5%) and the number of Series T shares

43

SC

OT

IA P

AR

TN

ER

S M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

of the Portfolio such investors hold at the time of thedistribution.








44

SC

OT

IA P

AR

TN

ER

S M

AX

IMU

M G

RO

WT

H P

OR

TF

OL

IO C

LA

SS

What is a mutual fund and what are the risks of investing in amutual fund?For many Canadians, mutual funds represent a simple and Under exceptional circumstances, a mutual fund may sus-affordable way to meet their financial goals. But what exactly pend your right to sell your securities. See Suspending youris a mutual fund, why invest in them, and what are the risks? right to buy, switch and sell shares for details.

What is a mutual fund? How mutual funds are structured?

A mutual fund is an investment that pools your money with 1832 LP offers the Trust Funds, which are mutual fundthe money of many other people. Professional portfolio advi- trusts, and the Corporate Funds, which are classes of thesors use that money to buy securities that they believe will Corporation, a mutual fund corporation. Mutual funds ownhelp achieve the mutual fund’s investment objectives. These different kinds of investments depending on their objectives.securities could include stocks, bonds, mortgages, money These include equities, like stocks, fixed income securitiesmarket instruments, or a combination of these. like bonds and cash or cash equivalents like treasury bills, or

units of other mutual funds, called underlying funds. TheWhen you invest in a mutual fund, you receive securities of

Trust Funds invest in securities, which may include securi-the mutual fund. Each security represents a proportionate

ties of other mutual funds that are trusts or corporations.share of all of the mutual fund’s assets. All of the investors in

The Corporate Funds invest in securities, which may includea mutual fund share in the mutual fund’s income, gains and

securities of other mutual funds that are trusts, corporationslosses. Investors also pay their share of the mutual fund’s

or limited partnerships, such as the LP Funds. None ofexpenses.

the LP Funds is offered directly to investors. The LP Fundsare only available for purchase by other ScotiaFunds. For

Why invest in mutual funds? additional information please refer to the simplified prospec-tus of the LP Funds. All of these forms of mutual funds allowMutual funds offer investors three key benefits: professionalthe pooling of money by all investors, however, there are amoney management, diversification and accessibility.few differences you should know about:

• Professional money management. Professional portfolio• You buy ‘‘units’’ of a mutual fund trust and ‘‘shares’’ of aadvisors have the expertise to make the investment deci-

mutual fund corporation. Units and shares both representsions. They also have access to up-to-the-minute informa-ownership.tion on trends in the financial markets, and in-depth data

and research on potential investments. • If a mutual fund corporation has more than one invest-ment objective, each investment objective is represented• Diversification. Because your money is pooled with thatby a separate class of shares. Each class of shares is aof other investors, a mutual fund offers diversification intoseparate mutual fund. Shares are issued and redeemed onmany securities that may not have otherwise been availa-the basis of the net asset value of the class.ble to individual investors.

• A mutual fund trust has only one investment objective.• Accessibility. Mutual funds have low investment mini-mums, making them accessible to nearly everyone. • Both classes of a mutual fund corporation and mutual

fund trusts offer different series of securities, each ofwhich has different features, including some that offerNo guaranteesdistributions of capital. You will find more information

While mutual funds have many benefits, it is important to about the different series of shares of a Fund underremember that an investment in a mutual fund is not Purchases, switches and redemptions.guaranteed. Unlike bank accounts or guaranteed investment

• When you switch between series of the same class of acertificates, mutual fund securities are not covered by the

mutual fund corporation or between two classes of theCanada Deposit Insurance Corporation or any other govern-

same mutual fund corporation, this is called a conversion.ment deposit insurer, and your investment in the Funds is

Under current income tax rules, a conversion is generallynot guaranteed by The Bank of Nova Scotia.

not considered a disposition for tax purposes so no taxesare payable solely as a result of the conversion. The

45

Federal government announced in its Budget delivered on • Assets and liabilities of a mutual fund corporation areMarch 22, 2016 that, beginning after September 2016 allocated either to a specific class or shared amongst(i.e., on October 1, 2016), a switch between classes of a multiple classes, depending on the nature of the asset ormutual fund corporation will be considered for income tax liability. The Corporation will allocate all of the invest-purposes to be a disposition at fair market value. Accord- ments made with subscriptions for a Corporate Fund toingly, if this proposed measure is enacted into law, you that Corporate Fund, and expenses related to acquiringmay realize a capital gain or a capital loss if, after those investments to that Corporate Fund. The Corpora-September 2016, you switch your shares from one Corpo- tion will determine the allocation of other assets andrate Fund to another Corporate Fund. The proposed mea- liabilities, to a Corporate Fund or among the Corporatesure will not apply to switches between different series of Funds in a manner that is fair and reasonable.shares of a Corporate Fund where the shares received in • A mutual fund corporation pays dividends out of income orexchange differ only in respect of management fees or capital gains, while a mutual fund trust pays distributionsexpenses to be borne by investors and otherwise derive out of income or capital gains. Unlike mutual fund trusttheir value from the same portfolio or fund within the distributions, dividends are not generally declared regu-mutual fund corporation. However, it is not clear based on larly by a mutual fund corporation. A mutual fund corpora-the description of the proposed measure in the Budget tion will have to pay tax on all sources of income otherdocuments whether it will apply to a switch between than capital gains if it pays sufficient capital gains divi-different series of shares within the same Corporate Fund dends. Any income taxes payable by a mutual fund corpo-where the shares received differ other than in respect of ration on its income will be allocated amongst all or onemanagement fees or expenses, as would be the case with or more classes in a manner determined by the Board ofswitches between Series A shares and Series T Shares of Directors of the Corporation, in its sole discretion. As athe Corporate Fund. result, the assets of a Corporate Fund may be used to

• A mutual fund corporation may decide to sell a particular satisfy the taxes payable allocated to it by the Corporation.investment for a variety of reasons such as for investment A mutual fund corporation typically pays out sufficientreasons, in order to raise money to pay the redemption ordinary dividends to recover tax it pays on dividendsprice to shareholders who redeem their investment in the received from taxable Canadian corporations. A mutualmutual fund corporation or to support the investment fund trust will not pay taxes on any source of income orobjective of a class that investors switch to. Each class will capital gains as long as it distributes its net taxablesatisfy any switches or redemptions first from the cash on income to securityholders. Both mutual fund corporationshand that is attributable to that class. If the level of and mutual fund trusts may pay dividends or distributions,switches and redemptions in a class at any particular as may be the case, out of capital.point in time is greater than the cash on hand of the class, • While the investment objective of a mutual fund trust andportfolio investments attributable to the class may have to a class of the mutual fund corporation may be identical,be sold in connection with such switches or redemptions. the performance of the respective funds may not be identi-This may give rise to capital gains to the mutual corpora- cal. While the portfolio advisor will generally seek to fairlytion and may cause the corporation to pay capital gains allocate portfolio investments between the funds, timingdividends to its shareholders. As a result, shareholders differences will occur in available cash flow to each fund.may have to pay taxes as a result of such switches As a consequence, the price at which a portfolio invest-or redemptions. ment may be bought or sold for one fund may differ from

• A mutual fund corporation is a single entity and taxpayer the other fund or some of the investments in the fundsregardless of how many classes it offers. The mutual fund may not be the same.corporation must consolidate its income, capital gains,expenses and capital losses from all the investments made What are the risks?for all classes in order to determine the amount of tax

While everyone wants to make money when they invest, youpayable. For example, capital gains of one class are offsetcould lose money, too. This is known as risk. Like otherby capital losses of another class. With mutual fund trusts,investments, mutual funds involve some level of risk. Thethe capital losses of one mutual fund trust cannot bevalue of a Fund’s securities can change from day to day foroffset against the capital gains of another mutual fundmany reasons, including changes in the economy, interesttrust. Mutual fund trusts are separate entitiesrates, and market and company news. That means the valueand taxpayers.

46

of mutual fund securities can vary. When you sell your Asset-backed and mortgage-backed securities risksecurities in a Fund, you could receive less money than

Asset-backed securities are debt obligations that are backedyou invested.

by pools of consumer or business loans. Mortgage-backedThe amount of risk depends on the Fund’s investment objec- securities are debt obligations backed by pools of mortgagestives and the types of securities it invests in. A general rule on commercial or residential real estate. To the extent that aof investing is that the higher the risk, the higher the mutual fund invests in these securities, it will be sensitive topotential for gains as well as losses. Cash equivalent funds asset-backed and mortgage-backed securities risk. If thereusually offer the least risk because they invest in highly are changes in the market perception of the issuers of theseliquid, short term investments such as treasury bills. Their types of securities, or in the creditworthiness of the partiespotential returns are tied to short term interest rates. involved, then the value of the securities may be affected.Income funds invest in bonds and other fixed income invest- When investing in mortgage-backed securities, there is also aments. These funds typically have higher long-term returns risk that there may be a drop in the interest rates charged onthan cash equivalent funds, but they carry more risk because mortgages, a mortgagor may default on its obligations undertheir prices can change when interest rates change. Equity a mortgage or there may be a drop in the value of thefunds expose investors to the highest level of risk because property secured by the mortgage.they invest in equity securities, such as common shares,whose prices can rise and fall significantly in a short period Class riskof time.

Each class of shares of the Corporation represents a separateportfolio of securities which is managed under distinct

Managing riskinvestment objectives which are not shared with other clas-

While risk is an important factor to consider when you are ses of shares of the Corporation. The liabilities attributed tochoosing a mutual fund, you should also think about your each class of shares of the Corporation are liabilities of theinvestment goals and when you will need your money. For Corporation as a whole. If the assets attributed to one classexample, if you are saving for a large purchase in the next of shares of the Corporation are insufficient, assets attrib-year or so, you might consider investing in a Fund with low uted to other classes may have to be used to cover theserisk. If you want your retirement savings to grow over the liabilities. Although the portfolios are different, and thenext 20 years, you can probably afford to put more of your value of each class is calculated separately, there is a riskmoney in equity funds. that the expenses or liabilities of one class may affect the

value of the other classes.A carefully chosen mix of investments can help reduce riskas you meet your investment goals. Your mutual fund repre-

Commodity risksentative can help you build an investment portfolio that issuited to your goals and risk comfort level. Some of the Funds may invest directly or indirectly in gold or

in companies engaged in the energy or natural resourceIf your investment goals or tolerance for risk changes,

industries. The market value of such a mutual fund’s invest-remember, you can and should change your investments to

ments may be affected by adverse movements in commoditymatch your new situation.

prices. When commodity prices decline, this generally has anegative impact on the earnings of companies whose busi-

Specific risks of mutual fundsness is based in commodities, such as oil and gas.

The value of the investments a mutual fund holds canchange for a number of reasons. You will find the specific Concentration riskrisks of investing in each of the Funds in the individual fund

If the holdings of a Fund in one issuer exceed 10% of thedescriptions section. This section tells you more about each

Fund’s assets, it is possible that the Fund may experiencerisk. To the extent that a Fund invests in or has exposure to

reduced liquidity and diversification. Additionally, if theunderlying funds, it has the same risks as its underlying

Fund holds significant investments in a few companies,funds. Accordingly, any reference to a Fund in this section is

changes in the value of the securities of those companiesintended to also refer to any underlying funds that a Fund

may increase the volatility of the net asset value of the Fund.may invest in.

47

Credit risk • There is no guarantee that a liquid exchange or market forderivatives will exist. This could prevent a mutual fund

A fixed income security, such as a bond, is a promise to payfrom closing out its positions to realize gains or limit

interest and repay the principal on the maturity date. Therelosses. At worst, a mutual fund might face losses from

is always a risk that the issuer will fail to honour thathaving to exercise underlying futures contracts.

promise. This is called credit risk. To the extent that a Fund• The prices of derivatives can be distorted if trading ininvests in fixed income securities, it will be sensitive to

their underlying stocks is halted. Trading in the derivativecredit risk. Credit risk is lowest among issuers that have amight be interrupted if trading is halted in a large numberhigh credit rating from a credit rating agency. It is highestof the underlying stocks. This would make it difficult for aamong issuers that have a low credit rating or no creditmutual fund to close out its positions.rating. Issuers with a low credit rating usually offer higher

interest rates to make up for the higher risk. The bonds of • The counterparty in a derivatives contract might not beissuers with poor credit ratings generally have yields that are able to meet its obligations. When using derivatives, ahigher than bonds of issuers with superior credit ratings. mutual fund relies on the ability of the counterparty to theBonds of issuers that have poor credit ratings tend to be transaction to perform its obligations. In the event that amore volatile as there is a greater likelihood of bankruptcy or counterparty fails to complete its obligations, the mutualdefault. Credit ratings may change over time. Please see fund may bear the risk of loss of the amount expected toForeign investment risk in the case of investments in debt be received under options, forward contracts or otherissued by foreign companies or governments. transactions in the event of the default or bankruptcy of

a counterparty.

Currency risk • Derivatives trading on foreign markets may take longerand be more difficult to complete. Foreign derivatives are

When a Fund buys an investment that is denominated in asubject to the foreign investment risks described below.

foreign currency, changes in the exchange rate between thatPlease see Foreign investment risk.

currency and the Canadian dollar will affect the value of the• Investment dealers and futures brokers may hold a mutualmutual fund.

fund’s assets as collateral in a derivative contract. As aresult, someone other than the mutual fund’s custodian isDerivatives riskresponsible for the safekeeping of that part of the mutual

To the extent that a Fund uses derivatives, it will be sensi- fund’s assets.tive to derivatives risk. Derivatives can be useful for hedging

• The regulation of derivatives is a rapidly changing area ofagainst losses, gaining exposure to financial markets and

law and is subject to modification by government andmaking indirect investments, but they involve certain risks:

judicial action. The effect of any future regulatory changes• Hedging with derivatives may not achieve the intended may make it more difficult, or impossible, for a mutual

result. Hedging instruments rely on historical or antici- fund to use certain derivatives.pated correlations to predict the impact of certain events,

• Changes in tax laws, regulatory laws, or the administrativewhich may or may not occur. If they occur, they may not

practices or policies of a tax or regulatory authority mayhave the predicted effect.

adversely affect a Fund and its investors. For example, the• It is difficult to hedge against trends that the market has tax and regulatory environment for derivative instruments

already anticipated. is evolving, and changes in the taxation or regulation ofderivative instruments may adversely affect the value of• Costs relating to entering and maintaining derivativesderivative instruments held by a Fund and the ability of acontracts may reduce the returns of a mutual fund.Fund to pursue its investment strategies. Interpretation of

• A currency hedge will reduce the benefits of gains if thethe law and the application of administrative practices or

hedged currency increases in value.policies by a taxation authority may also affect the charac-

• Currency hedging can be difficult in smaller emerging terization of a Fund’s earnings as capital gains or income.growth countries because of the limited size of In such a case, the net income of a Fund for tax purposesthose markets. and the taxable component of distributions to investors

• Currency hedging provides no protection against changes could be determined to be more than originally reported,in the value of the underlying securities. with the result that investors or the Fund could be liable

to pay additional income tax. Any liability imposed on a

48

Fund may reduce the value of the Fund and the value of Fund takes on the risk of another investment fund and itsan investor’s investment in a Fund. respective securities in proportion to its investment in, or

exposure to, that other investment fund. If the other invest-ment fund suspends redemptions, the Fund that invests in,Emerging markets riskor has exposure to, the other mutual fund may be unable to

Some mutual funds may invest in foreign companies or value part of its portfolio and may be unable to processgovernments (other than the U.S.) which may be located in redemption orders.or operate in developing countries. Companies in thesemarkets may have limited product lines, markets or

Income trust riskresources, making it difficult to measure the value of thecompany. Political instability, possible corruption, as well as An income trust, including a REIT, generally holds debtlower standards of business regulation increase the risk of and/or equity securities of an underlying active business or isfraud and other legal issues. In addition to foreign invest- entitled to receive a royalty on revenues generated by suchment risk described below, these mutual funds may be business. Distributions and returns on income trusts areexposed to greater volatility as a result of such issues. neither fixed nor guaranteed. Income trusts are subject to

the risks of the particular type of underlying business,including supply contracts, the cancellation by a major cus-Equity risktomer of its contract or significant litigation.

Funds that invest in equities, such as common shares, areThe governing law of the income trust may not limit, or mayaffected by changes in the general economy and financialnot fully limit, the liability of investors in the income trust,markets, as well as by the success or failure of the companiesincluding a Fund that invests in the income trust, for claimsthat issued the securities. When stock markets rise, theagainst the income trust. In such cases, to the extent thatvalue of equity securities tends to rise. When stock marketsclaims, whether in contract, in tort or as a result of tax orfall, the value of equity securities tends to fall. Convertiblestatutory liability against the income trust are not satisfiedsecurities may also be subject to interest rate risk.by the income trust, investors in the income trust, includinga Fund that invests in the income trust, could be held liableForeign investment riskfor such obligations. Income trusts generally seek to make

Investments issued by foreign companies or governments this risk remote in the case of contract by including provi-other than the U.S. can be riskier than investments in sions in their agreements that provide that the obligations ofCanada and the U.S. the income trust will not be binding on investors. However,

investors in the income trust, including a Fund that investsForeign countries can be affected by political, social, legal or

in the income trust, would still have exposure to damagediplomatic developments, including the imposition of cur-

claims not mitigated contractually, such as personal injuryrency and exchange controls. Some foreign markets can be

and environmental claims.less liquid, are less regulated, and are subject to differentreporting practices and disclosure requirements than issuers As the income tax treatment in Canada of certain publiclyin North American markets. It may be more difficult to traded income trusts (other than certain REITs) hasenforce a mutual fund’s legal rights in jurisdictions outside changed, many income trusts have converted or may convertof Canada. In general, securities issued in more developed to corporations, which has had, and may continue to have, anmarkets, such as Western Europe, have lower foreign invest- effect on the trading price of such trusts.ment risk. Securities issued in emerging or developing mar-kets, such as Southeast Asia or Latin America, have signifi- Interest rate riskcant foreign investment risk and are exposed to the emerging

Mutual funds that invest in fixed income securities, such asmarkets risks described above.bonds, mortgages and money market instruments, are sensi-tive to changes in interest rates. In general, when interestFund-of-funds riskrates are rising, the value of these investments tends to fall.

If a Fund invests in, or has exposure to, another investment When rates are falling, fixed income securities tend tofund, the risks associated with investing in that Fund include increase in value. Fixed income securities with longer termsthe risks associated with the securities in which that Fund to maturity are generally more sensitive to changes in inter-invests, along with the other risks of the Fund. Accordingly, a est rates. Certain types of fixed income securities permit

49

issuers to repay principal before the security’s maturity date. a specified later date from the same party with the expecta-There is a risk that an issuer will exercise this prepayment tion of a profit, it is entering into a repurchase agreement.right after interest rates have fallen and the mutual funds When a Fund agrees to buy a security at one price and sell itthat hold these fixed income securities will receive payments back on a specified later date to the same party with theof principal before the expected maturity date of the security expectation of a profit, it is entering into a reverse repur-and may need to reinvest these proceeds in securities that chase transaction. Funds engaging in repurchase and reversehave lower interest rates. repurchase transactions are exposed to the risk that the

other party to the transaction may become insolvent andunable to complete the transaction. In those circumstances,Issuer-specific riskthere is a risk that the value of the securities bought may

The market value of an individual issuer’s securities can be drop or the value of the securities sold may rise between themore volatile than the market as a whole. As a result, if a time the other party becomes insolvent and the time thesingle issuer’s securities represent a significant portion of Fund recovers its investment. To limit the risks associatedthe market value of a mutual fund’s assets, changes in the with repurchase and reverse repurchase transactions, anymarket value of that issuer’s securities may cause greater such transactions entered into by a Fund will comply withfluctuation in the mutual fund’s value than would normally applicable securities laws, including the requirement thatbe the case. A less-diversified mutual fund may also suffer each agreement be, at a minimum, fully collateralized byfrom reduced liquidity if a significant portion of its assets is investment grade securities or cash with a value of at leastinvested in any one issuer. In particular, the mutual fund 102% of the market value of the securities subject to themay not be able to easily liquidate its position in the issuers transaction. A Fund will enter into repurchase or reverseas required to mutual fund redemption requests. repurchase agreements only with parties that we believe,

through conducting credit evaluations, have adequateGenerally, mutual funds are not permitted to invest moreresources and financial ability to meet their obligationsthan 10% of their net assets in any one issuer. This restric-under such agreements. In addition, no Fund will exposetion does not apply to investments in debt securities issuedmore than 10% of the total value of its assets with any oneor guaranteed by the Canadian or U.S. government, securi-entity under these agreements. Prior to entering into aties issued by a clearing corporation, securities issued byrepurchase agreement, a Fund must ensure that the aggre-mutual funds that are subject to the requirements ofgate value of the securities that have been sold pursuant toNational Instrument 81-102 – Investment Fundsrepurchase transactions, together with any securities loaned(‘‘NI 81-102’’) and National Instrument 81-101 – Mutualpursuant to securities lending transactions, will not exceedFund Prospectus Disclosure, or index participation units50% of the net asset value of the Fund immediately after theissued by a mutual fund.Fund enters into the transaction.

Liquidity riskSecurities lending risk

Liquidity is a measure of how quickly an investment can beSome mutual funds may enter into securities lending trans-sold for cash at a fair market price. If a mutual fund cannotactions to generate additional income from securities held insell an investment quickly, it may lose money or make aa mutual fund’s portfolio. In lending its securities, a mutuallower profit, especially if it has to meet a large number offund is exposed to the risk that the borrower may not be ableredemption requests. In general, investments in smaller com-to satisfy its obligations under the securities lending agree-panies, smaller markets or certain sectors of the economyment and the mutual fund is forced to take possession of thetend to be less liquid than other types of investments. Thecollateral held. Losses could result if the collateral held byless liquid an investment, the more its value tendsthe mutual fund is insufficient, at the time the remedy isto fluctuate.exercised, to replace the securities borrowed. To addressthese risks, any securities lending transactions entered into

Repurchase and reverse repurchase transactionby a Fund will comply with applicable securities laws, includ-risking the requirement that each agreement be, at a minimum,

Some Funds may enter into repurchase or reverse repur- fully collateralized by investment grade securities or cashchase transactions to generate additional income. When a with a value of at least 102% of the market value of theFund agrees to sell a security at one price and buy it back on securities subject to the transaction. A Fund will enter into

securities lending transactions only with parties that we

50

believe, through conducting credit evaluations, have ade- certain criteria for creditworthiness and only up toquate resources and financial ability to meet their obliga- certain limits.tions under such agreements. In addition, no Fund willexpose more than 10% of the total value of its assets with any Significant securityholder riskone entity under these agreements. Prior to entering into a

Securities of mutual funds may be purchased and sold bysecurities lending agreement, a Fund must ensure that thelarge investors, including other funds. If a large investoraggregate value of the securities loaned, together with thoseredeems a portion or all of its investment from an underlyingthat have been sold pursuant to repurchase transactions,fund, that underlying fund may have to incur capital gainsdoes not exceed 50% of the net asset value of the Fundand other transaction costs in the process of making theimmediately after the Fund enters into the transaction.redemption. In addition, some securities may have to be soldat unfavourable prices, thus reducing the underlying fund’s

Series riskpotential return. Conversely, if a large investor were to

Some mutual funds offer more than one series of securities increase its investment in an underlying fund, that underly-of the same mutual fund. Although the value of each series is ing fund may have to hold a relatively large position in cashcalculated separately, there is a risk that the expenses or for a period of time until the portfolio adviser finds suitableliabilities of one series of securities may affect the value of investments, which could also negatively impact the perform-the other series. If one series is unable to cover its liabilities, ance of the underlying fund. Since the performance of thethe other series are legally responsible for covering the underlying fund may be negatively impacted, so may thedifference. We believe that this risk is very low. investment return of any remaining investors in the underly-

ing fund, including other top funds which may still beinvested in the underlying fund.Short selling risk

Certain Funds may engage in a limited amount of shortSmall company risk

selling. A ‘‘short sale’’ is where a mutual fund borrows securi-ties from a lender which are then sold in the open market The prices of shares issued by smaller companies tend to(or ‘‘sold short’’). At a later date, the same number of fluctuate more than those of larger corporations. Smallersecurities are repurchased by the mutual fund and returned companies may not have established markets for their prod-to the lender. In the interim, the proceeds from the first sale ucts and may not have solid financing. These companiesare deposited with the lender and the Fund pays interest to generally issue fewer shares, which increases theirthe lender. If the value of the securities declines between the liquidity risk.time that the mutual fund borrows the securities and thetime it repurchases and returns the securities, the mutual Underlying ETFs riskfund makes a profit for the difference (less any interest the

Certain Funds may invest in securities of exchange-tradedmutual fund is required to pay to the lender). Short sellingFunds (‘‘ETFs’’). The risks of each such ETF will be depen-involves certain risks. There is no assurance that securitiesdent on the structure and underlying investments of the ETF.will decline in value during the period of the short saleThe trading price of the units or shares of ETFs will fluctu-sufficient to offset the interest paid by the Fund and make aate in accordance with changes in the ETFs’ net asset value,profit for the Fund, and securities sold short may insteadas well as market supply and demand on the stock exchangeappreciate in value. The Fund also may experience difficul-on which they are listed. Units or shares of an ETF may tradeties repurchasing and returning the borrowed securities if ain the market at a premium or discount to the ETF’s netliquid market for the securities does not exist. The lenderasset value per unit or share and there can be no assurancefrom whom the Fund has borrowed securities may go bank-that units or shares will trade at prices that reflect their netrupt and the Fund may lose the collateral it has depositedasset value.with the lender. Each Fund that engages in short selling will

adhere to controls and limits that are intended to offsetU.S. withholding tax riskthese risks by short selling only securities of larger issuers

for which a liquid market is expected to be maintained andGenerally, the Foreign Account Tax Compliance provisions of

by limiting the amount of exposure for short sales. Suchthe U.S. Hiring Incentives to Restore Employment Act of

Funds also will deposit collateral only with lenders that meet2010 (or ‘‘FATCA’’) impose a 30% withholding tax on‘‘withholdable payments’’ made to a mutual fund, unless the

51

mutual fund enters into a FATCA agreement with the of property that can produce U.S. source interest or divi-U.S. Internal Revenue Service (the ‘‘IRS’’) (or is subject to dends. The withholding tax applies to withholdable paymentsan intergovernmental agreement as described below) to made on or after July 1, 2014 (or January 1, 2019 in the casecomply with certain information reporting and other require- of gross proceeds). The 30% withholding tax may also applyments. Compliance with FATCA may in certain cases require to any ‘‘foreign passthru payments’’ paid by a mutual fund toa mutual fund to obtain certain information from certain of certain investors on or after January 1, 2019. The scope ofits investors and (where applicable) their beneficial owners foreign passthru payments will be determined under the(including information regarding their identity, residency U.S. Treasury regulations that have yet to be issued.and citizenship) and to disclose such information and docu-

The foregoing rules and requirements may be modified bymentation to the IRS.

future amendments of the Canada-U.S. IGA, the Tax Act,Under the terms of the intergovernmental agreement future U.S. Treasury regulations, and other guidance.between Canada and the U.S. to provide for the implementa-tion of FATCA (the ‘‘Canada-U.S. IGA’’), and its implementingprovisions under the Tax Act, a Fund will be treated ascomplying with FATCA and not subject to the 30% withhold-ing tax if the Fund complies with the terms of theCanada-U.S. IGA and its implementing provisions in theTax Act. Under the terms of the Canada-U.S. IGA, a Fund willnot have to enter into an individual FATCA agreement withthe IRS but the Fund will be required to register with theIRS and report certain information on accounts held byU.S. persons owning, directly or indirectly, an interest in theFund, or held by certain other persons or entities. In addi-tion, the Fund may also be required to report certain infor-mation on accounts held by investors that did not providethe required residency and identity information, through thedealer, to the Fund. The Fund will not have to provideinformation directly to the IRS but instead will be requiredto report information to the Canada Revenue Agency(the ‘‘CRA’’). The CRA will in turn exchange information withthe IRS under the existing provisions of theCanada-U.S. Income Tax Convention. The Canada-U.S. IGAsets out specific accounts that are exempt from beingreported, including certain tax deferred plans. By investingin a Fund the investor is deemed to consent to the Funddisclosing such information to the CRA. If a Fund is unableto comply with any of its obligations under theCanada-U.S. IGA, the imposition of the 30% U.S. withholdingtax may affect the net asset value of the Fund and may resultin reduced investment returns to securityholders. It is possi-ble that the administrative costs arising from compliancewith FATCA and/or the Canada-U.S. IGA and future guidancemay also cause an increase in the operating expenses of aFund. The Funds may also be subject to the penalty provi-sions of the Tax Act.

Withholdable payments include (i) certain U.S. sourceincome (such as interest, dividends and other passiveincome) and (ii) gross proceeds from the sale or disposition

52

Organization and management of the Funds

Manager As manager, we are responsible for the overall business and operation of the Funds. This includes:

• providing or arranging for portfolio advisory services1832 Asset Management L.P.1 Adelaide Street East • providing or arranging for administrative services.28th Floor

The general partner of the Manager, 1832 Asset Management L.P., is wholly-owned by The Bank of Nova Scotia.Toronto, OntarioM5C 2V9

Board of directors The Board is responsible for the oversight of the Corporation.

The Board is currently comprised of four members, two of whom are not officers or employees of theCorporation. Additional information concerning the Board, including the names of its members, and governanceof the Corporation is available in the annual information form.

Principal distributor Scotia Securities Inc. is the principal distributor of the Series A and Series T shares offered under this simplifiedprospectus. As principal distributor, Scotia Securities Inc. markets and sells the Series A and Series T shares. We, or

Scotia Securities Inc.Scotia Securities Inc., may hire participating dealers to assist in the sale of the Funds.

Toronto, OntarioScotia Securities Inc. is a wholly-owned subsidiary of The Bank of Nova Scotia, which is the parent company of1832 Asset Management L.P.

Custodian The custodian holds the investments of the Funds and keeps them safe to ensure that they are used only for thebenefit of investors. The Bank of Nova Scotia is the parent company of 1832 Asset Management L.P.

The Bank of Nova ScotiaToronto, Ontario

Securities Lending In the event a Fund engages in a securities lending transaction, repurchase transaction or reverse repurchaseAgent transaction, then The Bank of Nova Scotia will be appointed as the Fund’s securities lending agent. The securities

lending agent will act on behalf of the Fund in administering the securities lending transactions, repurchaseThe Bank of Nova Scotiatransactions and reverse repurchase transactions entered into by the Fund.Toronto, OntarioThe general partner of the Manager, 1832 Asset Management G.P. Inc., is wholly-owned by The Bank of NovaScotia.

Registrar As registrar, we make arrangements to keep a record of all securityholders of the Funds, process orders and issuetax slips to securityholders.

1832 Asset Management L.P.Toronto, Ontario

Auditor The auditor is an independent firm of chartered professional accountants. The firm audits the annual financialstatements of the Funds and provides an opinion as to whether they are fairly presented in accordance with

PricewaterhouseCoopers LLPinternational financial reporting standards.

Toronto, Ontario

Portfolio advisor The portfolio advisor provides investment advice and makes the investment decisions for the Funds. You will findthe portfolio advisor for each Fund in the Fund descriptions starting at page 4.

1832 Asset Management L.P.1832 Asset Management L.P. is wholly-owned by The Bank of Nova Scotia.Toronto, Ontario

Portfolio sub-advisors We have authority to retain portfolio sub-advisors. The sub-advisor provides investment advice and makes theinvestment decisions for certain of the Funds.

CI Investments, Inc.You will find the portfolio advisor for each Fund in the Fund descriptions starting on page 4.Toronto, Ontario

CI Investments Inc. is independent of the Manager.

53

Independent Review In accordance with National Instrument 81-107 – Independent Review Committee for Investment FundsCommittee (‘‘NI 81-107’’), we, as manager of the ScotiaFunds, have established an independent review committee (‘‘IRC’’),

with a mandate to review, and provide input on, our policies and procedures dealing with conflicts of interest inrespect of ScotiaFunds, and to review conflict of interest matters that we present to the IRC. The IRC has fivemembers, each of whom is independent of the Manager and any party related to the Manager. The IRC willprepare, at least annually, a report of its activities for securityholders. This report will be available on or beforeMarch 31st of each year, at no charge, on the Internet at www.scotiabank.com, or by requesting a copy by e-mailat [email protected]. Additional information about the IRC, including the names of its members, isavailable in the Funds’ annual information form.

In certain circumstances, your approval may not be required under applicable securities laws to effect a fundmerger or a change in the auditor of a Portfolio. Where the IRC is permitted under applicable securities laws toapprove a fund merger in place of the securityholders, you will receive at least 60 days’ written notice before thedate of the merger. For a change in the auditor of a Fund, your approval will not be obtained, but you will receiveat least 60 days’ written notice before the change takes effect.

Funds that invest in underlying funds that are managed by us or our associates or affiliates will not vote any of the securities ofthose underlying funds. However, we may arrange for you to vote your share of those securities.

The Funds have received an exemption from the securities regulatory authorities allowing them to purchase equity securitiesof a Canadian reporting issuer during the period of distribution of the securities and for the 60-day period following the periodof distribution (the ‘‘Prohibition Period’’) pursuant to a private placement notwithstanding that an affiliate or associate of theManager, such as Scotia Capital Inc., acts as an underwriter or agent in the offering of equity securities. Any such purchasemust be consistent with the investment objectives of the particular Fund. Further, the IRC of the Funds must approve theinvestment in accordance with the approval requirements of NI 81-107 and such purchase can only be carried out if it is incompliance with certain other conditions.

The Funds have received an exemption from the securities regulatory authorities to permit the Funds, to invest in equitysecurities of an issuer that is not a reporting issuer in Canada during the Prohibition Period, whether pursuant to a privateplacement of the issuer in Canada or in the United States or a prospectus offering of the issuer in the United States ofsecurities of the same class, even if an affiliate of the Manager acts as underwriter in the private placement or prospectusoffering, provided the issuer is at the time a registrant in the United States, the IRC approves of the investment and thepurchase is carried out in compliance with certain other conditions.

In addition to the above exemptive relief, the Funds may from time to time be granted exemptions from NI 81-102 to permitthem to invest during the Prohibition Period in securities of an issuer, in which an affiliate or associate of the Manager, such asScotia Capital Inc., acts as an underwriter or agent in the issuer’s distribution of securities of the same class, where the Fundsare not able to do so in accordance with NI 81-107 or the exemptive relief described above.

54

Purchases, switches and redemptionsSeries A and Series T shares of the ScotiaFunds are no-load. Securities which trade on a public stock exchange are usu-That means you do not pay a sales commission when you buy, ally valued at their closing price on that exchange. However,switch or sell these shares through us or our affiliates. if the price is not a true reflection of the value of theSelling your shares is also known as redeeming. security, we will use another method to determine its value.

This method is called fair value pricing and it will be usedwhen a security’s value is affected by events which occurHow to place ordersafter the closing of the market where the security is princi-

You can open an account and buy, switch or sell the Funds, pally traded. Fair value pricing may also be used in othersubject to any specific rules your dealer may have: circumstances.• by calling or visiting any Scotiabank branch

All of the Funds are valued in Canadian dollars.• by calling or visiting an office of ScotiaMcLeod or by

visiting online (and/or by calling) Scotia iTRADE orAbout the series of shares

• through Scotia OnLine at www.scotiabank.com once youThe Funds offered under this simplified prospectus are avail-have signed up for this service. You may not redeemable in Series A shares and Series T shares only. The seriesScotiaFunds through Scotia OnLine – redemptions musthave different fees and are intended for different investors:be placed through a Scotiabank branch, either in person,

by email, by fax, or by telephone. • Series A shares are available to all investors.

• Series T shares are intended for investors seeking stableYou can also open an account and place orders through othermonthly distributions. A portion of distributions forregistered brokers or dealers. They may charge you a salesSeries T shares is expected to consist of return ofcommission or other fee. Brokers and dealers must sendcapital but may also include ordinary dividends. Anyorders to us on the same day that they receive completedcapital gains dividends will be included within 60 daysorders from investors.following year end.

All transactions are based on the price of a Fund’s shares –or its net asset value per share (‘‘NAVPS’’). All orders are How to buy the Fundsprocessed using the next NAVPS calculated after the Fund

Scotia Conservative Government Bond Capital Yield Class,receives the order.Scotia INNOVA Income Portfolio Class and Scotia FixedIncome Blend Class are closed to new purchases and toHow we calculate net asset value per shareswitches of securities from other funds into these Funds. The

We usually calculate the NAVPS of each series of each Fund closure does not affect your ability to switch from thesefollowing the close of trading on the Toronto Stock Exchange Funds to other funds. We may choose to re-open these Funds(the ‘‘TSX’’) on each day that the TSX is open for trading to new purchases in the future.(a ‘‘Valuation Date’’). In unusual circumstances, we maysuspend the calculation of the NAVPS. Minimum investments

The NAVPS of each series of a Fund is the current market The minimum amounts for the initial and each subsequentvalue of the proportionate share of the assets allocated to investment in Series A and Series T shares of the Scotiathe series, less the liabilities of the series and the propor- INNOVA Portfolios is $50,000 and $100, respectively, intionate share of the common expenses allocated to the series Series A and Series T shares of the Scotia Partners Portfoliosdivided by the total number of outstanding shares in that is $10,000 and $50, respectively and in Series A and Series Tseries. Common expenses of the Corporation are shared by shares of Scotia Global Dividend Class, Scotia Canadianall Corporate Funds and are allocated based on the relative Dividend Class, Scotia Conservative Government Bond Capi-net asset values of each Corporate Fund and the allocation tal Yield Class, Scotia Fixed Income Blend Class, Scotiato a particular Corporate Fund is then treated as a common Canadian Equity Blend Class, Scotia U.S. Equity Blend Classexpense of the Corporate Fund to be shared amongst the and Scotia International Equity Blend Class is $1,000 andseries of that Corporate Fund. We may allocate expenses to a $50, respectively. If you buy, sell or switch shares throughparticular Corporate Fund when it is reasonable to do so.

55

non-affiliated brokers or dealers you may be subject to How to switch Fundshigher minimum initial or additional investment amounts.

You can switch from one ScotiaFund to another ScotiaFund,We can redeem your shares after giving 10 days’ written as long as you are eligible to hold the particular series of thenotice to you if the value of your investment in any shares of ScotiaFund into which you switch. A switch involves movinga Fund drops below the minimum initial investment. We may money from the Fund to another ScotiaFund. Generally, achange the minimum amounts for initial and subsequent switch may be an order to sell and buy or to convert yourinvestments in shares of a Fund at any time, from time to securities. We describe these kinds of switches below. Whentime, and on a case by case basis, subject to applicable we receive your order, we will sell or convert your securitiessecurities laws. from the Fund and use the proceeds to buy the second

ScotiaFund. The steps for buying and selling a ScotiaFundalso apply to switches. A Fund may also charge you a shortMore about buyingterm or frequent trading fee if you switch your securities

• Purchase orders received by the Manager by the close of within 31 days of buying them, or if you have made multipletrading of the Toronto Stock Exchange, generally 4:00 p.m. switches within ten calendar days of purchase. See Short(Toronto time), on a Valuation Date will be effective on term trading for details.that day. Orders received after that time will be effectiveon the next Valuation Date.

Switching between corporate funds and series of acorporate fund• We can reject all or part of your order within one business

day of the Fund receiving it. If we reject your order, weWhen you switch shares between Corporate Funds or

will immediately return any money received, withoutbetween series within a Corporate Fund, it is treated as a

interest.conversion. You can convert shares of a Corporate Fund into

• We may reject your order if you have made several shares of another Corporate Fund as long as you are eligiblepurchases and sales of a Fund within a short period of to hold series of the other Corporate Fund. You can converttime, usually 31 days. See Short term trading for details. shares of a series to shares of another series within the same

Corporate Fund as long as you are eligible to holder the• You have to pay for your shares when you buy them. If weother series of the Corporate Fund. When you convert sharesdo not receive payment for your purchase within threebetween Corporate Funds or series, the value of your invest-business days after the purchase price is determined, wement will not change (except for any fees you pay towill sell your shares on the next business day. If theconvert), but the number of shares you hold will change.proceeds from the sale are more than the cost of buyingThis is because each series of each Corporate Fund has athe shares, the Fund will keep the difference. If thedifferent share price. Under current income tax rules, aproceeds are less than the cost of buying the shares, weconversion is generally not considered a disposition for taxmust pay the shortfall. We may collect the shortfall andpurposes, so no capital gain or loss will result. However, anyany related costs from the dealer or broker who placed theredemption of shares to pay for a switch fee charged by yourorder, or from you, if you placed the order directly with us.dealer will be considered a disposition for tax purposes.If you used a dealer or broker to place the order then your

dealer or broker may make provision in its arrangementsThe Federal government announced in its Budget delivered

with you that it will be entitled to reimbursement fromon March 22, 2016 that, beginning after September 2016

you of the shortfall together with any additional costs and(i.e., on October 1, 2016), a switch between classes of a

expenses suffered by it in connection with a failed settle-mutual fund corporation will be considered for income tax

ment of a purchase of shares of a Fund caused by you.purposes to be a disposition at fair market value. Accord-

• Your broker, dealer or we will send you a confirmation of ingly, if this proposed measure is enacted into law, you mayyour purchase once your order is processed. If you buy realize a capital gain or a capital loss if, after Septem-shares through pre-authorized contributions, you will ber 2016, you switch your shares from one Corporate Fund toreceive a confirmation only for the initial investment and another Corporate Fund. The proposed measure will notwhen you change the amount of your regular investment. apply to switches between different series of shares of a

Corporate Fund where the shares received in exchange differonly in respect of management fees or expenses to be borneby investors and otherwise derive their value from the same

56

portfolio or fund within the mutual fund corporation. How- shares is less than the sale proceeds, the Fund will keepever, it is not clear based on the description of the proposed the difference. If the cost of buying the shares is moremeasure in the Budget documents whether it will apply to a than the sale proceeds, we must pay the shortfall. We canswitch between different series of shares within the same collect the shortfall and any related costs from the brokerCorporate Fund where the shares received differ other than or dealer who placed the order, or from you, if you placedin respect of management fees or expenses, as would be the the order directly with us. If you used a dealer or brokercase with switches between Series A shares and Series T to place the order then your dealer or broker may makeShares of the Corporate Fund. provision in its arrangements with you that it will be

entitled to reimbursement from you of the shortfalltogether with any additional costs and expenses sufferedSwitching between corporate funds and trust fundsby it in connection with a failed redemption of shares of a

Switching between a Corporate Fund and a Trust Fund is Fund caused by you.considered a disposition for tax purposes. If you hold your

• Sell orders placed for a corporation, trust, partnership,securities in a non-registered account, you may realize aagent, fiduciary, surviving joint owner or estate must becapital gain or loss on the disposition. Capital gainsaccompanied by the required documents with proof ofare taxable.signing authority. The sell order will be effective onlywhen the Fund receives all required documents, properly

More about switchingcompleted.

• The rules for buying and selling shares also apply to • If you hold your shares in a non-registered account, youswitches. will experience a taxable disposition which for most

• You can switch between Funds valued in the same securityholders is expected to result in a capital gaincurrency. or loss.

• Your broker, dealer or we will send you a confirmation • Your broker, dealer or we will send you a confirmationonce your order is processed. once your order is processed. If you sell shares through

the automatic withdrawal plan, you will receive a confir-mation only for the first withdrawal.How to sell your shares

In general, your instructions to sell must be in writing, and Suspending your right to buy, switch and sell sharesyour bank, broker or dealer must guarantee your signature.

Securities regulations allow us to temporarily suspend yourWe may also require other proof of signing authority.right to sell your Fund shares and postpone payment of your

We will send your payment to your broker or dealer within sale proceeds:three business days of receiving your properly completed

• during any period when normal trading is suspended onorder. If you sell shares of a Fund, within 31 days of buyingany exchange on which securities or derivatives that makethem, you may have to pay a short term trading fee. Seeup more than 50% by value or underlying market exposureShort term trading for details.of the total assets of the Fund without allowance for

You can also sell shares on a regular basis by setting up an liabilities are traded and there is no other exchange whereautomatic withdrawal plan. See Optional services for details. these securities or derivatives are traded that represents a

reasonably practical alternative for the Fund; orWe may redeem your shares under certain circumstances.

• with the approval of securities regulators.See U.S. withholding tax risk in this simplified prospectusand Shares of the Funds – Redemption in the annual infor- We may also suspend your right to sell your shares andmation form of the Funds for further details. postpone payment of your sale proceeds if the Fund in which

you are invested is invested in an underlying fund and suchMore about selling underlying fund suspends the Fund’s right to redeem

its investment.• You must provide all required documents within 10 busi-ness days of the day the redemption price is determined. We will not accept orders to buy shares of a Fund during anyIf you do not, we will buy back the shares as of the close of period when we have suspended investors’ rights to sellbusiness on the 10th business day. If the cost of buying the their shares.

57

You may withdraw your sell order before the end of thesuspension period. Otherwise, we will sell your shares at theNAVPS next calculated when the suspension period ends.

Short term trading

Short term trading by investors can increase a Fund’sexpenses, which affects all investors in the Fund, and canaffect the economic interest of long-term investors. Shortterm trading can affect a Fund’s performance by forcing theportfolio advisor to keep more cash in the Fund than wouldotherwise be required. To discourage short term trading, aFund may charge a fee of 2% of the amount you sell orswitch, if you sell or switch your shares within 31 days ofbuying them. The short term trading fee does not apply to:

• automatic rebalancing that is part of the service offered bythe Manager;

• transactions not exceeding a certain minimum dollaramount, as determined by the Manager from time to time;

• trade corrections or any other action initiated by theManager or the applicable portfolio advisor;

• transfers of securities of one Fund between two accountsbelonging to the same securityholder;

• regularly scheduled RRIF or LIF (defined below) pay-ments; and

• regularly scheduled automatic withdrawal plan payments.

Any formal or informal arrangements to permit short termtrading are described in the Fund’s annual information form.If securities regulations mandate the adoption of specifiedpolicies relating to short term trading, the Funds will adoptsuch policies if and when implemented by the securitiesregulators. If required, these policies will be adopted withoutamendment to this simplified prospectus or the Funds’annual information form and without notice to you, unlessotherwise required by such regulations.

58

Optional servicesThis section tells you about the accounts, plans and services Automatic withdrawal planthat are available to investors in the ScotiaFunds. Call us at

Automatic withdrawal plans let you receive regular cash1-800-268-9269 (416-750-3863 in Toronto) for English, orpayments from your Funds. The minimum balance needed to1-800-387-5004 for French, or contact your Scotiabankstart the plan is $50,000 for the Scotia INNOVA Portfoliobranch for full details and application forms.Classes and $10,000 for all other Funds and the minimum foreach withdrawal is $50.

Pre-authorized contributions

Following your initial investment, you can make regular More about the automatic withdrawal planpre-authorized contributions (‘‘PAC’’) for Series A and

• The automatic withdrawal plan is only available forSeries T shares of the Funds using automatic transfers fromnon-registered accounts and for Series A and Series T.your bank account at any Canadian financial institution.

• You can choose to receive payments monthly, quarterly,More about pre-authorized contributions semi-annually or annually.

• We will automatically sell the necessary number of shares• Pre-Authorized contributions are available forto make payments to your bank account at any Canadiannon-registered accounts, RRSPs, RESPs, RDSPs andfinancial institution or by cheque.TFSAs. See Minimum investments for more details.

• If you hold your shares in a non-registered account, you• You can choose to invest weekly, bi-weekly, semi-monthly,may realize a capital gain or loss. Capital gainsmonthly, bi-monthly, quarterly, semi-annually or annually.are taxable.• We will automatically transfer the money from your bank

• You can change the Funds and the amount or frequency ofaccount to the Funds you choose.your payments, or cancel the plan by contacting your• You can change how much you invest and how often youmutual fund representative.invest, or cancel the plan at any time by contacting your

• Automatic withdrawal plans which were established priormutual fund representative.to any Fund merger will be re-established in comparable• We can change or cancel the plan at any time.plans with respect to the applicable continuing Funds

• If you make purchases using pre-authorized contributionsunless you advise otherwise.

and are not a resident of Quebec, you will receive Fund• We can change or cancel the plan, or waive the minimumFacts for the Fund you have invested in only after your

amounts at any time.initial purchase unless you request that Fund Facts alsobe provided to you after each subsequent purchase. If you If you withdraw more money than your Fund shares arewould like to receive Fund Facts for subsequent earning, you will eventually use up your investment.purchases, please contact your broker or dealer. The cur-rent Fund Facts may be found at www.sedar.com or at

Registered planswww.scotiafunds.com. Quebec residents will receive FundFacts after each subsequent purchase using a Scotia registered plans, including RRSPs, RRIFs, RDSPs,pre-authorized contribution plan. Although you do not locked-in retirement accounts, locked-in retirement savingshave a statutory right to withdraw from a subsequent plans, life income funds, locked-in retirement income funds,purchase of shares made under a pre-authorized contribu- prescribed retirement income fund, RESPs and TFSAs aretion (as that right only exists with respect to initial available from your dealer or advisor at a Scotiabank branch.purchases under a PAC), you will continue to have a right You can make lump-sum investments, or if you prefer, youof action for damages or rescission in the event the Fund can set up a regular investment plan using Pre-AuthorizedFacts (or the documents incorporated by reference into Contributions. See Minimum investments for the minimumthe simplified prospectus) contains a misrepresentation, investment amounts. You can also hold shares of the Fundswhether or not you request a Fund Facts for subsequent in self-directed registered plans with other financial institu-purchases. tions. You may be charged a fee for these plans.

• Pre-authorized contribution plans which were establishedprior to any Fund merger will be re-established in compa-rable plans with respect to the applicable continuing Fundunless you advise otherwise.

59

Fees and expensesThis section describes the fees and expenses you may have to the residence of the Fund investors may affect the amount ofpay if you invest in the Funds. You may have to pay some of HST paid by the Funds each year.these fees and expenses directly. The Funds may have to pay

The Manager is not required to seek securityholder approvalsome of these fees and expenses, which may reduce thefor the introduction of, or a change in the basis of calculat-value of your investment. The Funds are required to paying, a fee or expense that is charged to a Fund or chargedgoods and services tax (‘‘GST’’) or harmonized sales taxdirectly to securityholders of the Fund in a way that could(‘‘HST’’) on management fees and operating expenses inresult in an increase in charges to securityholders providedrespect of each series of shares. GST is currently charged atany such introduction, or change, will only be made if noticea rate of 5% and HST is currently charged at a rate ofis sent to securityholders at least 60 days before the effectivebetween 13% and 15% depending on the province. Changes indate of the change.HST rates, the adoption of HST by additional provinces, the

repeal of HST by HST-participating provinces and changes in

Fees and expenses payable by the Funds

Management fees The management fees cover the costs of managing the Funds, arranging for investment analysis,recommendations and investment decision making for the Funds, arranging for distribution of the Funds,marketing and promotion of the Funds and providing or arranging for other services.

Each Fund pays us a management fee with respect to each series of shares. The fee is calculated andaccrued daily and paid monthly. The maximum annual rates of the management fee, which are a percentageof the net asset values (‘‘NAV’’) for Series A and Series T shares of each Fund are as follows:

Maximum annualmanagement fee

Fund Series A Series T

Scotia Conservative Government Bond Capital Yield Class 1.10% –Scotia Fixed Income Blend Class 1.25% –Scotia Canadian Dividend Class 1.50% –Scotia Canadian Equity Blend Class 1.85% –Scotia U.S. Equity Blend Class 1.95% –Scotia Global Dividend Class 2.00% –Scotia International Equity Blend Class 2.00% –Scotia INNOVA Income Portfolio Class 1.60% –Scotia INNOVA Balanced Income Portfolio Class 1.70% 1.70%Scotia INNOVA Balanced Growth Portfolio Class 1.80% 1.80%Scotia INNOVA Growth Portfolio Class 1.90% 1.90%Scotia INNOVA Maximum Growth Portfolio Class 2.00% 2.00%Scotia Partners Balanced Income Portfolio Class 1.85% 1.85%Scotia Partners Balanced Growth Portfolio Class 2.00% 2.00%Scotia Partners Growth Portfolio Class 2.15% 2.15%Scotia Partners Maximum Growth Portfolio Class 2.35% 2.35%

Management fee In order to encourage very large investments in a Fund and to achieve effective management fees that arerebates competitive for these large investments, the Manager may agree to waive a portion of the management fee

that it would otherwise be entitled to receive from a Fund or a shareholder with respect to a shareholder’sinvestment in the Fund. An amount equal to the amount so waived may be distributed to such shareholderby the Fund or the Manager, as applicable (a ‘‘Management Fee Rebate’’). In this way, the cost ofManagement Fee Rebates are effectively borne by the Manager, not the Funds or the shareholder as theFunds or the shareholder, as applicable, are paying a discounted management fee. All Management FeeRebates are automatically reinvested in additional shares of the relevant series of a Fund. The payment ofManagement Fee Rebates by the Fund or the Manager, as applicable, to a shareholder in respect of a largeinvestment is fully negotiable between the Manager, as agent for the Fund, and the shareholder’s financialadvisor and/or dealer, and is primarily based on the size of the investment in the Fund. The Manager willconfirm in writing to the shareholder’s financial advisor and/or dealer the details of any Management FeeRebate arrangement.

60

Fees and expenses payable by the Funds (cont’d)

Administration fees and The Manager pays certain operating expenses of the Funds. These expenses include regulatory filing feesother operating and other day-to-day operating expenses including, but not limited to, recordkeeping, accounting and Fundexpenses valuation costs, custody fees, audit and legal fees, costs of preparing and distributing annual and

semi-annual reports, prospectuses, Fund Facts and statements and investor communications. In return,each Fund pays a fixed administration fee. The fee is calculated and accrued daily and paid monthly. Theadministration fee may vary by series of shares and by Fund. The maximum annual rates of theadministration fee, which are a percentage of the NAV for Series A and Series T shares of each Fund, are asfollows:

Maximum annualadministration fee

Fund Series A Series T

Scotia Conservative Government Bond Capital Yield Class 0.10% –Scotia Fixed Income Blend Class 0.10% –Scotia Canadian Dividend Class 0.10% –Scotia Canadian Equity Blend Class 0.15% –Scotia U.S. Equity Blend Class 0.20% –Scotia Global Dividend Class 0.30% –Scotia International Equity Blend Class 0.30% –Scotia INNOVA Income Portfolio Class 0.10% –Scotia INNOVA Balanced Income Portfolio Class 0.10% 0.10%Scotia INNOVA Balanced Growth Portfolio Class 0.10% 0.10%Scotia INNOVA Growth Portfolio Class 0.10% 0.10%Scotia INNOVA Maximum Growth Portfolio Class 0.10% 0.10%Scotia Partners Balanced Income Portfolio Class 0.10% 0.10%Scotia Partners Balanced Growth Portfolio Class 0.10% 0.10%Scotia Partners Growth Portfolio Class 0.10% 0.10%Scotia Partners Maximum Growth Portfolio Class 0.10% 0.10%

Each Fund also pays certain operating expenses directly, including the costs and expenses related to theboard of directors of the Corporation, the IRC of the Funds, the cost of any new government or regulatoryrequirements, including, without limitation, costs associated with complying with International FinancialReporting Standards, compliance with Canadian OTC Derivatives Trade Reporting Rules, compliance withthe ‘‘Volcker Rule’’ under the Dodd-Frank Wall Street Reform and Consumer Protection Act and otherapplicable U.S. regulations and any new fees introduced by a securities regulator or other governmentauthority that is based on the assets or other criteria of the Funds, any transaction costs, including all feesand costs related to derivatives, and any borrowing costs (collectively, other fund costs), and taxes(including, but not limited to, GST or HST, as applicable).

The purchase price of all securities and other property acquired by or on behalf of the Funds (including, butnot limited to, brokerage fees, commissions and service charges paid in connection with the purchase andsale of such securities and other property) are considered capital costs paid directly by the Funds andtherefore are not considered part of the operating expenses of the Funds paid by the Manager.

Other fund costs will be allocated among Funds and each series of a Fund is allocated its own expenses andits proportionate share of the Fund’s expenses that are common to all series. Currently, each member of theIRC is entitled to an annual retainer of $45,000 ($60,000 for the Chair), and a per meeting fee of $1,500.Each mutual fund managed by the Manager to which NI 81-107 applies pays a proportionate share of thetotal compensation paid to the IRC each year and reimburses members of the IRC for expenses incurred bythem in connection with their services as members of the IRC. Each Fund’s share of the IRC’s compensationwill be disclosed in the Funds’ financial statements. The Manager may, in some years and in certain cases,pay a portion of a series’ administration fee or other fund costs. The administration fee and other fund costsare included in the management expense ratio of a Fund.

Management expense Each Fund pays all of the expenses relating to its operation and the carrying on of its activities, including:ratio (a) management fees paid to the Manager for providing general management services; (b) the

administration fee paid to the Manager; and (c) other fund costs (and taxes). These expenses are expressedeach year by each Fund as its annual management expense ratio which are the total expenses of the Fundfor the year expressed as a percentage of the Fund’s average daily net asset value during the year, calculatedin accordance with applicable securities legislation.

61

Fees and expenses payable by the Funds (cont’d)

Funds that invest in Fees and expenses are payable by the underlying funds in which a Fund may invest, in addition to the feesother funds and expenses payable by the Fund. An underlying Fund pays its own administration fees and other expenses,

which are in addition to the administration fees and other expenses payable by a Fund that invests in theunderlying fund. However, no management fees or incentive fees are payable by a Fund that, to a reasonableperson, would duplicate a fee payable by the underlying funds of that Fund for the same service. In addition,a Fund will not pay any sales fees or redemption fees upon a purchase or redemption of securities of anunderlying fund.

Fees and expenses payable directly by you

No sales or redemption fees are payable by a Fund when it buys or sells securities of an underlying fund thatis managed by us or one of our affiliates or associates if the payment of these fees could reasonably beperceived as a duplication of fees paid by an investor in the Fund.

Sales charges None

Redemption fee None

Switch fee None

Short term trading fee To discourage short term trading, a Fund may charge a fee of 2% of the amount you sell or switch, if you sellor switch your shares within 31 days of buying them. See Short term trading.

Registered Plan fees If you invest through a Registered Plan available from Scotia Securities Inc. a withdrawal or transfer fee ofup to $50 may apply. If you invest through a self-directed Registered Plan with another Scotiabank dealer oradvisor or with another financial institution then you may contact your broker or dealer to determine if theycharge any Registered Plan fees.

Other fees • Pre-authorized contributions: None• Automatic withdrawal plan: None

Impact of sales charges

Series A and Series T shares of the Funds are no-load. That Scotia iTRADE). You may pay a sales commission or othermeans you do not pay a sales commission when you buy, fee if you buy, switch or sell shares through other registeredswitch or sell shares of these series through Scotia Securi- brokers or dealers. See Dealer compensation below.ties Inc. or Scotia Capital Inc. (including ScotiaMcLeod and

62

Dealer compensationSales incentive programsThis section explains how we compensate brokers and deal-

ers when you invest in Series A and Series T shares ofMembers of Scotiabank may include sales of securities of the

the Funds.Funds in their general employee incentive programs. Theseprograms involve many different Scotiabank products. We

Trailing commissions may offer other incentive programs, as long as Canadiansecurities regulators approve them.We may pay Scotia Securities Inc., ScotiaMcLeod or Scotia

iTRADE employees or other registered brokers and dealers a The Funds or their securityholders pay no charges for incen-trailing commission on Series A and Series T shares of the tive programs.Funds. The fee is calculated daily and paid monthly and,subject to certain conditions, is based on the value of

Equity interestsSeries A and Series T shares investors are holding of eachFund sold by a broker or dealer at the following annual rates: The Bank of Nova Scotia owns, directly or indirectly, 100% of

Maximum annual trailing Scotia Securities Inc. and Scotia Capital Inc. (whichcommission rate

includes HollisWealth�, ScotiaMcLeod and Scotia iTRADE)Fund Series A Series T

and HollisWealth Advisory Services Inc. The above dealersScotia Conservative Government Bond Capital

may sell shares of the Funds.Yield ClassScotia Fixed Income Blend Class up to 0.50% –Scotia Canadian Dividend Class Dealer compensation from management feesScotia Global Dividend ClassScotia Canadian Equity Blend Class The cost of the sales and service commissions and salesScotia U.S. Equity Blend Class incentive programs was approximately 47.29% of the totalScotia International Equity Blend Class up to 1.00% – management fees we received from all of the ScotiaFundsScotia INNOVA Income Portfolio Class up to 0.75% –

during the financial year ended December 31, 2015.Scotia INNOVA Balanced Income PortfolioClassScotia INNOVA Balanced Growth PortfolioClassScotia INNOVA Growth Portfolio ClassScotia INNOVA Maximum Growth PortfolioClassScotia Partners Balanced Income PortfolioClassScotia Partners Balanced Growth PortfolioClassScotia Partners Growth Portfolio ClassScotia Partners Maximum Growth PortfolioClass up to 1.00% up to 1.00%

Income tax considerations for investorsThis section is a general summary of how Canadian federal situation may be different. You should consult a tax advisorincome taxes affect your investment in the Fund. It assumes about your own situation.that you:

Shares held in a registered plan• are an individual (other than a trust);

• are a Canadian resident; Provided the Corporation is a ‘‘mutual fund corporation’’ forpurposes of the Tax Act at all material times, shares of the• deal with the Fund at arm’s length; andCorporation will be ‘‘qualified investments’’ for Registered

• hold your shares as capital property.Plans. Provided that the holder or annuitant of a TFSA, RRSPor RRIF (i) deals at arm’s length with the Corporation andThis summary assumes that the Corporation will be a(ii) does not hold a ‘‘significant interest’’ (as defined in the‘‘mutual fund corporation’’ within the meaning of the Tax ActTax Act) in the Corporation, the shares of any series of theat all material times. This section is not exhaustive and your

63

Fund will not be a prohibited investment for a TFSA, RRSP invested in the Fund. For example, the Fund may pay itsor RRIF. Investors should consult with their tax advisors only, or most significant, dividend in December. If youregarding whether an investment in a Fund will be a prohib- purchase shares late in the year, you will have to pay tax onited investment for their TFSA, RRSP or RRIF. the dividend you receive, even though you were not invested

in the Fund during the whole year.If you hold shares of a Fund in a Registered Plan, you pay notax on dividends from the Fund on those shares or on any In general, you must include any management fee rebatescapital gains that your Registered Plan receives from selling you receive in your income. However, in some circumstances,or switching shares held inside the plan. Withdrawals from a you may instead elect to reduce the adjusted cost base ofRegistered Plan (other than TFSA) will generally be subject your securities by the amount of the rebate.to tax.

We will issue you a tax slip that shows the taxable amount ofyour dividends and any federal dividend tax credit that

Shares held in a non-registered accountapplies, as well as any capital gains dividends in respect of

Dividends from the Funds the preceding tax year.

The Corporation may pay ordinary dividends and/or capitalCapital gains (or losses) you realizegains dividends. Dividends are taxable in the year you

receive them, whether you receive them in cash or have When you dispose of a share, including on a redemption or athem reinvested in additional shares. switch of shares of a particular series of a Fund for securities

of another fund (but not, under current income tax rules, aOrdinary dividends are eligible for the dividend gross-up andswitch of shares within the Corporation), you may realize atax credit treatment that applies to taxable dividendscapital gain or capital loss. Your capital gain or capital lossreceived from taxable Canadian corporations. An enhancedwill be equal to the difference between the proceeds ofgross-up and dividend tax credit is available for certaindisposition (generally, the value received on the disposition‘‘eligible dividends’’ from a corporation. The Corporation willless any reasonable disposition costs) and your adjusted costdesignate taxable dividends as ‘‘eligible dividends’’ to thebase of the share.extent permitted under the Tax Act.

If you dispose of shares of a Fund and you, or your spouse orCapital gains dividends are distributions of capital gainsanother person affiliated with you (including a corporationrealized by the Corporation and will generally be treated ascontrolled by you) has acquired shares of the same Fundcapital gains realized by you. In general, you must includewithin 30 days before or after you dispose of the shares (suchone-half of the amount of a capital gains dividend in yournewly acquired shares being considered ‘‘substituted prop-income for tax purposes. Capital gains dividends may be paiderty’’), your capital loss may be deemed to be a ‘‘superficialby the Corporation to shareholders of any particular Fund orloss’’. If so, your loss will be deemed to be nil and the amountFunds in order to obtain a refund of any capital gain taxesof the loss will be added to the adjusted cost base of thepayable by the Corporation as a whole, whether or not suchshares which are ‘‘substituted property’’.taxes relate to the investment portfolio attributable to a

particular Fund or Funds. Under current income tax rules, switching shares of oneseries of a Corporate Fund for the same series or for aDistributions on Series T shares will likely represent adifferent series of shares of a different Corporate Fund orreturn of capital, but may also include ordinary dividendsdifferent series of shares of the same Corporate Fund will notand/or capital gains dividends. If the Corporation pays abe considered a disposition for tax purposes and accordingly,return of capital on a class or series of shares, such amountyou will realize neither a gain nor a loss as a result of thewill generally not be taxable but will reduce the adjustedswitch. If you switch a particular series of shares of acost base of your shares. If the reductions to the adjustedCorporate Fund, the cost of the series of shares of thecost base of your shares would result in such adjusted costCorporate Fund acquired on the switch will be the same asbase becoming a negative amount, that amount will bethe adjusted cost base of the series of shares of the Corpo-treated as a capital gain and the adjusted cost base of therate Fund switched immediately before the switch. The costshares will then be zero.will be averaged with the adjusted cost base of other shares

The price of a share of a Fund may include income and/or of such series of the Corporate Fund held or subsequentlycapital gains that the Fund has earned, but not yet realized acquired by you.and/or distributed. If you buy shares of a Fund before it pays

The Federal government announced in its Budget delivereda dividend, the dividend you receive will be taxable to youon March 22, 2016 that, beginning after September 2016even though the Fund earned the amount before you(i.e., on October 1, 2016), a switch between classes of a

64

mutual fund corporation will be considered for income tax • minus any return of capital in respect of shares of thatpurposes to be a disposition at fair market value. Accord- series of the Fund;ingly, if this proposed measure is enacted into law, you may • minus the adjusted cost base of any shares of that seriesrealize a capital gain or a capital loss if, after Septem- you have previously redeemed or otherwise disposed of.ber 2016, you switch your shares from one Corporate Fund to

The adjusted cost base of each of your shares of a series of aanother Corporate Fund. The proposed measure will notFund will generally be equal to the aggregate adjusted costapply to switches between different series of shares of abase of all shares of that series of the Fund held by you atCorporate Fund where the shares received in exchange differthe time of the disposition divided by the total number ofonly in respect of management fees or expenses to be borneshares of that series of the Fund held by you. You shouldby investors and otherwise derive their value from the samekeep detailed records of the purchase cost of your shares andportfolio or fund within the mutual fund corporation. How-dividends you receive so you can calculate the adjusted costever, it is not clear based on the description of the proposedbase of your shares. You may want to get advice from ameasure in the Budget documents whether it will apply to atax expert.switch between different series of shares within the same

Corporate Fund where the shares received differ other thanPortfolio turnover ratein respect of management fees or expenses, as would be the

case with switches between Series A shares and Series TEach Fund discloses its portfolio turnover rate in its manage-

Shares of the Corporate Fund.ment report of fund performance. A Fund’s portfolio turnoverrate indicates how actively the Fund’s portfolio advisor man-

Calculating adjusted cost base ages its portfolio investments. A portfolio turnover rate of100% is equivalent to the Fund buying and selling all of theYou must calculate your adjusted cost base for tax purposessecurities in its portfolio one time in the course of a year.in Canadian dollars and separately for each series of sharesThe higher a Fund’s portfolio turnover rate in a year, theof each Fund that you own.greater the trading costs payable by the Fund in the year and

In general, the aggregate adjusted cost base of your shares of the greater the likelihood that gains or losses will be realizeda series of a Fund is: by the Fund. There is not necessarily a relationship between• the total amount paid for all your shares of that series of a high turnover rate and the performance of a Fund.

the Fund (including any sales charges paid);

• plus dividends and management fee rebates reinvested inadditional shares of that series of the Fund;

What are your legal rights?Securities legislation in some provinces and territories gives form, Fund Facts or financial statements misrepresent anyyou the right to withdraw from an agreement to buy mutual facts about the mutual fund. These rights must usually befunds within two business days of receiving the simplified exercised within certain time limits.prospectus or Fund Facts, or to cancel your purchase within

For more information, refer to the securities legislation of48 hours of receiving confirmation of your order.your province or territory or consult your lawyer.

Securities legislation in some provinces and territories alsoallows you to cancel an agreement to buy mutual fundsecurities and get your money back, or to make a claim fordamages, if the simplified prospectus, annual information

65

12DEC201417494427

Additional information about each Fund is available in its most recently filed annual information form, its most recentlyfiled Fund Facts, its most recently filed interim financial reports and annual financial statements and its most recentlyfiled annual and interim management reports of fund performance. These documents are incorporated by referenceinto this simplified prospectus. That means they legally form part of this simplified prospectus just as if they wereprinted in it.

You can get a copy of the these documents, at your request and at no charge, by calling 1-800-268-9269(416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, or by asking 1832 Asset Management L.P.

You will also find these documents on our website at www.scotiafunds.com.

These documents and other information about the Funds, such as information circulars and material contracts, are alsoavailable at www.sedar.com.

Scotia Conservative Government Bond Capital Yield Class (Series A shares)

Scotia Fixed Income Blend Class (Series A shares)

Scotia Canadian Dividend Class (Series A shares)

Scotia Canadian Equity Blend Class (Series A shares)

Scotia U.S. Equity Blend Class (Series A shares)

Scotia Global Dividend Class (Series A shares)

Scotia International Equity Blend Class (Series A shares)

Scotia INNOVA Income Portfolio Class (Series A shares)

Scotia INNOVA Balanced Income Portfolio Class (Series A and Series T shares)

Scotia INNOVA Balanced Growth Portfolio Class (Series A and Series T shares)

Scotia INNOVA Growth Portfolio Class (Series A and Series T shares)

Scotia INNOVA Maximum Growth Portfolio Class (Series A and Series T shares)

Scotia Partners Balanced Income Portfolio Class (Series A and T shares)

Scotia Partners Balanced Growth Portfolio Class (Series A and T shares)

Scotia Partners Growth Portfolio Class (Series A and T shares)

Scotia Partners Maximum Growth Portfolio Class (Series A and T shares)

1832 Asset Management L.P.1 Adelaide Street East28th FloorToronto, OntarioM5C 2V9

�Registered trademarks of The Bank of Nova Scotia, used under licence.

2921413

ScotiaFunds� Simplified Prospectus

Simplified Prospectus - Scotiabank · Simplified Prospectus May 16, ... Scotia Fixed Income Blend...

Documents

Transcript of Simplified Prospectus - Scotiabank · Simplified Prospectus May 16, ... Scotia Fixed Income Blend...