Fees” on page 29 for details.
Portfolio Manager
Industrial Alliance Investment Management Inc.
Québec City, Québec Sub-Advisor
Taylor Asset Management Inc.
Toronto, Ontario
(1) Effective October 24, 2014, all of the issued and outstanding Series E Securities were re-designated as Series EX Securities and effective October 24, 2014 Series EX were closed to new purchases except for purchases under pexisting PAC Plans or other systematic plans. IA Clarington may re-open the series to new purchases in its discretion.
(2) Effective October 24, 2014, all of the issued and outstanding Series E5 Securities were re-designated as Series EX5 Securities and effective October 24, 2014 Series EX5 were closed to new purchases except for purchases under pre-existing PAC Plans or other systematic plans. IA Clarington may re-open the series to new purchases in its discretion.
(3) A lower management fee rate may be applicable depending on the amount of your investment. Please speak with your representative for more details.
What Does the Fund Invest In?
Investment Objectives
The Fund achieves long-term capital growth by investing primarily in equity securities of Canadian companies.
The fundamental investment objectives may only be changed with the approval of a majority of Securityholders at a meeting called for that purpose.
Investment Strategies The Fund:
invests primarily in Canadian equity securities of any market capitalization that represent good value based on current stock prices relative to their intrinsic value,
utilizes a fundamentals-based, bottom-up security selection process emphasizing company-specific analysis,
may invest up to 49% of its assets in foreign securities,
may hold a portion of its assets in cash, government bonds, short-term debt or money market securities while seeking investment opportunities or for defensive purposes to reflect general market or economic conditions,
may enter into securities lending transactions and may enter into repurchase and reverse repurchase transactions in order to earn additional income and manage its portfolio. For a further description of securities lending transactions, repurchase and reverse repurchase transactions, and the strategies to be used by the Fund to minimize the risks associated with these transactions, please see the discussion under “Repurchase and Reverse Repurchase Transactions and Securities Lending Risk”
on page 10,
may engage in short selling. A “short sale” is where a mutual fund borrows securities from a lender and sells those securities in the open market. Where a fund sells securities short, it will generally see a profit if the securities decrease in value and a loss if they increase in value. The sub-advisor may sell short up to 20% of the net portfolio in securities which the sub-advisor believes are overpriced. This is balanced by the sub-advisor investing up to 70% of the net portfolio in long positions in what it believes are underpriced securities, resulting in a net 100% long exposure when
IA Clarington Focused Canadian Equity Class (continued)
190
“cash cover” (cash, cash equivalents and other similar assets specified in NI 81-102 that are held in connection with the short sale) is taken into account. Please see the discussion under “Short Selling Risk” on page 11, and
may use derivatives such as options, futures, forward contracts and swaps for hedging and non-hedging purposes. Such derivatives may be used to hedge against losses from changes in the security prices, currency exchange rates, interest rates or in stock markets. Derivatives may also be used to obtain exposure to individual securities and markets instead of buying the securities directly, which is considered “non-hedging”. If used for non-hedging purposes, the derivatives acquired will be consistent with the investment objectives of the Fund and the limits and restrictions under securities law. Please see the discussion under “Derivatives Risk” on page 7 for more details.
The Fund’s portfolio turnover rate may be high. The higher the Fund’s portfolio turnover rate:
the greater the chance that you may receive a dividend from the Fund that must be included in determining your taxable income for tax purposes, and
the higher the Fund’s trading costs, which are an expense of the Fund and are paid out of the Fund’s assets, so that your returns may be reduced.
What are the Risks of Investing in this Fund?
The risks of investing in the Fund are:
capital depletion risk
concentration risk
corporate class risk
currency risk
derivatives risk
equity market risk
foreign investment risk
large transaction risk
repurchase and reverse repurchase transactions and securities lending risk
sector risk
series risk
short selling risk
You will find an explanation of each risk under “What are the Specific Risks Associated with Mutual Funds?” beginning on page 5 of this document.
Who Should Invest in this Fund?
Investors:
seeking the possibility for capital appreciation,
with medium risk tolerance, and
planning to invest over the long term.
IA Clarington Focused Canadian Equity Class (continued)
191
The description of suitability in this section is of a general nature only, and may not be applicable to the circumstances of any particular investor.
Please see “Who Should Invest in this Fund?” on page 50 for a description of how we determined the classification of this Fund’s risk tolerance level.
Distribution Policy
Please see “Corporate Class Funds - Dividends” on page 45 for more details of the Fund’s distribution policy.
For Series A, Series E, Series EX, Series F, Series FE, Series I, Series L, Series O and Series P shares CSFI will not pay a monthly dividend. These series may pay an annual income dividend within the current calendar year or a capital gain dividend before the end of January of the following year.
For Series E5, Series EX5, Series F5, Series FE5, Series L5, Series P5 and Series T5 shares, CSFI will make a monthly dividend of a fixed dollar amount per share determined for each such series in January of each year. If the annualized monthly dividend per share of the series at that time is between approximately 4% and 6% (for Series E5, Series EX5, Series F5, Series FE5, Series L5, Series P5 and Series T5 shares) of the NAV per share of the series as of December 31 of the previous year, the monthly dividend per share will not change. If the annualized monthly dividend per share of the series is outside that range, the monthly dividend amount will be adjusted to be approximately one-twelfth of 5% (for Series E5, Series EX5, Series F5, Series FE5, Series L5, Series P5 and Series T5 shares) of the NAV per share of the series as of December 31 of the previous year. The current monthly dividend rate is $0.042 per Series E5, Series EX5, Series F5, Series FE5, Series L5, Series P5 and Series T5 shares which rate will remain in effect until adjusted in accordance with this distribution policy.
Fund Expenses Indirectly Borne by Investors
The following table shows the cumulative amount of expenses that a typical investor with a $1,000 investment in the specified series of the Fund would pay over a 1, 3, 5 and 10 year period, assuming that the Fund’s annual performance is a constant 5% per year and the management expense ratio remained the same as in the Fund’s last financial year throughout the period. Because Series FE and FE5 shares of the Fund did not exist during the Fund’s last financial year, historical expense information is not yet available for these series.
Series A expenses payable over: 1 year 3 years 5 years 10 years
$25.26 $79.62 $139.56 $317.67
Series E expenses payable over: 1 year 3 years 5 years 10 years
$23.14 $72.94 $127.84 $291.00
Series E5 expenses payable over: 1 year 3 years 5 years 10 years
$22.52 $70.99 $124.43 $283.25
Series EX expenses payable over: 1 year 3 years 5 years 10 years
$21.57 $68.01 $119.21 $271.36
Series EX5 expenses payable over: 1 year 3 years 5 years 10 years
$21.97 $69.26 $121.40 $276.35
Series F expenses payable over: 1 year 3 years 5 years 10 years
$13.08 $41.23 $72.26 $164.48
IA Clarington Focused Canadian Equity Class (continued)
192
Series F5 expenses payable over: 1 year 3 years 5 years 10 years
$12.59 $39.70 $69.59 $158.40
Series L expenses payable over: 1 year 3 years 5 years 10 years
$25.61 $80.75 $141.53 $322.17
Series L5 expenses payable over: 1 year 3 years 5 years 10 years
$24.23 $76.39 $133.90 $304.79
Series O expenses payable over: 1 year 3 years 5 years 10 years
$1.55 $4.87 $8.54 $19.45
Series P expenses payable over: 1 year 3 years 5 years 10 years
$2.95 $9.29 $16.28 $37.06
Series P5 expenses payable over: 1 year 3 years 5 years 10 years
$3.50 $11.02 $19.32 $43.98
Series T5 expenses payable over: 1 year 3 years 5 years 10 years
$25.82 $81.40 $142.67 $324.76
Please see “Fund Expenses Indirectly Borne by Investors” on page 51 for further information.