scotia private poolstm 2012dr.scotiabank.com/ca/en/files/12/11/scotia_private_pools_-_en.pdf ·...

Scotia Private PoolsTM 2012(formerly The Pinnacle Funds)

Simplified ProspectusNovember 19, 2012Pinnacle Series (formerly Class A) and Series F units (unless otherwise noted) and Series I and Series M(formerly Manager Class) units where noted.

Money Market FundsScotia Private Short Term Income Pool

Bond FundsScotia Private Income Pool (Series I units available)Scotia Private High Yield Income Pool (Series I and Series M units available)Scotia Private American Core-Plus Bond Pool (Series I units available)

Balanced FundScotia Private Strategic Balanced Pool

Canadian Equity FundsScotia Private Canadian Value Pool (Series I units available)Scotia Private Canadian Mid Cap Pool (Series I units available)Scotia Private Canadian Growth Pool (Series I units available)Scotia Private Canadian Small Cap Pool (Series I units available)

Foreign Equity FundsScotia Private U.S. Value Pool (Series I units available)Scotia Private U.S. Large Cap Growth Pool (Series I units available)Scotia Private U.S. Mid Cap Value Pool (Series I and Series M units available)Scotia Private U.S. Mid Cap Growth Pool (Series I and Series M units available)Scotia Private International Equity Pool (Series I units available)Scotia Private International Small to Mid Cap Value Pool (Series I units available)Scotia Private Emerging Markets Pool (Series I and Series M units available)Scotia Private Global Equity Pool (Series I units available)Scotia Private Global Real Estate Pool (Series I units available)

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

The Funds and the units they offer under this simplified prospectus are not registered with the U.S. Securities and ExchangeCommission. Units of the Funds may be offered and sold in the United States only in reliance on exemptions fromregistration.

Table of Contents

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

FUND SPECIFIC INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

ABOUT THE FUND DESCRIPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Scotia Private Short Term Income Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Scotia Private Income Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Scotia Private High Yield Income Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Scotia Private American Core-Plus Bond Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Scotia Private Strategic Balanced Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Scotia Private Canadian Value Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Scotia Private Canadian Mid Cap Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Scotia Private Canadian Growth Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Scotia Private Canadian Small Cap Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Scotia Private U.S. Value Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Scotia Private U.S. Large Cap Growth Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Scotia Private U.S. Mid Cap Value Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Scotia Private U.S. Mid Cap Growth Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Scotia Private International Equity Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Scotia Private International Small to Mid Cap Value Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Scotia Private Emerging Markets Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Scotia Private Global Equity Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Scotia Private Global Real Estate Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

WHAT IS A MUTUAL FUND AND WHAT ARE THE RISKS OF INVESTING IN A MUTUALFUND? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

ORGANIZATION AND MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

PURCHASES, SWITCHES AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

About the Series of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

How to Buy the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

How We Calculate Net Asset Value Per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

How to Place Orders for the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

How to Switch the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

How to Switch between Series of a Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

How to Redeem Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

Short-term Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

1

OPTIONAL SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

Tax-Deferred Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

Optimized Portfolios (Pinnacle Series units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Custom Portfolios (Pinnacle Series units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Automatic Rebalancing (Pinnacle Series units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Pre-Authorized Chequing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Automatic Withdrawal Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

DEALER COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

DEALER COMPENSATION FROM MANAGEMENT FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

INCOME TAX CONSIDERATIONS FOR INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

WHAT ARE YOUR LEGAL RIGHTS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67

2

IntroductionIn this document,

fund or funds means a mutual fund that is offered for sale under this simplified prospectus;

Manager, SAM, we, us, and our refer to Scotia Asset Management L.P.;

Scotiabank includes The Bank of Nova Scotia (Scotiabank) and its affiliates, including The Bank of NovaScotia Trust Company (Scotiatrust), Scotia Asset Management L.P., Scotia Securities Inc. and Scotia CapitalInc. (including ScotiaMcLeod and Scotia iTRADE, each a division of Scotia Capital Inc.);

ScotiaFunds refers to all of our mutual funds and the series, thereof, which are offered under separatesimplified prospectuses under the ScotiaFunds brand and includes the Scotia mutual funds offered under thissimplified prospectus;

Tax Act means the Income Tax Act (Canada); and

underlying fund refers to a mutual fund (either a ScotiaFund or other mutual fund) in which a fundinvests.

This simplified prospectus contains selected important information to help you make an informedinvestment decision about the Scotia Private Pools and to understand your rights as an investor. It’s dividedinto two parts. The first part, from pages 4 to 48, contains specific information about each of the funds offeredfor sale under this simplified prospectus. The second part, from pages 49 to 67 contains general informationthat applies to all of the funds offered for sale under this simplified prospectus and the risks of investing inmutual funds generally, as well as the names of the firms responsible for the management of the funds.

Additional information about each fund is available in its annual information form, its most recently filedfund facts, its most recently filed annual and interim financial statements and its most recently filed annual andinterim management reports of fund performance. These documents are incorporated by reference into thissimplified 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 funds’ annual information form, financial statements and management reportsof fund performance at no charge by calling 1-800-268-9269 (416-750-3863 in Toronto) for English, or1-800-387-5004 for French, or by asking your mutual fund representative. You’ll also find these documents onour website at www.scotiabank.com/privatepools.com.

These documents and other information about the funds are also available at www.sedar.com.

3

Fund specific informationThe funds are a family of 18 mutual funds. Each fund is associated with an investment portfolio having

specific investment objectives. Each unit of a series represents an equal, undivided interest in the portion of thefund’s net assets attributable to that series. The funds offered for sale under this simplified prospectus offerPinnacle Series and (except Scotia Private Emerging Markets Pool) Series F units. Some of the funds also offerSeries I and/or Series M units.

The series have different management fees and are intended for different investors. Pinnacle Series unitsare only available to investors who participate in the Pinnacle Program through ScotiaMcLeod advisors or asotherwise permitted by the Manager. Series F units are generally available only to investors who have fee-basedaccounts with their dealer. We may make Series F units available to other investors from time to time. Series Iunits are available only to eligible institutional investors and other qualified investors and are currently onlyavailable through Scotia Asset Management L.P. Series M units are available only to investors who have signeda discretionary investment management agreement with Scotia Asset Management L.P. or Scotiatrust. You’llfind more information about the series under the heading About the Series of Units.

About the fund descriptionsOn the following pages, you will find detailed descriptions of each of the funds to help you make your

investment decisions. Here’s what each section of the fund descriptions tells you.

Fund details

This section gives you some basic information about each fund, such as its start date and its eligibility forregistered plans, including Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Plans(RRIFs), Registered Education Savings Plans (RESPs), Registered Disability Savings Plans (RDSPs), LifeIncome Funds (LIFs), Locked-in Retirement Income Funds (LRIFs), Locked-in Retirement Savings Plans(LRSPs), Prescribed Income Funds (PRIFs) and Tax-Free Savings Accounts (TFSAs).

All of the funds offered under this simplified prospectus are qualified investments under the Income TaxAct (Canada) (“Tax Act”) for registered plans. In certain cases, we may restrict purchases of units of certainfunds by certain registered plans.

What does the fund invest in?

This section tells you the fund’s fundamental investment objectives and the strategies it uses in trying toachieve those objectives. Any change to the fundamental investment objectives must be approved by a majorityof votes cast at a meeting of unitholders.

Portfolio advisor selection and monitoring

The Manager has retained the services of an independent investment consulting firm, NT GlobalAdvisors, Inc. (“NTGA”), a wholly owned subsidiary of Northern Trust Corporation, to assist in the selectionand monitoring of portfolio advisors (the “Portfolio Advisors”). Based on consultation with and research onprospective portfolio advisors, NTGA evaluates and recommends a group of qualified portfolio advisors who,in the opinion of NTGA, are best able to carry out the investment objectives and strategies of the funds.Portfolio Advisors are then chosen by the Manager from this group based on each Portfolio Advisor’sspecialized expertise, performance, consistency, investment philosophy or style, investment disciplines andquality of service. Each Portfolio Advisor is required to operate within the limits of the investment objectives,restrictions and any supplemental guidelines developed from time to time by the Manager.

On an ongoing basis, NTGA will monitor the performance of the Portfolio Advisors and report to us.

About derivatives

Derivatives are investments that derive their value from the price of another investment or fromanticipated movements in interest rates, currency exchange rates or market indexes. Derivatives are usually

4

contracts with another party to buy or sell an asset at a later time and at a set price. Examples ofderivatives are options, forward contracts, futures contracts and swaps.

• Options generally give holders the right, but not the obligation, to buy or sell an asset, such as asecurity or currency, at a set price and a set time. Option holders normally pay the other party a cashpayment, called a premium, for agreeing to give them the option.

• Forward contracts are agreements to buy or sell an asset, such as a security or currency, at a set priceand a set time. The parties have to complete the deal, or sometimes make or receive a cash payment,even if the price has changed by the time the deal closes. Forward contracts are generally not tradedon organized exchanges and are not subject to standardized terms and conditions.

• Futures contracts, like a forward contract, are agreements to buy or sell an asset, such as a security orcurrency, at a set price and a set time. The parties have to complete the deal, or sometimes make orreceive a cash payment, even if the price has changed by the time the deal closes. Futures contractsare normally traded on a registered futures exchange. The exchange usually specifies certainstandardized terms and conditions.

• Swaps are agreements between two or more parties to exchange principal amounts or payments basedon returns on different investments. Swaps are not traded on organized exchanges and are notsubject to standardized terms and conditions.

A fund can use derivatives as long as it uses them in a way that’s consistent with the fund’s investmentobjectives and with Canadian securities regulations. All of the funds may use derivatives to hedge theirinvestments against losses from changes in currency exchange rates, interest rates and stock market prices.Some of the funds may also use derivatives to gain exposure to financial markets or to invest indirectly insecurities or other assets. This can be less expensive than buying securities or assets directly.

When a fund uses derivatives for purposes other than hedging, it holds enough cash or money marketinstruments to fully cover its positions, as required by securities regulations.

Funds that engage in repurchase and reverse repurchase transactions

Some of the funds may enter into repurchase or reverse repurchase agreements to generate additionalincome from securities held in a fund’s portfolio. When a mutual fund agrees to sell a security at one priceand buy it back on a specified later date (usually at a lower price), it is entering into a repurchasetransaction. When a mutual fund agrees to buy a security at one price and sell it back on a specified laterdate (usually at a higher price), it is entering into a reverse repurchase transaction. For a description of thestrategies the funds use to minimize the risks associated with these transactions, see the discussion underRepurchase and reverse repurchase transaction risk.

Funds that lend their securities

Some of the funds may enter into securities lending transactions to generate additional income fromsecurities held in a fund’s portfolio. A mutual fund may lend securities held in its portfolio to qualifiedborrowers who provide adequate collateral. For a description of the strategies the funds use to minimizethe risks associated with these transactions, see the discussion under Securities Lending Risk.

About REITs

A Real Estate Investment Trust (“REIT”) is an entity that buys, manages and sells real estate assets. REITsallow participants to invest in a professionally managed portfolio of real estate properties. REITs qualify aspass-through entities, which are able to distribute the majority of income cash flows to investors withouttaxation at the corporate level (providing that certain conditions are met). As a pass-through entity, whosemain function is to pass profits on to investors, a REIT’s business activities are generally restricted togeneration of property rental income. Another major advantage of a REIT is its liquidity (ease ofliquidation of assets into cash), as compared to traditional private real estate ownership which can bedifficult to liquidate. One reason for the liquid nature of a REIT is that its units are primarily traded on

5

major exchanges, making it easier to buy and sell REIT assets/units than to buy and sell properties inprivate markets. See the discussion under Real Estate Sector Risk and Income trust Risk.

About purchasing debt from related parties

The funds may purchase or sell non-government and government debt securities in the secondary marketfrom, or to, Scotia Capital Inc. or one of our affiliates. The funds may only do so in reliance upon anexemption from the Canadian Securities Administrators and provided that such transactions are done inaccordance with certain conditions.

What are the risks of investing in the fund?

This section tells you the risks of investing in a fund. You’ll find a description of each risk under theheading Specific risks of mutual funds.

This section can help you decide if a fund might be suitable for your portfolio. It’s meant as a generalguide only. For advice about your portfolio, you should consult your mutual fund representative. If you don’thave a mutual fund representative, you can speak with one of our representatives at any Scotiabank branch orby calling a Scotia Securities Inc. or Scotia McLeod office.

Investment Risk Classification Methodology

A risk classification rating is assigned to each fund to provide you with information to help you determinewhether the fund is appropriate for you. Each fund is assigned a risk rating in one of the following categories:low, low to medium, medium, medium to high or high. The investment risk rating for each fund is reviewed atleast annually as well as if there is a material change in a fund’s investment objective or investment strategies.

The methodology used to determine the risk ratings of the fund for purposes of disclosure in thissimplified prospectus is based on a combination of the qualitative aspects of the methodology recommended bythe Fund Risk Classification Task Force of the Investment Fund Institute of Canada and the Manager’squantitative analysis of a Portfolio’s historic volatility. The Manager takes into account other qualitative factorsin making its final determination of each Portfolio’s risk rating. In particular, the standard deviation of eachfund is reviewed. Standard deviation is a common statistic used to measure the volatility of an investment.Portfolios with higher standard deviations are generally classified as being more risky. Qualitative factors takeninto account include key investment policy guidelines which may include but are not limited to regional,sectoral and market capitalization restrictions as well as asset allocation policies.

The Manager recognizes that other types of risk, both measurable and non-measurable, may exist and thathistorical performance may not be indicative of future returns and a fund’s historic volatility may not beindicative of its future volatility.

The methodology that the Manager uses to identify the investment risk level of the funds is available onrequest at no cost by contacting us toll free at 1-800-268-9269 (416-750-3863 in Toronto) for English or1-800-387-5004 for French or by email at [email protected] or by writing to us at the address on the backcover of this simplified prospectus.

Distribution Policy

This section tells you when the fund usually distributes any net income and capital gains, and whereapplicable, return of capital, to unitholders. The funds may also make distributions at other times.

Distributions on units under in registered plans and non-registered accounts are reinvested in additionalunits of the fund, unless you tell your mutual fund representative that you want to receive cash distributions.For information about how distributions are taxed, see Income tax considerations for investors.

Fund expenses indirectly borne by investors

A fund pays its expenses out of its assets. This means investors in a fund indirectly pay for these expensesthrough lower returns. This chart allows you to compare the costs of investing in a fund with the cost of othermutual funds. This chart is for illustrative purposes as required by securities regulators and it shows thecumulative expenses you would have paid over various time periods if you:

• invested $1,000 in the fund; and

• earned a total annual return of 5%, which may be different than the fund’s actual return in any given year.

6

If a fund does not offer Series I or Series F units or did not previously offer Series F, Series I or Series Munits, no fund expenses information is available for that Series. You will find more information about fees andexpenses in Fees and Expenses.

The management expense ratio (“MER”) is based on total expenses for each year shown. It’s expressed as apercentage of daily average net assets during the period. The MER is shown as an annualized rate even if afund’s financial year is less than 12 months. The MER includes all the expenses borne directly by a fund,including interest charges and taxes of most types.

The information in this chart assumes that the fund had the same MER each year as it did in the fund’slast completed financial year. See Fees and Expenses for more information about the costs of investing in thefunds.

7

MONEY MARKET FUND

Scotia Private Short Term Income Pool

This fund has the lowest risk of all the fundsbecause it invests in very high quality short terminstruments. This fund is managed to attempt tomaintain a constant unit value of $10. Interestincome will vary with short term interest rates.

8

Scotia Private Short Term Income PoolFund details

Type of fund Canadian money market fund

Date established October 6, 1997

Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008

Eligible for registered plans? Yes

Portfolio advisor Scotia Asset Management L.P.Toronto, Ontario

Sub-advisor GCIC Ltd.Toronto, Ontario

What does the Fund invest in?

Investment Objectives

The fund’s investment objective is to preserve investment capital while providing interest income andmaintaining liquidity by investing primarily in highly liquid, senior investment grade money marketinstruments (i.e. federal and provincial treasury bills and bonds) and bankers acceptances with a minimumcredit rating of R-1 (low) or A-1 (low).

Any change to the fundamental investment objectives of the fund must be approved by a majority of votescast at a meeting of unitholders called for that purpose.

Investment Strategies

The fund’s investments will have a maximum 180 average term to maturity and a maximum 90 dayaverage term to maturity when calculated on the basis that the term of a floating rate obligation is the periodremaining to the date of the next rate setting. The fund’s investments may also include:

• up to 30% foreign government money market instruments

• other money market investments

The fund aims to maintain a constant unit value of $10 by crediting income and capital gains daily anddistributing them monthly.

The fund can invest up to 30% of its assets in foreign securities. Not less than 95% of the fund’s assetsmust be denominated in Canadian currency.

The fund may participate in securities lending, repurchase and reverse repurchase transactions to achieveits investment objectives and to enhance returns. You’ll find more information about securities lending,repurchase and reverse repurchase transactions and how the fund limits the risks associated with them underWhat are the risks of investing in a mutual fund?.

What are the risks of investing in the Fund?

Returns may vary with movements in interest rates.

Although the fund intends to maintain a constant unit price of $10, there is no guarantee that the pricewill not go up or down.

See What are the risks of investing in a mutual fund? — Credit Risk, Currency Risk, Foreign InvestmentRisk, Interest Rate Risk, Repurchase and Reverse Repurchase Transaction Risk, Securities Lending Risk, SeriesRisk and U.S. Withholding Tax Risk.

9

SCOTIA PRIVATE SHORT TERM INCOME POOL

Who should invest in this Fund?

This fund may be suitable for you if:

• you want interest income and liquidity with a high level of safety

• you’re investing for the short term

• you can accept low risk

• you’re aiming to preserve capital

Please see Investment Risk Classification Methodology for a description of how we determined theclassification of this fund’s risk level.

Distribution Policy

The fund credits net income daily and distributes it monthly on the last business day of each month.Distributions on units held in registered plans and non-registered accounts are reinvested in additional units ofthe fund unless you tell your dealer that you want to receive cash distributions.


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

Fees and expenses payable over: 1 year 3 years 5 years 10 years

Pinnacle Series $5.84 $18.42 $32.28 $73.49

Series F $6.97 $21.97 $38.51 $87.67

10

BOND FUNDS

Scotia Private Income PoolScotia Private High Yield Income PoolScotia Private American Core-Plus Bond Pool

The Bond Funds aim to offer the potential forhigher interest income than the Money MarketFund. These funds are more sensitive to changesin interest rates and the creditworthiness ofissuers.

11

Scotia Private Income PoolFund details

Type of fund Canadian fixed income fund


Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008Series I: since September 8, 2010


Portfolio advisor Fiera Capital CorporationToronto, Ontario



The fund’s investment objective is to preserve investment capital while seeking to achieve increasedincome by investing primarily in a portfolio of Canadian government and corporate bonds, preferred shares ofCanadian corporations and loans of supranational organizations.



The fund’s investments may also include:

• mortgage backed securities, mortgage bonds and mortgages

• term loans

• short term instruments and cash equivalents

Duration may vary by no more than one year from the duration of the DEX Universe Bond Index. ThePortfolio Advisor may actively trade the fund’s investments. This can increase trading costs, which may lowerthe fund’s returns. It also increases the chance that you will receive taxable distributions if you hold the fund ina non-registered account.

The fund may use derivatives for foreign currency hedging purposes only.

The fund can invest up to 30% of its assets in foreign securities.



Returns will vary inversely with movements in interest rates (i.e. if interest rates rise, returns will decline; ifinterest rates drop, returns will increase).

See What are the risks of investing in a mutual fund? — Asset-Backed and Mortgage-Backed SecuritiesRisk, Credit Risk, Currency Risk, Foreign Investment Risk, Interest Rate Risk, Issuer-specific Risk, Repurchaseand Reverse Repurchase Transaction Risk, Securities Lending Risk, Series Risk, and U.S. Withholding TaxRisk.

12

SCOTIA PRIVATE INCOME POOL



• you want a high level of regular interest income while tracking the performance of a major Canadianbond index

• you’re investing for the medium to long term

• you can accept low to medium risk


Distribution Policy

The fund will distribute sufficient net income and net realized capital gains in the year they are earned toensure that the fund does not have to pay ordinary income tax.

Income Distributions Quarterly by the end of the last calendar month of each quarterCapital Gains Distributions Annually by the end of December of each year

Distributions on units held in registered plans and non-registered accounts are reinvested in additionalunits of the fund unless you tell your dealer that you want to receive cash distributions.




Pinnacle Series $0.92 $2.91 $5.10 $11.60

Series F $9.02 $28.44 $49.84 $113.45

Series I $0.62 $1.94 $3.40 $7.74

13

Scotia Private High Yield Income PoolFund details

Type of fund High yield fixed income fund


Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008Series I: since September 8, 2010Series M: since September 8, 2010


Portfolio advisor Guardian Capital LPToronto, Ontario



The fund’s investment objective is to achieve superior long term returns and to provide income as well ascapital growth by investing primarily in high yield, lower rated Canadian corporate bonds, preferred shares andshort term money market securities.



The fund’s investments will have an average duration of 7 years and an average credit rating of single B.

The fund’s investments may also include up to 30% high yield, lower rated bonds of U.S. corporations.

The Portfolio Advisor may actively trade the fund’s investments. This can increase trading costs, whichmay lower the fund’s returns. It also increases the chance that you will receive taxable distributions if you holdthe fund in a non-registered account.



The fund may participate in securities lending, repurchase and reverse repurchase transactions to achieveits investment objectives and to enhance returns. You’ll find more information about securities lending,repurchase and reverse repurchase transactions and how the fund limits the risks associated with them startingunder What are the risks of investing in a mutual fund?.



Higher potential for gain and greater risk of loss associated with lower rated securities.

See What are the risks of investing in a mutual fund? — Credit Risk, Currency Risk, Derivatives Risk,Foreign Investment Risk, Interest Rate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and ReverseRepurchase Transaction Risk, Securities Lending Risk, Series Risk and U.S. Withholding Tax Risk.

As at November 1, 2012, Scotia INNOVA Income Portfolio, Scotia INNOVA Balanced IncomePortfolio, and Scotia INNOVA Balanced Growth Portfolio held approximately 20.0%, 16.4%, and 13.9%,respectively, of the outstanding units of the fund.

14

SCOTIA PRIVATE HIGH YIELD INCOME POOL

Who should invest in this fund?


• you’re seeking a high level of regular interest income

• you’re contributing to the income portion of a diversified portfolio


• you can accept medium risk


Distribution Policy







Pinnacle Series $1.44 $4.52 $7.93 $18.05

Series F $9.74 $30.70 $53.81 $122.48

Series I $1.03 $3.23 $5.66 $12.89

Series M $4.00 $12.60 $22.09 $50.28

15

Scotia Private American Core-Plus Bond PoolFund details

Type of fund Global fixed income fund

Date established February 14, 2002

Type of securities Pinnacle Series: since February 14, 2002Series F: since December 22, 2008Series I: since December 22, 2008


Portfolio advisor Logan Circle Partners, L.P.Conshohocken, Pennsylvania



The fund’s investment objective is to achieve superior long term returns and to provide income as well ascapital growth by investing primarily in a portfolio of U.S. government and corporate bonds and mortgage passthrough securities. The fund may also invest in the U.S. dollar denominated emerging markets,non-investment grade debt and non-U.S. investment grade sovereign and corporate debt.



The fund’s investments in bonds will have an average credit rating of at least single A.

Up to 20% of the net asset value of the fund may be invested in U.S. denominated non-investment grade(high yield and emerging market) bonds.

Up to 20% of the net asset value of the fund may be invested in non-U.S. government agency andcorporate bonds.

At least 80% of the net asset value of the fund will consist of investment grade securities. Investments innon-U.S. dollar denominated securities and non-investment grade securities will be made tactically based onthe Portfolio Advisor’s evaluation of spread management using fundamental bottom up research.


• short term instruments and cash equivalents

• U.S. denominated asset backed securities and mortgage backed securities


The fund may use derivatives for foreign currency hedging purposes.



16

SCOTIA PRIVATE AMERICAN CORE-PLUS BOND POOL



Higher potential for gain and greater risk of loss associated with lower rated securities.

See What are the risks of investing in a mutual fund? — Asset-Backed and Mortgage-Backed SecuritiesRisk, Commodity Risk, Credit Risk, Currency Risk, Derivatives Risk, Emerging Markets Risk, ForeignInvestment Risk, Interest Rate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and Reverse RepurchaseTransaction Risk, Securities Lending Risk, Series Risk and U.S. Withholding Tax Risk.

As at November 1, 2012, Scotia INNOVA Income Portfolio, Scotia INNOVA Balanced IncomePortfolio, and Scotia INNOVA Balanced Growth Portfolio held approximately 28.5%, 25.0% and 22.0%,respectively, of the outstanding units of the fund.



• you want a high level of regular interest income and U.S. dollar exposure• you’re investing for the medium to long term• you can accept medium risk


Distribution Policy


Income Distributions Quarterly by the end of the last month of each quarterCapital Gains Distributions Annually by the end of December of each year





Pinnacle Series $3.18 $10.02 $17.56 $39.97

Series F $10.25 $32.31 $56.64 $128.92

Series I $0.82 $2.59 $4.53 $10.31

17

BALANCED FUND

Scotia Private Strategic Balanced Pool

The fund offers a combination of equity, bondsand money market securities in a singleinvestment. The fund generally has less volatilitythan Equity Funds but more volatility thanIncome Funds.

18

Scotia Private Strategic Balanced PoolFund details

Type of fund Canadian neutral balanced fund


Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008


Portfolio advisor Gryphon Investment Counsel Inc.Toronto, Ontario



This fund’s investment objective is to achieve superior long term returns through a combination of capitalgrowth and income by investing primarily in large capitalization stocks of Canadian corporations andCanadian government bonds. The weighting of the fund’s portfolio will be allocated between asset classeswithin specified ranges: 40%-80% equities; 20%-60% fixed income securities; 0%-30% short term moneymarket securities and cash.



This fund uses an investment strategy of allocating investments between short term money marketsecurities and cash, fixed income and equity securities. Reallocations between these asset classes tend to becarried out gradually and are fixed within specific ranges. The proportion of assets invested in different classesof securities will vary from time to time based on market conditions, economic outlook and level of interestrates and dividend yields.

The fund may use derivatives for hedging purposes and to provide more effective exposure while reducingtransaction costs.


The fund may participate in securities lending, repurchase and reverse repurchase transactions to achieveits investment objectives and to enhance returns. You’ll find more information about securities lending,repurchase and reverse repurchase transactions and how the fund limits the risks associated with them underWhat are the risks of investing in a mutual fund?


Returns may vary with changes in interest rates and stock prices.

Prices of equity securities tend to fluctuate more than those of fixed income securities, resulting in greaterprice fluctuations than would be expected of the money market or bond funds.

See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Equity Risk, Foreign Investment Risk, Interest Rate Risk, Issuer-specific Risk, Liquidity Risk,Repurchase and Reverse Repurchase Transaction Risk, Securities Lending Risk, Series Risk and U.S.Withholding Tax Risk.

19

SCOTIA PRIVATE STRATEGIC BALANCED POOL



• you want both interest income and growth through strategic asset allocation among the three majorasset classes




Distribution Policy







Pinnacle Series $4.00 $12.60 $22.09 $50.28

Series F $16.20 $51.05 $89.49 $203.70

20

CANADIAN EQUITY FUNDS

Scotia Private Canadian Value PoolScotia Private Canadian Mid Cap PoolScotia Private Canadian Growth PoolScotia Private Canadian Small Cap Pool

The Equity Funds offer the greatest potential forlong term growth. These funds also have higherrisk because the prices of equity securities canchange significantly in a short period of time.

21

Scotia Private Canadian Value PoolFund details

Type of fund Canadian focused equity fund




Portfolio advisor Scheer, Rowlett & AssociatesInvestment Management Ltd.Toronto, Ontario



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in securities of Canadian corporations.



The fund uses a value-oriented investment style to achieve its investment objectives.

The fund’s investments may also include up to 15% cash and cash equivalents.





Returns will vary with changes in stock prices.


See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, Interest Rate Risk, Issuer-specificRisk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk, Securities Lending Risk, SeriesRisk and U.S. Withholding Tax Risk.



• you want a Canadian value holding in a diversified portfolio

• you’re investing for the long term

• you can accept medium risk.

22

SCOTIA PRIVATE CANADIAN VALUE POOL


Distribution Policy


Income Distributions Annually by the end of December of each yearCapital Gains Distributions Annually by the end of December of each year





Pinnacle Series $2.26 $7.11 $12.46 $28.36

Series F $13.53 $42.65 $74.76 $170.18

Series I $1.23 $3.88 $6.80 $15.47

23

Scotia Private Canadian Mid Cap PoolFund details

Type of fund Canadian focused small/mid capequity fund


Type of securities Pinnacle Series: since February 14, 2002Series F: since December 22, 2008Series I: since September 8, 2010


Portfolio advisor Connor, Clark & Lunn InvestmentManagement Ltd.Vancouver, British Columbia



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of small and medium capitalization Canadian corporations.

Any changes to the fundamental investment objectives of the fund must be approved by a majority ofvotes cast at a meeting of unitholders called for that purpose.









Stock prices of small and medium capitalization companies are typically more volatile due to size andshorter trading history.

See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, Interest Rate Risk, Issuer-specificRisk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk, Securities Lending Risk, SeriesRisk, Small Company Risk and U.S. Withholding Tax Risk.



• you want a Canadian medium capitalization value holding in a diversified portfolio


• you can accept high risk

24

SCOTIA PRIVATE CANADIAN MID CAP POOL


Distribution Policy







Pinnacle Series $3.69 $11.63 $20.39 $46.41

Series F $13.43 $42.33 $74.20 $168.89

Series I $1.74 $5.49 $9.63 $21.92

25

Scotia Private Canadian Growth PoolFund details

Type of fund Canadian equity fund




Portfolio advisor Manulife Asset ManagementToronto, Ontario



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of large and medium capitalization Canadian corporations.



The fund uses a growth-oriented investment style to achieve its investment objectives.










As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, and Scotia INNOVA GrowthPortfolio held approximately 16.9%, and 14.8%, respectively, of the outstanding units of the fund.

26

SCOTIA PRIVATE CANADIAN GROWTH POOL



• you want a Canadian growth holding in a diversified portfolio




Distribution Policy







Pinnacle Series $2.15 $6.79 $11.89 $27.07

Series F $13.43 $42.33 $74.20 $168.89

Series I $1.23 $3.88 $6.80 $15.47

27

Scotia Private Canadian Small Cap PoolFund details

Type of fund Canadian small/mid cap equity fund


Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008Series I: since December 22, 2008


Portfolio advisor Mawer Investment Management Ltd.Calgary, Alberta



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of small and medium capitalization Canadian corporations.



The fund uses a growth-oriented investment style that is moderated by price sensitivity (growth at areasonable price) to achieve its investment objectives.









Stock prices of small capitalization companies are typically more volatile due to size and shorter tradinghistory.


28

SCOTIA PRIVATE CANADIAN SMALL CAP POOL

As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, Scotia INNOVA GrowthPortfolio, and Scotia INNOVA Balanced Income Portfolio held approximately 29.2%, 19.8%, and 12.5%,respectively, of the outstanding units of the fund.



• you want a Canadian small capitalization growth holding in a diversified portfolio




Distribution Policy







Pinnacle Series $3.08 $9.69 $16.99 $38.68

Series F $13.33 $42.01 $73.63 $167.60

Series I $0.92 $2.91 $5.10 $11.60

29

FOREIGN EQUITY FUNDS

Scotia Private U.S. Value PoolScotia Private U.S. Large Cap Growth PoolScotia Private U.S. Mid Cap Value PoolScotia Private U.S. Mid Cap Growth PoolScotia Private International Equity PoolScotia Private International Small to Mid Cap Value PoolScotia Private Emerging Markets PoolScotia Private Global Equity PoolScotia Private Global Real Estate Pool

The Equity Funds offer the greatest potential forlong term growth. These funds also have higherrisk because the prices of equity securities canchange significantly in a short period of time.Foreign Equity Funds usually have more riskthan Canadian Equity Funds because theinvestments may be in countries that have fewerregulations.

30

Scotia Private U.S. Value PoolFund details

Type of fund U.S. equity fund




Portfolio advisor Herndon Capital Management, LLCAtlanta, Georgia



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of large capitalization U.S. corporations.





• up to 15% cash and cash equivalents

• up to 10% non-U.S. securities




The fund may participate in securities lending, repurchase and reverse repurchase transactions to achieveits investment objectives and to enhance returns. You’ll find more information on securities lending,repurchase and reverse repurchase transactions and how the fund limits the risks associated with them underWhat are the risks of investing in a mutual fund?.





As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, Scotia INNOVA BalancedIncome Portfolio, Scotia INNOVA Income Portfolio, and Scotia INNOVA Growth Portfolio heldapproximately 23.5%, 20.1%, 15.3%, and 13.3%, respectively, of the outstanding units of the fund.

31

SCOTIA PRIVATE U.S. VALUE POOL



• you want long term growth of capital through well established, high quality U.S. companies

• you want a U.S. value holding in a diversified portfolio


• you can accept medium to high risk


Distribution Policy







Pinnacle Series $3.69 $11.63 $20.39 $46.41

Series F $13.33 $42.01 $73.63 $167.60

Series I $0.51 $1.62 $2.83 $6.45

32

Scotia Private U.S. Large Cap Growth PoolFund details

Type of fund U.S. equity fund


Type of securities Pinnacle Series: since February 23, 2001Series F: since December 22, 2008Series I: since September 8, 2010


Portfolio advisor American Century InvestmentManagement, Inc.Kansas City, Missouri



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in large capitalization stocks of U.S. corporations.



The fund uses a growth-oriented investment style to achieve its investment objectives. The fund’sinvestments may also include:


• up to 10% non-U.S. securities








See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, Interest Rate Risk, Issuer-specificRisk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk, Securities Lending Risk, SeriesRisk, and U.S. Withholding Tax Risk.

33

SCOTIA PRIVATE U.S. LARGE CAP GROWTH POOL



• you want the growth potential of investing in equity securities of U.S. companies

• you want a U.S. growth holding in a diversified portfolio


• you can accept medium to high Risk


Distribution Policy







Pinnacle Series $5.64 $17.77 $31.15 $70.91

Series F $13.22 $41.68 $73.06 $166.31

Series I $1.85 $5.82 $10.19 $23.21

34

Scotia Private U.S. Mid Cap Value PoolFund details

Type of fund U.S. small/mid cap equity fund


Type of securities Pinnacle Series: since February 14, 2002Series F: since December 22, 2008Series I: since December 22, 2008Series M: since September 8, 2010


Portfolio advisor Cramer Rosenthal McGlynn, LLCNew York, New York



The fund’s objective is to achieve superior long term returns through capital growth by investing primarilyin stocks of small and medium capitalization companies located in the U.S.

Any change to the fundamental investment objectives of the fund must be approved by the majority ofvotes cast at a meeting of unitholders called for that purpose.





• up to 10% non-U.S. equivalent









35

SCOTIA PRIVATE U.S. MID CAP VALUE POOL



• you are seeking exposure to U.S. medium-sized companies with value characteristics

• you want a U.S. medium capitalization value holding in a diversified portfolio




Distribution Policy







Pinnacle Series $5.84 $18.42 $32.28 $73.49

Series F $13.53 $42.65 $74.76 $170.18

Series I $5.64 $17.77 $31.15 $70.91

Series M $10.15 $31.99 $56.07 $127.64

36

Scotia Private U.S. Mid Cap Growth PoolFund details

Type of fund U.S. small/mid cap equity fund


Type of securities Pinnacle Series: since October 6, 1997Series F: since December 22, 2008Series I: since December 22, 2008Series M: since September 8, 2010


Portfolio advisor TCW Investment ManagementCompanyLos Angeles, California



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of small and medium capitalization companies traded on U.S. stock exchanges.




The fund’s investments may also include up to 15% cash and cash equivalents. The fund may usederivatives for foreign currency hedging purposes only.








As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, and Scotia INNOVA GrowthPortfolio held approximately 48.2%, and 26.0%, respectively, of the outstanding units of the fund.

37

SCOTIA PRIVATE U.S. MID CAP GROWTH POOL



• you’re seeking exposure to U.S. medium-sized growth companies

• you want a U.S. medium capitalization growth holding in a diversified portfolio




Distribution Policy







Pinnacle Series $6.15 $19.39 $33.98 $77.35

Series F $13.22 $41.68 $73.06 $166.31

Series I $1.23 $3.88 $6.80 $15.47

Series M $7.48 $23.59 $41.35 $94.11

38

Scotia Private International Equity PoolFund details

Type of fund International equity fund




Portfolio advisor Thornburg Investment Management,Inc.Santa Fe, New Mexico



The fund’s investment objective is to achieve long term returns through capital growth by investingprimarily in large capitalization stocks of companies in Europe, Australia and the Far East.



The fund varies its investment style as considered appropriate for each country or region in order toachieve its investment objectives, including amongst value oriented, growth-oriented investment styles andgrowth at a reasonable price.

The fund may invest up to 15% of its assets in cash and cash equivalents and up to 10% of its assets insecurities of issuers in emerging markets.







See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Emerging Markets Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, InterestRate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk,Securities Lending Risk, Series Risk and U.S. Withholding Tax Risk.

As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, Scotia INNOVA BalancedIncome Portfolio, Scotia INNOVA Growth Portfolio, and Scotia INNOVA Income Portfolio heldapproximately 32.0%, 19.7%, 17.1%, and 10.8%, respectively, of the outstanding units of the fund.

39

SCOTIA PRIVATE INTERNATIONAL EQUITY POOL



• you want the growth potential of foreign equity securities while tracking the performance of majormarket indexes

• you already have sufficient Canadian and U.S. investments and are seeking geographic diversificationoutside of North America

• you want some currency diversification outside of North America




Distribution Policy







Pinnacle Series $3.49 $10.99 $19.26 $43.83

Series F $12.71 $40.07 $70.23 $159.87

Series I $0.62 $1.94 $3.40 $7.74

40

Scotia Private International Small to Mid CapValue PoolFund details

Type of fund International equity fund




Portfolio advisor Munder Capital ManagementBirmingham, Michigan



The fund’s investment objective is to achieve superior long term returns through capital growth byinvesting primarily in stocks of small and medium capitalization corporations in Europe, Australia and the FarEast.

Any changes to the fundamental investment objectives of the fund must be approved by a majority ofvotes cast at a meeting of unitholders called for that purpose.



The fund may invest up to 30% of its assets in securities of issuers in emerging markets and up to 15% ofits assets in cash and cash equivalents.

The fund may use derivatives for foreign currency hedging purposes and to provide more effectiveexposure while reducing transaction costs.





Prices of equity securities tend to fluctuate more than those of fixed income securities resulting in greaterprice fluctuations than would be expected of the money market or bond funds.


See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Emerging Markets Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, InterestRate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk,Securities Lending Risk, Series Risk, Small Company Risk and U.S. Withholding Tax Risk.

41

SCOTIA PRIVATE INTERNATIONAL SMALL TO MID CAP VALUE POOL



• you’re seeking exposure to non-North American small to medium sized companies with valuecharacteristics

• you want some currency diversification outside of North America

• you want an international small to mid cap value holding in a diversified portfolio




Distribution Policy







Pinnacle Series $5.74 $18.10 $31.72 $72.20

Series F $13.74 $43.30 $75.89 $172.76

Series I $1.95 $6.14 $10.76 $24.50

42

Scotia Private Emerging Markets PoolFund details

Type of fund Emerging Markets Equity Fund

Date established September 8, 2010

Type of securities Pinnacle Series: September 8, 2010Series I: September 8, 2010Series M: September 8, 2010


Portfolio advisor Trilogy Global Advisors, LLCNew York, New York



The fund’s objective is to achieve long term returns through capital growth by investing primarily inequity and equity-related securities of companies located in emerging markets and emerging industries of anymarket.

Any change to the investment objectives must be approved by a majority of votes cast at a meeting ofunitholders held for that purpose.



The portfolio advisor analyzes the global economy and the economies and industries of various emergingmarkets. Based on this analysis, it identifies the countries and then the companies that it believes offer thepotential for growth. The portfolio advisor uses techniques such as fundamental analysis to assess growthpotential. This means evaluating the financial condition and management of a company, its industry and theoverall economy through due diligence, including meetings with companies’ management, financial statementanalysis and modeling. The portfolio advisor also focuses on the upside potential versus the downside risk ofeach security.

The fund may temporarily hold cash or fixed income securities for strategic reasons.

The fund may use derivatives for foreign currency hedging purposes and to provide more effectiveexposure while reducing transaction costs.





Prices of equity securities tend to fluctuate more than those of fixed income securities, resulting in greaterprice fluctuations than would be expected of a money market or bond funds.

See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Emerging Markets Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, InterestRate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk,Securities Lending Risk, Series Risk, Small Company Risk and U.S. Withholding Tax Risk.

43

SCOTIA PRIVATE EMERGING MARKETS POOL

As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, Scotia INNOVA GrowthPortfolio, and Scotia INNOVA Balanced Income Portfolio held approximately 28.4%, 16.7, and 18.1%,respectively, of the outstanding units of the fund.



• You’re seeking exposure to emerging market equities




Distribution Policy







Pinnacle Series $4.00 $12.60 $22.09 $50.28

Series I $1.54 $4.85 $8.50 $19.34

Series M $10.66 $33.61 $58.90 $134.08

44

Scotia Private Global Equity PoolFund details

Type of fund Global equity fund




Portfolio advisor Harding Loevner LPSomerville, New Jersey



The fund’s investment objective is to achieve long term returns through capital growth by investingprimarily in stocks of large capitalization companies in North America, Europe, Australia and the Far East.



The fund uses a fundamental growth-oriented investment style.

The fund may invest up to 10% of its assets in securities of issuers in emerging markets and up to 15% ofits assets in cash and cash equivalents.







See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Emerging Markets Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, InterestRate Risk, Issuer-specific Risk, Liquidity Risk, Repurchase and Reverse Repurchase Transaction Risk,Securities Lending Risk, Series Risk and U.S. Withholding Tax Risk.

As at November 1, 2012, Scotia INNOVA Income Portfolio, Scotia INNOVA Balanced GrowthPortfolio, Scotia INNOVA Balanced Income Portfolio, and Scotia INNOVA Growth Portfolio heldapproximately 31.2%, 22.1%, 14.1%, and 12.1%, respectively, of the outstanding units of the fund.

45

SCOTIA PRIVATE GLOBAL EQUITY POOL



• you’re seeking wide geographic diversification

• you want some currency diversification




Distribution Policy







Pinnacle Series $4.41 $13.89 $24.35 $55.44

Series F $13.43 $42.33 $74.20 $168.89

Series I $0.62 $1.94 $3.40 $7.74

46

Scotia Private Global Real Estate PoolFund details

Type of fund Real estate equity fund




Portfolio advisor CBRE Clarion Securities, LLC,Philadelphia, Pennsylvania (effective onor about December 28, 2011)



The fund’s objective is to achieve superior long term returns through income and capital growth, byinvesting primarily in U.S., Canadian and non-North American real estate stocks and real estate investmenttrusts (REITs).

Any change to the fundamental investment objectives of the fund must be approved by the majority ofvotes cast at a meeting of unitholders called for that purpose.


The fund’s investments may consist of the following:

• up to 40% Canadian securities

• up to 100% REITs






Returns may vary with changes in interest rates and stock prices.

Returns may be affected by factors such as global economic and political conditions and the state offoreign markets.


See What are the risks of investing in a mutual fund? — Commodity Risk, Credit Risk, Currency Risk,Derivatives Risk, Equity Risk, Foreign Investment Risk, Income Trust Risk, Interest Rate Risk, Issuer-specificRisk, Liquidity Risk, Real Estate Sector Risk, Repurchase and Reverse Repurchase Transaction Risk, SecuritiesLending Risk, Series Risk, and U.S. Withholding Tax Risk.

As at November 1, 2012, Scotia INNOVA Balanced Growth Portfolio, and Scotia INNOVA BalancedIncome Portfolio held approximately 16.3%, and 10.3%, respectively, of the outstanding units of the fund.

47

SCOTIA PRIVATE GLOBAL REAL ESTATE POOL



• you seek long term capital growth and income from real estate securities denominated in a variety ofcurrencies

• you seek diversification of your investment portfolio through an investment in real estate securities




Distribution Policy



As the fund invests in REITs, and as cash distributions received by the fund from the REITs are expectedto be substantially larger than the amount required to be included in the fund’s income for tax purposes, aportion of the fund’s annual distributions to its unitholders is expected to represent returns of capital receivedby the fund from such REITs. It is possible that all or a portion of such returns of capital to unitholders mayresult in an encroachment upon a unitholder’s original capital investment in the fund, depending on the natureof the fund’s underlying investments and earnings from those investments.





Pinnacle Series $1.85 $5.82 $10.19 $23.21

Series F $13.63 $42.98 $75.33 $171.47

Series I $0.92 $2.91 $5.10 $11.60

48

What is a mutual fund andwhat are the risks of investingin a mutual fund?

For many Canadians, mutual funds represent a simple and affordable way to meet their financial goals.But what exactly is a mutual fund, why invest in them, and what are the risks?

What is a mutual fund?

A mutual fund is an investment that pools your money with the money of many other people.Professional portfolio advisors use that money to buy securities that they believe will help achieve the fund’sinvestment objectives. These securities could include stocks, bonds, mortgages, money market instruments or acombination of these.

When you invest in a mutual fund, you receive units of the fund. Each unit represents a proportionateshare of all of the mutual fund’s assets. All of the investors in a mutual fund share in the fund’s income, gainsand losses. Investors also pay their share of the fund’s expenses.

Why invest in mutual funds?

Mutual funds offer investors three key benefits: professional money management, diversification andaccessibility.

• Professional money management. Professional portfolio advisors have the expertise to make theinvestment decisions. They also have access to up-to-the-minute information on trends in thefinancial markets, and in-depth data and research on potential investments.

• Diversification. Because your money is pooled with that of other investors, a mutual fund offersdiversification into many securities that may not have otherwise been available to individual investors.

• Accessibility. Mutual funds have low investment minimums, making them accessible to nearlyeveryone.

No guarantees

While mutual funds have many benefits, it’s important to remember that an investment in a mutual fundisn’t guaranteed. Unlike bank accounts or guaranteed investment certificates (GICs), units aren’t covered bythe Canada Deposit Insurance Corporation (CDIC) or any other government deposit insurer, and yourinvestment in the funds is not guaranteed by Scotiabank.

Under exceptional circumstances, a mutual fund may suspend your right to sell your units. SeeSuspending your right to buy, switch and sell units for details.

What are the risks?

While everyone wants to make money when they invest, you could lose money, too. This is known asrisk. Like other investments, mutual funds involve some level of risk. The value of a fund’s securities canchange from day to day for many reasons, including changes in the economy, interest rates, and market andcompany news. That means the value of mutual fund units can vary. When you sell your units in a fund, youcould receive less money than you invested.

The amount of risk depends on the fund’s investment objectives and the types of securities it invests in. Ageneral rule of investing is that the higher the risk, the higher the potential for gains as well as losses. Cashequivalent funds usually offer the least risk because they invest in highly liquid, short-term investments such astreasury bills. Their potential returns are tied to short-term interest rates. Income funds invest in bonds andother fixed income investments. These funds typically have higher long-term returns than cash equivalentfunds, but they carry more risk because their prices can change when interest rates change. Equity funds exposeinvestors to the highest level of risk because they invest in equity securities, such as common shares, whoseprices can rise and fall significantly in a short period of time.

49

Managing risk

While risk is an important factor to consider when you’re choosing a mutual fund, you should also thinkabout your investment goals and when you’ll need your money. For example, if you’re saving for a largepurchase in the next year or so, you might consider investing in a fund with low risk. If you want yourretirement savings to grow over the next 20 years, you can probably afford to put more of your money inequity funds.

A carefully chosen mix of investments can help reduce risk as you meet your investment goals. Yourmutual fund representative can help you build a portfolio that’s suited to your goals and risk comfort level.

If your investment goals or tolerance for risk changes, remember, you can and should change yourinvestments to match your new situation.

Specific risks of mutual funds

The value of the investments a mutual fund holds can change for a number of reasons. You’ll find thespecific risks of investing in each of the funds in the individual fund descriptions starting on page 9. Thissection tells you more about each risk. To the extent that a fund invests in underlying funds, it has the samerisks as its underlying funds. Accordingly, any reference to a fund in this section is intended to also refer to anyunderlying funds that a fund may invest in.

Asset-Backed and Mortgage-Backed Securities Risk

Asset-backed securities are debt obligations that are backed by funds of consumer or business loans.Mortgage- backed securities are debt obligations backed by funds of mortgages on commercial or residentialreal estate. To the extent that a fund invests in these securities, it will be sensitive to asset-backed and mortgage-backed securities risk. If there are changes in the market perception of the issuers of these types of securities, orin the creditworthiness of the parties involved, then the value of the securities may be affected. In the use ofmortgage backed securities, there is also a risk that there may be a drop in the interest rates charged onmortgages, a mortgagor may default on its obligations under a mortgage or there may be a drop in the value ofthe property secured by the mortgage.

Commodity Risk

Some funds may invest directly or indirectly in gold or in companies engaged in the energy or naturalresource industries. The market value of such a mutual fund’s investments may be affected by adversemovements in commodity prices. When commodity prices decline, this generally has a negative impact on theearnings of companies whose business is based in commodities, such as oil and gas.

Credit Risk

A fixed income security, such as a bond, is a promise to pay interest and repay the principal on thematurity date. There’s always a risk that the issuer will fail to honour that promise. This is called credit risk. Tothe extent that a fund invests in fixed income securities, it will be sensitive to credit risk. Credit risk is lowestamong issuers that have a high credit rating from a credit rating agency. It’s highest among issuers that have alow credit rating or no credit rating. Issuers with a low credit rating usually offer higher interest rates to makeup for the higher risk. The bonds of issuers with poor credit ratings generally have yields that are higher thanbonds of issuers with superior credit ratings. Bonds of issuers that have poor credit ratings tend to be morevolatile as there is a greater likelihood of bankruptcy or default. Credit ratings may change over time. Please seeForeign investment risk in the case of investments in foreign government debt.

Currency Risk

When a mutual fund buys an investment that’s denominated in a foreign currency, changes in theexchange rate between that currency and the Canadian dollar will affect the value of the fund.

50

Derivatives Risk

To the extent that a fund uses derivatives, it will be sensitive to derivatives risk. Derivatives can be usefulfor hedging against losses, gaining exposure to financial markets and making indirect investments, but theyinvolve certain risks:

• Hedging with derivatives may not achieve the intended result. Hedging instruments rely onhistorical or anticipated correlations to predict the impact of certain events, which may or may notoccur. If they occur, they may not have the predicted effect.

• It’s difficult to hedge against trends that the market has already anticipated.

• Costs relating to entering and maintaining derivatives contracts may reduce the returns of a fund.

• A currency hedge will reduce the benefits of gains if the hedged currency increases in value.

• Currency hedging can be difficult in smaller emerging growth countries because of the limited size ofthose markets.

• Currency hedging provides no protection against changes in the value of the underlying securities.

• There’s no guarantee that a liquid exchange or market for derivatives will exist. This could prevent afund closing out its positions to realize gains or limit losses. At worst, a fund might face losses fromhaving to exercise underlying futures contracts.

• The prices of derivatives can be distorted if trading in their underlying stocks is halted. Trading inthe derivative might be interrupted if trading is halted in a large number of the underlying stocks.This would make it difficult for a fund to close out its positions.

• The counterparty in a derivatives contract might not be able to meet its obligations. When usingderivatives, a mutual fund relies on the ability of the counterparty to the transaction to perform itsobligations. In the event that a counterparty fails to complete its obligations, the mutual fund maybear the risk of loss of the amount expected to be received under options, forward contracts or othertransactions in the event of the default or bankruptcy of a counterparty.

• Derivatives trading on foreign markets may take longer and be more difficult to complete. Foreignderivatives are subject to the foreign investment risks described below. Please see foreign investmentrisk.

• Investment dealers and futures brokers may hold a fund’s assets on deposit as collateral in aderivative contract. As a result, someone other than the fund’s custodian is responsible for thesafekeeping of that part of the fund’s assets.

• The regulation of derivatives is a rapidly changing area of law and is subject to modification bygovernment and judicial action. The effect of any future regulatory changes may make it moredifficult, or impossible, for a fund to use certain derivatives.

Emerging Markets Risk

Some mutual funds may invest in foreign companies or governments (other than the U.S.) which may belocated in, or operate, in developing countries. Companies in these markets may have limited product lines,markets or resources, making it difficult to measure the value of the company. Political instability, possiblecorruption, as well as lower standards of business regulation increase the risk of fraud and other legal issues. Inaddition to foreign investment risk described below, these mutual funds may be exposed to greater volatility asa result of such issues.

Equity Risk

funds that invest in equities, such as common shares, are affected by changes in the general economy andfinancial markets, as well as by the success or failure of the companies that issued the securities. When stockmarkets rise, the value of equity securities tends to rise. When stock markets fall, the value of equity securitiestends to fall. Convertible securities may also be subject to interest rate risk.

51

Foreign Investment Risk

Investments issued by foreign companies or governments other than the U.S. can be riskier thaninvestments in Canada and the U.S. Foreign countries can be affected by political, social, legal or diplomaticdevelopments, including the imposition of currency and exchange controls. Some foreign markets can be lessliquid, are less regulated and are subject to different reporting practices and disclosure requirements than issuersin North American markets. It may be more difficult to enforce a fund’s legal rights in jurisdictions outside ofCanada. In general, securities issued in more developed markets, such as Western Europe, have lower foreigninvestment risk. Securities issued in emerging or developing markets, such as Southeast Asia or Latin America,have significant foreign investment risk and are exposed to the emerging markets risks described above.

Income Trust Risk

An income trust, including a REIT, generally holds debt and/or equity securities of an underlying activebusiness or is entitled to receive a royalty on revenues generated by such business. Distributions and returns onincome trusts are neither fixed nor guaranteed. The trusts are subject to the risks of the particular type ofunderlying business, including supply contracts, the cancellation by a major customer of its contract orsignificant litigation.

The governing law of the income trust may not limit, or may not fully limit, the liability of unitholders ofthe trust for claims against the income trust. In such cases, to the extent that claims, whether in contract, intort or as a result of tax or statutory liability against a trust are not satisfied by the trust, holders of units in thetrusts, including a fund, could be held liable for such obligations. Income trusts generally seek to make this riskremote in the case of contract by including provisions in their agreements that the obligations of the incometrust will not be binding on unitholders personally. However, the income trust would still have exposure todamage claims not arising from contract, such as personal injury and environmental claims

As the income tax treatment in Canada of certain publicly traded trusts (other than certain REITs) haschanged, many trusts have converted or may convert to corporations, which has had, and may continue tohave, an effect on the trading price of such trusts.

Issuer-specific Risk

The market value of an individual issuer’s securities can be more volatile than the market as a whole. As aresult, if a single issuer’s securities represent a significant portion of the market value of a fund’s assets, changesin the market value of that issuer’s securities may cause greater fluctuation in the fund’s unit value than wouldnormally be the case. A less-diversified fund may also suffer from reduced liquidity if a significant portion of itsassets is invested in any one issuer. In particular, the fund may not be able to easily liquidate its position in theissuers as required to fund redemption requests.

Generally, mutual funds are not permitted to invest more than 10 per cent of their assets in any oneissuer. This restriction does not apply to investments in debt securities issued or guaranteed by the Canadian orU.S. government, securities issued by a clearing corporation, securities issued by mutual funds that are subjectto the requirements of National Instrument 81-102 – Mutual Funds and National Instrument 81-101- MutualFund Prospectus Disclosure, or index participation units issued by a mutual fund.

Interest Rate Risk

Mutual funds that invest in fixed income securities, such as bonds, mortgages and money marketinstruments, are sensitive to changes in interest rates. In general, when interest rates are rising, the value ofthese investments tends to fall. When rates are falling, fixed income securities tend to increase in value. Fixedincome securities with longer terms to maturity are generally more sensitive to changes in interest rates. Certaintypes of fixed income securities permit issuers to repay principal before the security’s maturity date. There is arisk that an issuer will exercise this prepayment right after interest rates have fallen and the funds that holdthese fixed income securities will receive payments of principal before the expected maturity date of the securityand may need to reinvest these proceeds in securities that have lower interest rates.

Liquidity Risk

Liquidity is a measure of how quickly an investment can be sold for cash at a fair market price. If a fundcan’t sell an investment quickly, it may lose money or make a lower profit, especially if it has to meet a large

52

number of redemption requests. In general, investments in smaller companies, smaller markets or certainsectors of the economy tend to be less liquid than other types of investments. The less liquid an investment, themore its value tends to fluctuate.

Real Estate Sector Risk

Some of the funds concentrate their investments in the real estate sector of the marketplace. These fundsare better able to focus on the real estate sector’s potential, however these funds are also riskier than funds withbroader diversification. Sector specific funds tend to experience greater fluctuations in price because securitiesin the same industry tend to be affected by the same factors. These funds must continue to follow theirinvestment objectives by investing in their particular sector even during periods when the sector is performingpoorly.

Repurchase and Reverse Repurchase Transaction Risk

Some mutual funds may enter into repurchase or reverse repurchase agreements to generate additionalincome. When a mutual fund agrees to sell a security at one price and buy it back on a specified later date fromthe same party with the expectation of a profit, it is entering into a repurchase agreement. When a mutual fundagrees to buy a security at one price and sell it back on a specified later date to the same party with theexpectation of a profit, it is entering into a reverse repurchase agreement. Mutual funds engaging in repurchaseand reverse repurchase transactions are exposed to the risk that the other party to the transaction may becomeinsolvent and unable to complete the transaction. In those circumstances, there is a risk that the value of thesecurities bought may drop or the value of the securities sold may rise between the time the other partybecomes insolvent and the time the fund recovers its investment. Mutual funds that engage in thesetransactions reduce this risk by holding as collateral enough of the other party’s cash or securities to cover thatparty’s repurchase or reverse repurchase obligations. To limit the risks associated with repurchase and reverserepurchase transactions, the collateral held in respect of the repurchase or reverse repurchase obligations mustbe marked to market on each business day and be fully collateralized at all times with acceptable collateralwhich has a value at least equal to 102% of the securities sold or cash paid for the securities by the mutualfund. Prior to entering into a repurchase agreement, a mutual fund must ensure that the aggregate value of thesecurities of the mutual fund that have been sold pursuant to repurchase transactions, together with anysecurities loaned, does not exceed 50% of its total asset value at the time that the mutual fund enters into thetransaction.

Securities Lending Risk

Some mutual funds may enter into securities lending transactions to generate additional income fromsecurities held in a mutual fund’s portfolio. A mutual fund may lend securities held in its portfolio to qualifiedborrowers who provide adequate collateral. In lending its securities, a mutual fund is exposed to the risk thatthe borrower may not be able to satisfy its obligations under the securities lending agreement and the lendingmutual fund is forced to take possession of the collateral held. Losses could result if the collateral held by themutual fund is insufficient, at the time the remedy is exercised, to replace the securities borrowed. Mutualfunds must receive collateral worth no less than 102% of the value of the loaned securities and borrowers mustadjust that collateral daily to ensure this level is maintained. Prior to entering into a securities lendingagreement, a mutual fund must ensure that the aggregate value of the securities loaned together with those thathave been sold pursuant to repurchase transactions does not exceed 50% of its total asset value.

Series Risk

Some mutual funds offer two or more series of units of the same fund. Although the value of each series iscalculated separately, there’s a risk that the expenses or liabilities of one series of units may affect the value ofthe other series. If one series is unable to cover its liabilities, the other series are legally responsible for coveringthe difference. We believe that this risk is very low.

Significant Unitholder Risk

Securities of mutual funds may be purchased and sold by large investors, including top funds. If a largeinvestor redeems a portion or all of its investment from an underlying fund, that underlying fund may have toincur capital gains and other transaction costs in the process of making the redemption. In addition, some

53

securities may have to be sold at unfavourable prices, thus reducing the underlying fund’s potential return.Conversely, if a large investor were to increase its investment in an underlying fund, that underlying fund mayhave to hold a relatively large portion in cash for a period of time until the portfolio advisor finds suitableinvestments, which could also negatively impact the performance of the underlying fund. Since theperformance of the underlying fund may be negatively impacted, so may the investment return of anyremaining investors in the underlying fund, including other top funds which may still be invested in theunderlying fund.

Small Company Risk

The prices of shares issued by smaller companies tend to fluctuate more than those of larger corporations.Smaller companies may not have established markets for their products and may not have solid financing.These companies generally issue fewer shares, which increases their liquidity risk.

U.S. withholding tax Risk

Effective January 1, 2014, pursuant to recently enacted U.S. tax legislation (including proposed U.S.Treasury Regulations that have yet to be finalized) generally referred to as the “Foreign Account TaxCompliance Act” (“FATCA”), mutual funds will be required to comply with certain reporting requirements inorder not to be subject to a 30% U.S. withholding tax on certain payments of U.S. source income made (aswell as payments attributable to dispositions of property which produce or could produce certain U.S. sourceincome) to the mutual funds or on certain amounts (including distributions and dividends) paid by the mutualfunds to certain securityholders. Complying with such requirements will require such mutual funds to requestand obtain certain information from securityholders and (where applicable) their beneficial owners, includinginformation regarding their citizenship, and to furnish such information and documentation to the U.S.Internal Revenue Service (the “IRS”). If a mutual fund is unable to comply with these requirements, theimposition of the 30% U.S. withholding tax will affect the net asset value of the relevant mutual fund and willresult in reduced investment returns to securityholders. If a securityholder does not provide the informationnecessary for us and the funds to comply with these requirements, the funds may redeem the shares held bysuch securityholder. See Shares of the funds — redemption in the annual information form for furtherdetails. In addition, the administrative costs arising from compliance with FATCA may also cause an increasein the operating expenses of the mutual funds.

54

Organization and Management of the FundsManager Scotia Asset Management L.P.

Scotia Plaza52nd Floor40 King Street WestToronto, Ontario M5H 1H1

As Manager, we are responsible for the overallbusiness and operation of the funds. Thisincludes:• arranging for portfolio advisory services• providing or arranging for administrative

servicesScotia Asset Management L.P. is wholly-ownedby The Bank of Nova Scotia.

Trustee Scotia Asset Management L.P.Toronto, Ontario

As Trustee, we control and have authority overeach fund’s investments in trust for unitholdersunder the terms described in the masterdeclaration of trust.

Principal Distributor Scotia Capital Inc.Toronto, Ontario

Scotia Capital Inc. is the principal distributor ofthe Pinnacle Series and Series F units, offeredunder this simplified prospectus. As principaldistributor, Scotia Capital Inc. markets and sellsthe Pinnacle Series and Series F units of thefunds where they qualify for sale in Canada. We,or Scotia Capital Inc., may hire participatingdealers to assist in the same of the funds.

Custodian ScotiabankToronto, Ontario

The custodian holds the investments of thefunds and keeps them safe to ensure that they areused only for the benefit of investors. The Bankof Nova Scotia is the parent company of ScotiaAsset Management L.P.

Registrar International Financial DataServices (Canada) LimitedToronto, Ontario

International Financial Data Services (Canada)Limited is the registrar of the Pinnacle Series,Series F and Series I units, offered under thissimplified prospectus. The registrar makesarrangements to keep a record of all unitholdersof Pinnacle Series, Series F and Series I units,process orders and issue tax slips to unitholders.

Scotia Asset Management L.P.Toronto, Ontario

As registrar, we make arrangements to keep arecord of all unitholders of Series M Units,process orders and issue tax slips to unitholders

Auditor PricewaterhouseCoopers LLPToronto, Ontario

The auditor is an independent firm of charteredaccountants. The firm audits the annualfinancial statements of the funds and provides anopinion as to whether they are fairly presented inaccordance with Canadian generally acceptedaccounting principles.

Portfolio Advisor Scotia Asset Management L.P.Toronto, Ontario

Various

The portfolio advisor provides investment adviceand makes the investment decisions for thefunds. You will find the portfolio advisor foreach fund in the fund descriptions starting atpage 9.

We are wholly owned by The Bank of NovaScotia.

55

Sub-advisor GCIC Ltd.Toronto, Ontario

We have authority to retain portfoliosub-advisors. The sub-advisor providesinvestment advice and makes the investmentdecisions for certain of the funds.

You’ll find the portfolio advisor for each fund inthe fund descriptions starting on page 9.

GCIC Ltd. is a wholly-owned subsidiary ofDundeeWealth Inc., which is itself a wholly-owned subsidiary of The Bank of Nova Scotia.

Independent ReviewCommittee

In accordance with National Instrument 81-107,Independent Review Committee for Investment Funds(“NI 81-107”), we, as Manager of the funds, haveestablished an Independent Review Committee(“IRC”), with a mandate to review and provideinput on our policies and procedures dealing withconflicts of interest in respect of the funds, and toreview conflict of interest matters that we present tothe IRC. The IRC currently has three members,each of whom is independent of the Manager andany party related to the Manager. The IRC willprepare, at least annually, a report of its activities forunitholders. This report will be available on or beforeMarch 31st of each year, at no charge on the Internetat www.scotiabank.com/pinnaclefunds or byrequesting a copy by e-mail at [email protected] information about the IRC, including thenames of its members, is available in the funds’annual information form.

In certain circumstances, your approval may not berequired under securities legislation to effect a fundmerger or a change in the auditor of a fund. Wherethe IRC is permitted under securities legislation toapprove a fund merger in place of unitholders, youwill receive at least 60 days written notice beforethe date of the merger. For a change in the auditorof a fund, your approval will not be obtained, butyou will receive at least 60 days written noticebefore the change takes place.

The funds have received an exemption from the Canadian Securities Administrators allowing them topurchase equity securities of a Canadian reporting issuer during the period of distribution of the securities andfor the 60-day period following the period of distribution (the “Prohibition Period”) pursuant to a privateplacement notwithstanding that an affiliate or associate of the Manager, such as Scotia Capital Inc., acts as anunderwriter or agent in the offering of equity securities. Any such purchase must be consistent with theinvestment objective of the particular fund. Further, the Independent Review Committee of the funds mustapprove the investment in accordance with the approval requirements of NI 81-107 and such purchase canonly be carried out if it is in compliance with certain other conditions.

In addition to the above exemptive relief, the funds may from time to time be granted exemptions fromNI 81-102 to permit them to invest during the Prohibition Period in securities of an issuer, in which anaffiliate or associate of the Manager, such as Scotia Capital Inc., acts as an underwriter or agent in the issuer’sdistribution of securities of the same class, where the funds are not able to do so in accordance with NI 81-107or the exemptive relief described above.

56

We as manager of the funds have applied for an exemption from the Canadian Securities Administratorsto permit the funds to invest in equity securities of an issuer that is not a reporting issuer in Canada during adistribution of the securities of the issuer, whether pursuant to a private placement of the issuer in Canada or inthe United States or a prospectus offering of the issuer in the United States of securities of the same class, andfor the 60-day period following the period of distribution, even if an affiliate of the Manager acts asunderwriter in the private placement or prospectus offering, provided the issuer is at the time a registrant in theUnited States, the IRC approves of the investment and the purchase is carried out in compliance with certainother conditions.

Herndon Capital Management, LLC, American Century Investment Management, Inc.,CramerRosenthal McGlynn LLC, TCW Investment Management Company, Thornburg InvestmentManagement, Inc., Munder Capital Management, Trilogy Global Advisors LLC, Harding, LoevnerManagement, L.P. and CBRE Clarion Securities, LLC rely on the exemption for firms that are qualified to usethe “exempt international advisor” category. The name and address of the agent for the service for each of thesePortfolio Advisors is available from the Ontario Securities Commission. Notwithstanding any registration inOntario, these Portfolio Advisors are not fully subject to the requirements of the Securities Act (Ontario).Currently, Scotia Asset Management L.P. assumes responsibility for the investment advice provided by LoganCircle Partners, L.P.

All of the portfolio advisors mentioned above are located outside of Canada and all or a substantialportion of their assets may be situated outside of Canada, which may make it difficult for investors to enforcetheir legal rights against these portfolio advisors.

The Custodian for the funds is Scotiabank, Toronto, Ontario. The Custodian is responsible for thesafekeeping of the securities and cash in a fund’s portfolio.

57

Purchases, Switches and RedemptionsAbout the Series of Units

The funds are available in four series of units: Pinnacle Series units, Series F units, Series I units and SeriesM units (where noted). The series have different fees and are intended for different investors:

• Pinnacle Series units are only available to investors who participate in the Pinnacle Program, throughScotiaMcLeod advisors or as otherwise permitted by the Manager. All of the funds offer PinnacleSeries units.

• Series F units are generally available to investors who have fee-based accounts with ScotiaMcLeod.We may make Series F units available to other investors from time to time. All of the funds offerSeries F units. If an investor is no longer eligible to hold Series F units, the Manager may reclassifythe Series F units as Pinnacle Series units.

• Series I units are available to eligible institutional investors and other qualified investors. Series Iunits are offered by Scotia Private Income Pool, Scotia Private High Yield Income Pool, ScotiaPrivate American Core-Plus Bond Pool, Scotia Private Canadian Value Pool, Scotia PrivateCanadian Mid Cap Pool, Scotia Private Canadian Growth Pool, Scotia Private Canadian Small CapPool, Scotia Private U.S. Value Pool, Scotia Private U.S. Large Cap Growth Pool, Scotia PrivateU.S. Mid Cap Value Pool, Scotia Private U.S. Mid Cap Growth Pool, Scotia Private InternationalEquity Pool, Scotia Private International Small to Mid Cap Value Pool, Scotia Private EmergingMarkets Pool, Scotia Private Global Equity Pool and Scotia Private Global Real Estate Pool. Series Iunits are currently only available through Scotia Asset Management L.P. If an investor is no longereligible to hold Series I units, the Manager may reclassify the Series I units as Pinnacle Series units.

• Series M units are available to investors who have signed a discretionary investment managementagreement with Scotia Asset Management L.P. or Scotiatrust. Series M units are offered by ScotiaPrivate High Yield Income Pool, Scotia Private U.S. Mid Cap Value Pool, Scotia Private U.S. MidCap Growth Pool and Scotia Private Emerging Markets Pool.

How to Buy the Funds

The minimum initial investment for Pinnacle Series and Series F units is $1,000 and the minimumsubsequent investment is $500. For Series I units, the minimum initial investment is generally $1,000,000.The minimum initial investment in Series M units of the fund is generally $250,000. At the discretion of theManager these minimums may be reduced. When the initial investment is made, your dealer will send you aconfirmation that summarizes the details of the purchase. The funds do not issue unit certificates; the Managerarranges to keep records of unit ownership.

For Pinnacle Series units, if the value of the investment(s) in your account falls below $100, we may sellyour units and send you the proceeds. For Series F, Series I and Series M units, if the value of the investment(s)in your account falls below the minimum initial investment, we may sell your units and send you the proceeds.

We will give you 30 days written notice before selling your units.

Units are non-transferable except with the written consent of the Manager for the sole purpose of grantinga security interest therein.

We may change the minimum amounts for initial and subsequent investments in a fund at any time, fromtime to time, and on a case by case basis, subject to applicable securities legislation.

How We Calculate Net Asset Value Per Unit

Separate net asset values are calculated for each series of a fund at the end of each day based on each series’share of the fund’s net asset value as determined in accordance with the fund’s declaration of trust. The seriesnet asset value per unit is calculated daily by dividing (1) the amount equal to the value of that series’ share ofassets of a fund, less that series’ share of the common expenses of the fund and less that series’ specific expensesby (2) the total number of units of that series outstanding at such time.

58

The net asset value per unit is determined daily, at the close of regular trading on the Toronto StockExchange, normally 4:00 p.m. Toronto time. In unusual circumstances, we may suspend the calculation of thenet asset value per unit of each series, subject to obtaining any necessary regulatory approval. The unit price ofa series usually varies day to day in response to changes in the value of the fund’s portfolio’s securities.However, as the income of Scotia Private Short Term Income Pool is credited daily to investors, the series netasset value per unit of such fund is expected to remain constant at $10.

Units are purchased, distributions reinvested and redemptions implemented for all funds on the basis ofthe series net asset value per unit applicable to the transactions.

How to Place Orders for the Funds

Your request to purchase units must be received before 3:00 p.m. Toronto time in order for the purchaseto be priced at the series net asset value per unit determined at 4:00 p.m. on such day. If the order is receivedafter 3:00 p.m., units will be issued at the series net asset value calculated at 4:00 p.m. on the next business day.If the cash required to complete the transaction is not received within three trading days (one trading day inthe case of the Scotia Private Short Term Income Pool) of receipt of the purchase order, the same number ofunits purchased will be redeemed. If the fund’s redemption price is less than the purchase price, your dealer willpay the difference to the fund and collect that amount from you. If the redemption price is greater than thepurchase price for the units, the fund will keep the difference.

The Manager has the right to reject any order within one business day after it has been received. If anapplication is rejected, the purchase price paid by you will be refunded immediately. We may reject your orderif you’ve made several purchases and sales of a fund within a short period of time, usually 31 days.

How to Switch the Funds

You can switch units of any series you purchased of a Fund for units of the same or a different series ofanother Fund, as long as you’re eligible to hold the particular series of the Fund into which you switch. Thesetypes of switches will be considered a disposition for tax purposes and accordingly, you may realize a capitalgain or loss. The tax consequences are discussed in “Income Tax Considerations for Investors” in thisdocument.

When we receive your order, we’ll sell units of the first fund and then use the proceeds to buy units orshares of the second fund. If you switch units within 31 days of buying them, you may have to pay a short termtrading fee. See Short term trading for details.

How to Switch between Series of a Fund

Reclassifications are permitted from one series of a fund into another series of the same fund if you areeligible for that series. The number of units you receive upon reclassification depends upon the relative netasset value per unit of the series of units being exchanged to the series of units being received. The rulesapplicable to purchases and redemption also apply to reclassifications.

How to Redeem Funds

All or some of the units held by you can be redeemed on any business day. Your request to redeem unitsof the funds must be received before 3:00 p.m. Toronto time in order for the redemption to be priced at thenet asset value per unit determined at 4:00 p.m. on such date. If the redemption request is received after 3:00p.m., units will be redeemed at the net asset value per unit calculated at 4:00 p.m. on the next business day. Inthe case of a redemption of the Scotia Private Short Term Income Pool, units will be redeemed at a price of$10 per unit plus the portion of that fund’s net income and net capital gains attributable to the redeemedunits, if any, credited since the last reinvestment date.

If any documents which may be required by the Manager to complete the sale are not received within tenbusiness days of the redemption request, the Manager will buy the same number of units sold. If the purchaseprice is less than the sale price of the units, the fund will keep the difference. If the purchase price is greater

59

than the sale price for the units, your dealer is required to pay the fund the difference. This amount will becollected from you.

Redemption proceeds will be paid within three business days after the documents required to completethe sale are received. Upon request, the Manager will mail you a cheque for the proceeds of the sale, or willdeposit the proceeds into an account designated by you, provided your cheque for the purchase of any of theunits being redeemed has cleared. If you sell units within 31 days of buying them, you may have to pay a short-term trading fee. See Fees and Expenses Payable by You — Short-Term Trading Fee for details.

Under extraordinary circumstances, the rights of investors to redeem units may be suspended by a fund. Afund may suspend the right to sell units if normal trading is suspended in any market where more than fiftypercent of that fund’s assets are traded.

Short-term Trading

Short-term trading by investors can increase a fund’s expenses, which affects all investors in the fund, andcan affect the economic interest of long-term investors. Short-term trading can affect a fund’s performance byforcing the portfolio advisor to keep more cash in the fund than would otherwise be required. If you redeem,switch or reclassify securities of any series of a fund within 31 days of acquisition, we may, on behalf of thefund, in our sole discretion, charge a short-term trading fee on behalf of the fund of 2% of the net asset valueof that series of securities redeemed, switched or reclassified. The fee may not apply to:

• Scotia Private Short Term Income Pool;

• redemptions that are carried out to accommodate payment of Summit Program fees or PinnacleProgram fees;

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

• transactions not exceeding a certain minimum dollar amount, as determined by the Manager fromtime to time;

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

• transfers of units of one fund between two accounts belonging to the same unitholder;

• regularly scheduled RRIF or LIF payments; and

• regularly scheduled automatic withdrawal plan payments.

Any formal or informal arrangements to permit short-term trading are described in the funds’ annualinformation form. If securities regulations mandate the adoption of specified policies relating to short-termtrading, the funds will adopt such policies if and when implemented by the securities regulators. If required,these policies will be adopted without amendment to this simplified prospectus or the funds’ annualinformation form and without notice to you, unless otherwise required by such regulations.

Optional ServicesTax-Deferred Plans

Each of the funds is an eligible investment for all registered accounts.

This means you can hold units of the funds in the following registered accounts (collectively referred to as“tax deferred plans”):

• registered retirement savings plans (“RRSPs”), including group RRSPs

• locked-in RRSPs and locked-in retirement accounts (“LIRAs”)

• registered retirement income funds (“RRIFs”)

• life income funds (“LIFs”) and life registered income funds (“LRIFs”)

• deferred profit sharing plans (“DPSPs”)

• registered pension plans (“RPPs”), including defined contribution pension plans (“DCPPs”)

60

• registered education savings plans (“RESPs”)

• registered disability savings plans (“RDSPs”)

• tax-free savings accounts (“TFSAs”)

Optimized Portfolios (Pinnacle Series units)

You have the option of choosing from several optimized portfolios, professionally designed with theassistance of NTGA. Each of the optimized portfolios consists of various funds as well as cash and cashequivalent securities. You can choose an optimized portfolio with the help of your ScotiaMcLeod advisor. Youcan also set the target weighting for each fund within your portfolio if you wish to use the automaticrebalancing as described below. If NTGA recommends a change in weighting in a particular optimizedportfolio or a change in funds comprising the particular optimized portfolio, such change in weighting orchange in the funds comprising the particular optimized portfolio will not be made unless you agree with yourScotiaMcLeod advisor to make the change.

Custom Portfolios (Pinnacle Series units)

You also have the option of designing a custom portfolio with the help of your ScotiaMcLeod advisor.You can generally choose as many or as few funds as you wish to include in the custom portfolio. You can alsoset the target weighting for each fund within your portfolio if you wish to use the automatic rebalancing asdescribed below.

Automatic Rebalancing (Pinnacle Series units)

At your request, your optimized or custom portfolio can be automatically rebalanced to the set fund targetweightings in each portfolio. The rebalancing will take place on or about the 15th day of the month followingthe end of each calendar quarter. The short-term trading fee doesn’t apply to rebalancing that is offered inconnection with an optimized or custom portfolio.

If you hold your funds in a non-registered account, you may realize a capital gain or loss when youraccount is rebalanced. Capital gains are taxable.

Pre-Authorized Chequing Plan

Regular investing is an effective way to build wealth. In order to facilitate regular investing, the Managerhas established a Pre-Authorized Chequing Plan. Once the minimum initial investment in a fund has beenmade, you can authorize regular deductions from your bank account to buy units. The minimum amount perauthorized deduction is $500. You can suspend this authorization at any time.

If you make a purchase under a Pre-Authorized Chequing Plan, you will receive a renewal simplifiedprospectus for the funds only if you request it. If you would like to receive a copy of a renewal prospectus alongwith any amendment, please contact us at 1-800-268-9269 (416-750-3863 in Toronto) or contact your dealer.The current simplified prospectus and any amendments may be found at www.sedar.com or atwww.scotiabank.com/pinnaclefunds. Although you do not have a statutory right to withdraw from a purchaseof units made under a Pre-Authorized Chequing Plan, you will continue to have a right of action for damagesor rescission in the event a renewal prospectus contains a misrepresentation, whether or not you request arenewal prospectus.

Automatic Withdrawal Plan

If you have a minimum of $50,000 in your funds account, you may establish an automatic withdrawalaccount to provide predetermined cash payments through automatic redemption of units. You may suspendthis authorization at any time. The Manager reserves the right to terminate this arrangement for accounts thatfall below a market value of $25,000.

61

Fees and expensesThis section describes the fees and expenses you may have to pay if you invest in the funds. You may have

to pay some of these fees and expenses directly. The funds may have to pay some of these fees and expenses,which may reduce the value of your investment. The funds are required to pay Harmonized Sales Tax (“HST”)on management fees and operating expenses in respect of each series of units, based on the residence for taxpurposes of the investors of the particular series. Changes in existing HST rates, the adopting of HST byadditional provinces, the repeal of HST by HST-participating provinces and changes in the breakdown of theresidence of investors in each series of units may therefore have an impact on the funds year over year.

Fees and Expenses Payable by the Funds

Management Fees Each fund pays us a management fee with respect toeach series of units, other than Series I units, forproviding general management services. The fee iscalculated and accrued daily and paid monthly.Management fees for Series I units of a fund arenegotiated and paid directly by the investor, not bythe fund, and will not exceed 1.25% on MoneyMarket and Bond Funds and 2.5% on all otherfunds. The maximum annual rates of themanagement fee, which is a percentage of the netasset value (“NAV”) of each fund, for Series F unitsof the funds are as follows:

FundSeries F annual

management fees (%)

Scotia Private Short Term Income Pool 0.50%Scotia Private Income Pool 0.70%Scotia Private High Yield Income Pool 0.75%Scotia Private American Core-Plus Bond Pool 0.75%Scotia Private Strategic Balanced Pool 1.00%Scotia Private Canadian Value Pool 1.00%Scotia Private Canadian Mid Cap Pool 1.00%Scotia Private Canadian Growth Pool 1.00%Scotia Private Canadian Small Cap Pool 1.00%Scotia Private U.S. Value Pool 1.00%Scotia Private U.S. Large Cap Growth Pool 1.00%Scotia Private U.S. Mid Cap Value Pool 1.00%Scotia Private U.S. Mid Cap Growth Pool 1.00%Scotia Private International Equity Pool 1.00%Scotia Private International Small to Mid Cap Value Pool 1.00%Scotia Private Global Equity Pool 1.00%Scotia Private Global Real Estate Pool 1.00%

62

Pinnacle Series

No management fees are charged by the Manager in respect of the PinnacleSeries units of the individual funds. If you have a Pinnacle ProgramAgreement with ScotiaMcLeod, you will agree to pay an asset based fee forthe services offered under that Agreement. You will pay the fees on aquarterly basis and the payment can only be made through the redemptionof Pinnacle Series units held in the funds, unless otherwise permitted byScotiaMcLeod. The maximum annual fee charged is 1.25% on MoneyMarket and Bond Funds and 2.5% on all other funds. ScotiaMcLeod willpay the Manager up to the rate of fees it receives in respect of Series F forany fund. ScotiaMcLeod also reimburses the Manager for that portion of thefees of the portfolio advisors and NGTA attributable to the Pinnacle Seriesunits and may reimburse the Manager for certain other expenses.

Any fee for purchases of Pinnacle Series units outside the Pinnacle Programare negotiated separately with your dealer and the Manager.

Series I

Fees for services of the Manager payable by Series I investors are negotiableby the investor and are payable directly to the Manager. The maximumamount will not exceed the Pinnacle Series annual rate.

Series M

In addition to any fees paid directly to Scotia Asset Management under adiscretionary investment management agreement, each fund pays us amanagement fee with respect to Series M units for providing generalmanagement services. The fee is calculated and accrued daily and paidmonthly. The maximum annual management fee for Series M units is0.30% for the Scotia Private High Yield Income Pool, 0.55% for the ScotiaPrivate U.S. Mid Cap Value Pool and the Scotia Private U.S. Mid CapGrowth Pool and 0.70% of the Scotia Private Emerging Markets Pool.

Operating Expenses Pinnacle Series: The Pinnacle Series units bear their proportionate share ofthe common expenses relating to the operation of the funds and the carryingon of their business, including legal and audit fees, taxes, interest,administrative costs relating to the issue and redemption of units, brokeragecommissions, as well as the cost of financial and other reports and complyingwith all applicable laws, regulations and policies. These expenses also includethe annual fee paid to each IRC member, fees for each meeting he or sheattends, and the reasonable expenses associated with the performance of hisor her duties as an IRC member. In addition, there are series specificexpenses such as the costs of holding a unitholder meeting specific tomembers of the series. The amount of expenses will not exceed 0.50% of thePinnacle Series net assets of each fund. Series specific expenses such as thecosts of holding a unitholder meeting specific to members of the series,brokerage commissions, interest charges and taxes of all types are notincluded in the 0.50% cap on expenses. ScotiaMcLeod is responsible forreimbursing the Manager for expenses in excess of 0.50%.

63

Series F: The Series F units of funds bear their proportionate share of thecommon expenses relating to the operation of the funds and the carrying onof their business, including legal and audit fees, taxes, interest, administrativecosts relating to the issue and redemption of units, brokerage commissions,as well as the cost of financial and other reports and complying with allapplicable laws, regulations and policies. These expenses also include theannual fee paid to each IRC member, fees for each meeting he or sheattends, and the reasonable expenses associated with the performance of hisor her duties as an IRC member. In addition, there are series specificexpenses such as the costs of holding a unitholder meeting specific tomembers of the series.

Series I: The Series I units of funds bear their proportionate share of thecommon expenses relating to the operation of the funds and the carrying onof their business, including legal and audit fees, taxes, interest, administrativecosts relating to the issue and redemption of units, brokerage commissions,as well as the cost of financial and other reports and complying with allapplicable laws, regulations and policies. These expenses also include theannual fee paid to each IRC member, fees for each meeting he or sheattends, and the reasonable expenses associated with the performance of hisor her duties as an IRC member. In addition, there are series specificexpenses such as the costs of holding a unitholder meeting specific tomembers of the series.

Series M: The Series M units of the funds bear their proportionate share ofthe common expenses relating to the operation of the funds and the carryingon of their business, including legal and audit fees, taxes, interest,administrative costs relating to the issue and redemption of units, brokeragecommissions, as well as the cost of financial and other reports and complyingwith all applicable laws, regulations and policies. These expenses also includethe annual fee paid to each IRC member, fees for each meeting he or sheattends, and the reasonable expenses associated with the performance of hisor her duties as an IRC member. In addition, there are series specificexpenses such as the costs of holding a unitholder meeting specific tomembers of the series.

General:

We may choose to absorb any of these expenses.

Currently, each member of the IRC is entitled to an annual retainer of$35,000 ($47,500 for the Chair), and a per meeting fee of $1,500 forattending each IRC meeting. The fund pays a proportionate share of thetotal compensation paid to the IRC each year and reimburses members ofthe IRC for expenses incurred by them in connection with their services asmembers of the IRC. The fund’s share of the IRC’s compensation will bedisclosed in the fund’s financial statements.

Fees and Expenses Payable by You

Sales Charges No sales commission or other sales charge is payable for any purchase, switchor redemption of the funds.

Short-Term Trading Fee To discourage short-term trading, a fund may charge a fee of 2% of theamount you sell or switch, if you sell or switch your units within 31 days ofbuying them. For additional information please see Short-term trading fee.

64

Dealer CompensationAlthough ScotiaMcLeod advisors receive no up-front sales commissions in connection with the sale of

Pinnacle Series units of the funds, they are compensated in connection with certain ongoing services theyprovide to investors in the Pinnacle Program. Currently, ScotiaMcLeod pays no more frequently than monthly,a service fee to ScotiaMcLeod advisors in an amount up to 72% of the fee paid by each Pinnacle Series investorto ScotiaMcLeod.

For the sale of units of the funds to investors outside of the Pinnacle Program, ScotiaMcLeod also pays,no more frequently than monthly, a service fee to ScotiaMcLeod advisors in an amount up to 72% of the feepaid by each Pinnacle Series investor to ScotiaMcLeod.

We also pay trailing commissions to the discount broker for securities you purchase through yourdiscount brokerage account.

For the purchase of Series F units, the Manager does not pay any trailing commission to a dealer,including ScotiaMcLeod. The dealer and the investor negotiate a service fee in respect of the Series F unitswhich is in an amount up to 1.5% of the value of the Series F units, payable by the investor no more frequentlythan monthly.

No service fee is payable in respect of Series I or Series M units.

A ScotiaMcLeod advisor may also receive sales incentives based on his or her overall performance.

The Manager may participate in co-operative marketing programs with dealers to help them market thefunds. We may pay up to 50% of the cost of these co-operative marketing programs in accordance with therules set out in National Instrument 81-105 Mutual Fund Sales Practices.

The Bank of Nova Scotia owns, directly or indirectly, 100% of Scotia Asset Management L.P. andScotiaMcLeod , a division of Scotia Capital Inc.

Dealer Compensation from Management FeesThe cost of the sales and service commissions and sales incentive programs was approximately 33.13% of

the total management fees we received from all of the ScotiaFunds during the financial year endedDecember 31, 2011.

Income tax considerations for investorsThis section is a summary of how investing in the funds can affect your taxes. It assumes that you’re an

individual (other than a trust), a Canadian resident and deal at arm’s length with the funds and you hold yourunits as capital property. More detailed information is provided in the funds’ annual information form.Because tax laws vary by province and territory and every investor’s situation is different, we recommend thatyou get advice from a tax expert.

How your investment can earn money

Funds earn money in the form of income and capital gains. Income includes the interest and dividends afund earns on its investments and gains on certain derivatives. Capital gains are earned when a fund sellsinvestments for a profit.

You earn money in the form of distributions when the fund pays you your share of the net income andnet realized capital gains it has earned. In general, each fund will distribute enough of its net income and netrealized capital gains each year to unitholders so it won’t have to pay income tax.

You can also earn money in the form of a capital gain when you sell or switch your units for a profit. Youcan realize a capital loss if you sell or switch your units at a loss.

65

How earnings are taxed

The tax you pay depends on whether you hold your units in a tax-deferred plan or in a non-registeredaccount.

Units held in a tax-deferred plan

If you hold your units in a tax-deferred plan, you pay no tax on distributions from the fund on those unitsor on any capital gains that your tax-deferred plan receives from selling or switching units. When you withdrawmoney from a tax-deferred plan (other than a TFSA), it will generally be subject to tax at your marginal taxrate. You should consult with a tax expert about the special rules that apply to RESPs and RDSPs. See OptionalServices — Tax Deferred Plans.

Units held outside a tax-deferred plan

If you hold units of a fund in a non-registered account, you must include your share of the fund’sdistributions of net income and the taxable portion of its distributions of net realized capital gains in yourincome, whether you receive the distributions in cash or we reinvest them for you. In general, thesedistributions are taxable to you as if you received the income or gain directly.

Distributions, including management fee distributions, may include a return of capital. When a fundearns less income and capital gains than the amount distributed, the difference is a return of capital. A return ofcapital is not taxable, but will reduce the adjusted cost base of your units of the fund. If the adjusted cost baseof your units is reduced to less than zero, you will be deemed to realize a capital gain to the extent of thenegative amount and the adjusted cost base of your units will be increased to nil. You should consult a taxexpert about the tax implications of receiving a return of capital.

The unit price of a fund may include income and/or capital gains that the fund has accrued or realized,but not yet distributed. If you buy units of a fund just before it makes a distribution, you’ll be taxed on thatdistribution once it is made, even though the fund earned the amount before you owned it. For example, manyfunds make their only, or most significant, distribution of income and capital gains in December. If you buyunits late in the year, you may have to pay tax on the income and capital gains the fund earned for the wholeyear. That means you’ll end up paying tax on fund earnings that you had little or no benefit from.

We’ll issue a tax slip to you each year that shows you how much of each type of income and return ofcapital the fund distributed to you. You can claim any tax credits that apply to those earnings, for example, ifthe fund’s distributions include Canadian dividend income, you’ll qualify for a dividend tax credit. Thecharacterization of distributions made during the year will not be determined with certainty for Canadian taxpurposes until the end of each fund’s taxation year.

Capital gains (or losses) you realize

In general, you must also include in computing your income one-half of any capital gains you realize fromselling or switching your units. You will have a capital gain if your sale proceeds, less any costs of the sale, aremore than the adjusted cost base of your units. You will have a capital loss if your sale proceeds, less any costsof the sale, are less than the adjusted cost base of your units. You may use capital losses you realize to offsetcapital gains.

Changing units from one series of a fund to another series of the same fund is not a disposition for taxpurposes, so no capital gain or loss will result.

Calculating adjusted cost base

Your capital gain (or loss) for tax purposes is the difference between the amount you receive when you sellor switch your units and the adjusted cost base of those units, less any costs of the sale. You must calculate youradjusted cost base separately for each series of units of a fund that you own.

In general, the aggregate adjusted cost base of your units equals:

• your initial investment, plus

• additional investments, plus

66

• reinvested distributions, minus

• any return of capital distributions, minus

• the adjusted cost base of any previous redemptions

You should keep detailed records of the purchase cost of your investments and distributions you receiveon those units so you can calculate their adjusted cost base.

Unitholders should consult their own tax advisors.

Portfolio turnover rate

Each fund discloses its portfolio turnover rate in its management report of fund performance. A fund’sportfolio turnover rate indicates how actively the fund’s portfolio advisor manages its portfolio investments. Aportfolio turnover rate of 100% is equivalent to the fund buying and selling all of the securities in its portfolioone time in the course of a year. The higher a fund’s portfolio turnover rate in a year, the greater the tradingcosts payable by the fund in the year and the greater the likelihood that gains or losses will be realized by thefund. Any distribution of net income or the taxable portion of the net realized capital gains paid or payable bythe fund to you, in a non-registered account, must be included in your income for tax purposes for that year.There is not necessarily a relationship between a high turnover rate and the performance of a fund.

What are your legal rights?Securities legislation in some provinces gives you the right to withdraw from an agreement to buy mutual

funds within two business days of receiving the simplified prospectus, or to cancel your purchase within 48hours of receiving confirmation of your order.

Securities legislation in some provinces and territories, also allows you to cancel an agreement to buymutual fund units and get your money back, or to make a claim for damages, if the simplified prospectus,annual information form or financial statements misrepresent any facts about the fund. These rights mustusually be exercised within certain time limits. For more information, refer to the securities legislation of yourprovince or territory or consult your lawyer.

67

You can find additional information about each fund in the fund’s Annual Information Form, Fund Facts,their most recently filed annual and interim management reports of fund performance and their mostrecently filed annual and interim financial statements. These documents are incorporated by reference intothis simplified prospectus. That means they legally form part of this document just as if they were printedin it.

You can get a copy of the funds’ annual information form, financial statements and management reportsof fund performance at no charge, by calling 1-800-268-9269 (416-750-3863 in Toronto) for English or1-800-387-5004 for French, or by asking Scotia Asset Management L.P. You’ll also find these documents onour website at www.scotiabank.com/privatepools.com.

These documents and other information about the funds such as information circulars and materialcontracts, are also available at www.sedar.com.

The Scotia Private Pools are managed by Scotia Asset Management L.P. and are available through ScotiaSecurities Inc., and from other dealers and advisors including ScotiaMcLeod and Scotia iTRADE which aredivisions of Scotia Capital Inc. (Member of the Canadian Investor Protection Fund). Scotia Capital Inc., ScotiaSecurities Inc. and GCIC Ltd. are corporate entities separate from, although wholly owned directly andindirectly by, The Bank of Nova Scotia.

Scotia Private PoolsTM

Pinnacle Series and Series F units (unless otherwise noted) Series I and Series M units available wherenoted.

Money Market FundScotia Private Short Term Income Pool

Bond FundsScotia Private Income Pool (Series I units available)Scotia Private High Yield Income Pool (Series I and Series M units available)Scotia Private American Core-Plus Bond Pool (Series I units available)

Balanced FundScotia Private Strategic Balanced Pool

Canadian Equity FundsScotia Private Canadian Value Pool (Series I units available)Scotia Private Canadian Mid Cap Pool (Series I units available)Scotia Private Canadian Growth Pool (Series I units available)Scotia Private Canadian Small Cap Pool (Series I units available)

Foreign Equity FundsScotia Private U.S. Value Pool (Series I units available)Scotia Private U.S. Large Cap Growth Pool (Series I units available)Scotia Private U.S. Mid Cap Value Pool (Series I and Series M units available)Scotia Private U.S. Mid Cap Growth Pool (Series I and Series M units available)Scotia Private International Equity Pool (Series I units available)Scotia Private International Small to Mid Cap Value Pool (Series I units available)Scotia Private Emerging Markets Pool (Series I and Series M units available)Scotia Private Global Equity Pool (Series I units available)Scotia Private Global Real Estate Pool (Series I units available)

Managed by:

Scotia Asset Management L. P.Scotia Plaza52nd Floor40 King Street WestToronto, OntarioM5H 1H1

™ Trademark of The Bank of Nova Scotia, used under license. 54D 10843E 11/12

scotia private poolstm 2012dr.scotiabank.com/ca/en/files/12/11/scotia_private_pools_-_en.pdf ·...

Documents