Lonsdale Wealth Partners

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1 Lonsdale Wealth Partners SIMPLIFIED PROSPECTUS Offering of Units of The Lonsdale Tactical Balanced Portfolio The Lonsdale Tactical Yield Portfolio The Lonsdale Tactical Growth Portfolio November 6, 2014 No securities regulatory authority has expressed an opinion about these units and it is an offence to claim otherwise.

2 TABLE OF CONTENTS Page INTRODUCTION... 1 WHAT IS A MUTUAL FUND AND WHAT ARE THE RISKS OF INVESTING IN A MUTUAL FUND?... 2 What is a Mutual Fund?... 2 What are the Risks of Investing in a Mutual Fund?... 2 ORGANIZATION AND MANAGEMENT OF THE LONSDALE WEALTH PARTNERS FUNDS... 6 PURCHASES, SWITCHES AND REDEMPTIONS... 7 Purchases and Switches... 7 Redemptions... 8 Short-Term Trading... 8 OPTIONAL SERVICES... 8 Registered Plans... 8 Automatic Reinvestment of Distributions... 9 FEES AND EXPENSES... 9 Fees and Expenses Payable by the Funds... 9 Fees and Expenses Payable Directly by You Sales Charges DEALER COMPENSATION DEALER COMPENSATION FROM MANAGEMENT FEES INCOME TAX CONSIDERATIONS FOR INVESTORS How Your Investment can Make Money How Your Investment is Taxed Units held in a Registered Plan Units held in a Non-registered Account Calculating Adjusted Cost Base Buying Units Late in the Year WHAT ARE YOUR LEGAL RIGHTS? YOUR RIGHTS AS A SECURITYHOLDER SPECIFIC INFORMATION ABOUT EACH OF THE MUTUAL FUNDS DESCRIBED IN THIS DOCUMENT Introduction Investment Risk Classification Methodology Securities Lending Transactions Use of Derivatives THE LONSDALE TACTICAL BALANCED PORTFOLIO Fund Details What Does the Fund Invest In? What are the Risks of Investing in the Fund? Who Should Invest in This Fund? Distribution Policy Fund Expenses Indirectly Borne By Investors THE LONSDALE TACTICAL YIELD PORTFOLIO Fund Details i-

3 TABLE OF CONTENTS (continued) Page What Does the Fund Invest In? What are the Risks of Investing in the Fund? Who Should Invest in This Fund? Distribution Policy Fund Expenses Indirectly Borne By Investors THE LONSDALE TACTICAL GROWTH PORTFOLIO Fund Details What Does the Fund Invest In? What are the Risks of Investing in the Fund? Who Should Invest in This Fund? Distribution Policy Fund Expenses Indirectly Borne By Investors ii-

4 INTRODUCTION This document contains selected important information about The Lonsdale Tactical Balanced Portfolio, The Lonsdale Tactical Yield Portfolio and The Lonsdale Tactical Growth Portfolio (each, a Fund and together, the Funds ) to help you make an informed investment decision and to help you understand your rights as an investor. This document is divided into two parts. The first part, from pages 1 through 12, contains general information applicable to all of Funds. The second part, from pages 13 through 23, contains specific information about each of the Funds described in this document. Additional information about each Fund is available in the following documents: the Annual Information Form; the most recently filed Fund Facts; the most recently filed annual financial statements; any interim financial statements filed after those annual financial statements; the most recently filed annual management report of fund performance; and any interim management report of fund performance filed after that annual management report of fund performance. These documents are incorporated by reference into this document, which means that they legally form part of this document just as if they were printed as a part of this document. You can get a copy of these documents, at your request, and at no cost, by calling us locally at or toll-free at , or from your dealer. These documents are available on The Lonsdale Wealth Partners Internet site at or by contacting Lonsdale Wealth Partners at info@lonsdalewealth.com These documents and other information about the Funds are available at In this document, we, us and our mean Newport Private Wealth Inc. or Lonsdale Wealth Partners, a division of Newport Private Wealth Inc. and you means a potential or actual investor in the Funds

5 WHAT IS A MUTUAL FUND AND WHAT ARE THE RISKS OF INVESTING IN A MUTUAL FUND? What is a Mutual Fund? A mutual fund is a pool of investments made on behalf of people with a similar investment objective. When you invest in a mutual fund, your money is working together with that of many other investors. A professional investment manager invests this money on behalf of the whole group. Investors share a mutual fund s income, expenses, gains and losses in proportion to their interest in the mutual fund. Mutual funds can give individuals the advantages of a simpler, more accessible, less expensive and less timeconsuming method of investing in a portfolio of securities. The full amount of your investment in any Lonsdale Wealth Partners mutual fund is not guaranteed. Unlike bank accounts or GICs, mutual fund units are not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer. Under exceptional circumstances, a Fund may suspend redemptions. See Purchases, Switches and Redemptions, beginning on page 7 of this document, for more information. What are the Risks of Investing in a Mutual Fund? There are some general risks which all mutual funds share, as well as certain risks unique to an investment in a particular mutual fund. Mutual funds own different types of investments, depending upon their investment objectives. The value of these investments will change from day to day, reflecting changes in interest rates, economic conditions, and market and company news. As a result, the value of a mutual fund s units may go up and down, and the value of your investment in a mutual fund may be more or less when you redeem it than when you purchased it. Set out below are some of the specific risks, listed in alphabetical order, that can affect the value of your investment in a Fund. See the individual Fund descriptions, beginning on page 15 of this document, to find out which risks apply to a particular Fund. A mutual fund that invests in an underlying fund has similar risks as an investment in the underlying fund in which it invests. Concentration Risk A mutual fund may have a relatively high concentration of assets in a single or small number of issuers, which may reduce the diversification of the mutual fund. Such concentration may make the mutual fund s unit price more volatile and may reduce the liquidity of the mutual fund s portfolio, which may make it more difficult for the mutual fund to satisfy a redemption request. Credit Risk To the extent that a mutual fund invests in fixed-income securities, debt securities (including mortgages) or mortgage-backed securities, it will be sensitive to credit risk. There is a risk that the issuer of a fixed-income security (such as a bond or preferred share) held by a mutual fund will be unable to, or will not, pay the interest, dividends or other equivalent regular payments, or to repay at maturity the initial amount invested. This risk is higher if the fixed-income or debt security has a low credit rating or no rating at all. Where the fixed-income investment is an interest in a loan, there is a risk that the person administering the loan may default or not administer the loan properly. An issuer may suffer adverse changes in financial condition that could lower the credit rating of its debt securities which can affect liquidity and make it more difficult for the Fund to sell the security. Derivative Risk A derivative is a type of investment whose value is based on, or derived from, the value or performance of other investments or from the movement of interest rates, exchange rates or market indices. There are many different types of derivatives they usually take the form of a contract to buy or sell a specific commodity, currency, stock or - 2 -

6 market index. Examples of derivatives include options, futures contracts, swap contracts and forward contracts. Derivatives require or allow the holder to purchase or sell assets such as stocks, currencies or commodities at a certain price now or in the future. Some of the common risks relating to the use of derivatives are set out below: Derivatives may not prevent changes in the market value of the mutual fund s investments or prevent losses if the market value of the investments falls. Exchange-imposed trading limits could affect the ability of a mutual fund to close out its positions in derivatives. A mutual fund may not be able to purchase or sell a derivative to make a profit or limit a loss. Derivatives can limit a mutual fund s ability to benefit from increases in the stock markets. The price of a derivative may not reflect the value of the underlying security, currency or index. If the counterparty in a derivative, or a third party holding assets of the mutual fund in connection with a derivative, goes bankrupt, the mutual fund could lose any collateral it deposited and any gains made on the derivative. Derivatives traded on foreign markets may be harder to trade and may have higher credit risks than derivatives traded in North America. There is no guarantee that the other party to a derivative contract will meet its obligations. Emerging Markets Risk In emerging market countries, securities markets may be smaller than in more developed countries, making it more difficult to sell securities in order to take profits or avoid losses. Companies in these markets may have limited product lines, markets or resources, making it difficult to measure the value of the company. Political instability and possible corruption, as well as lower standards of regulation for business practices increase the possibility of fraud and other legal problems. The value of these investments may rise and fall substantially. Equities Risk Mutual funds that invest in equities, such as common shares, are affected by stock market movements and the financial well-being of the companies that issue them. The price of a share is also influenced by general economic, industry, and market trends. Historically, equity securities are more volatile than fixed-income securities. Securities of small market capitalization companies can be more volatile than securities of large market capitalization companies. The net asset value of mutual fund securities will increase or decrease with the market value of the securities in the mutual fund portfolio. FATCA Risk U.S. federal legislation, generally referred to as the Foreign Account Tax Compliance Act Rules ( FATCA Rules ), was enacted in Under these new U.S. tax rules, investors in the Funds may in the future be required to provide identity and residency information to the Funds. The information may in turn be provided by the Funds to U.S. tax authorities (indirectly through the Canada Revenue Agency) in order to prevent U.S. withholding tax being imposed on U.S. and certain non-u.s. source income and proceeds of disposition received by the Funds and on certain amounts (including distributions) paid by the Funds to certain investors. Pursuant to an inter-governmental agreement ( Canadian IGA ) between Canada and the U.S., mutual funds will not have to enter into an individual agreement with the IRS but will have to comply with the terms of the Canadian IGA including registration requirements with the IRS and requirements to identify, and report certain information on accounts held by U.S. persons owning, directly or indirectly, an interest in the mutual funds, or report on accounts - 3 -

7 held by certain other persons or entities. Draft Canadian legislation implementing FATCA has also been issued for comments. The Canadian IGA, final Canadian implementation legislation, future U.S. Treasury Regulations, or other guidance may modify the FATCA compliance requirements. Foreign Currency Risk Changes in the value of the Canadian dollar compared to a foreign currency or the imposition of foreign exchange controls will affect the value, in Canadian dollars, of any foreign securities held by a mutual fund. As the Canadian dollar changes in value against foreign currencies, the value of the mutual fund securities purchased in those other currencies will fluctuate. Generally, when the Canadian dollar rises in value against a foreign currency, the mutual fund s investment in securities denominated in the foreign currency is worth fewer Canadian dollars. Similarly, when the Canadian dollar decreases in value against a foreign currency, the mutual fund s investment in securities denominated in the foreign currency is worth more Canadian dollars. Foreign Investment Risk The performance of a mutual fund that invests in securities of foreign companies may be affected by foreign economic conditions, restrictions on foreign investment and exchange of securities, lack of liquidity in the foreign market, exchange control risk of foreign countries, and political and social instability in the foreign country. There is often less information available regarding foreign companies and many countries have less stringent accounting, auditing and financial reporting standards and practices than Canada. Illiquidity Risk A mutual fund may hold up to 15% or more of its net assets in illiquid securities. A security is illiquid if it cannot be sold at an amount that at least approximates the amount at which the security is valued. Illiquidity can occur if the securities have sale restrictions, if the securities do not trade through normal market facilities, if there is limited demand for the securities, if markets are or become volatile, or for other reasons. Illiquid securities are more difficult to sell and a mutual fund may be forced to accept a discounted price. Interest Rate Risk The performance of a mutual fund may be affected by movements in the general level of interest rates. Mutual funds that invest in fixed-income securities will be sensitive to changes in interest rates. Generally, the value of these types of investments tends to fall as interest rates rise and increase as interest rates decline. Fixed-income securities with longer terms to maturity tend to be more sensitive to interest rate changes than shorter term issues. Large Investor Risk Mutual funds may have particular investors who own a large proportion of the outstanding securities of the fund. For example, institutions such as banks and insurance companies or other fund companies may purchase securities of a mutual fund for their own mutual funds, segregated funds, structured notes or discretionary managed accounts. Retail investors may also own a significant amount of securities of a mutual fund. In circumstances where a securityholder with significant holdings redeems a large number of units of a mutual fund at one time, the fund may be forced to sell its investments at the prevailing market price (whether or not the price is favourable) in order to accommodate such a request. This can result in significant price fluctuations in the net asset value of the mutual fund, and may potentially reduce the fund s returns. In addition, the purchase or redemption of a substantial number of units of a mutual fund may require the manager to change the composition of the mutual fund s portfolio significantly or may force it to buy or sell investments at unfavourable prices, which can affect the mutual fund s performance and may increase realized capital gains of the mutual fund

8 Liquidity Risk Liquidity refers to the speed and ease with which an asset can be sold and converted into cash. Most securities owned by mutual funds can be sold easily and at a fair price. However, a mutual fund may invest in securities which are not liquid, i.e., which may not be sold quickly or easily. In highly volatile markets, such as in periods of sudden interest rate changes, certain securities may become less liquid, which means they cannot be sold as quickly or easily. Some securities may not be liquid because of legal restrictions, the nature of the investment, certain features, like guarantees or a lack of buyers interested in the particular security or market. The difficulty of selling illiquid securities may result in a loss or a reduced return for a mutual fund. Portfolio Adviser Risk A mutual fund is dependent on its investment advisers to select its investments. A mutual fund is also dependent on its portfolio advisers to decide what proportion of the mutual fund s assets to invest in each asset class. Mutual funds are subject to the risk that poor security selection or asset allocation decisions will cause a mutual fund to underperform relative to other mutual funds with similar investment objectives. Prepayment Risk Certain fixed income securities, including mortgage-backed or other asset-backed securities, can be prepaid before maturity. Prepayment risk exists when the borrower has the right to repay amounts before maturity. In periods of decreasing interest rates, the level of prepayments may increase resulting in the portfolio adviser having to reinvest amounts received in other securities carrying a lower interest rate. As such, expected returns from investments that contain prepayment provisions may be impacted by changes in interest rates. If a prepayment is unexpected or if it occurs faster than predicted, the fixed income security may pay less income and its value may decrease. Securities Lending Risk The Funds may engage from time to time in securities lending transactions to the extent permitted by the Canadian securities regulatory authorities. In securities lending transactions, mutual funds lend securities they hold for a set period of time to borrowers who post acceptable collateral. To engage in securities lending, mutual funds are required to appoint a qualified agent under a written agreement which addresses, among other requirements, the responsibility for administration and supervision of the securities lending program. There is a risk that the other party in the securities lending transaction may not live up to its part of the transaction leaving the mutual fund holding collateral which could be worth less than the loaned securities if the value of the loaned securities increases relative to the value of the cash or other collateral, resulting in a loss to the fund. To limit this risk: the fund must hold collateral equal to no less than 102% of the value of the loaned securities (where the amount of collateral is adjusted each trading day to make sure that the value of the collateral does not go below the 102% minimum level); the collateral to be held may consist only of cash, qualified securities or securities that can be immediately converted into identical securities to those that are on loan; a fund cannot loan more than 50% of the total value of its assets (not including the collateral held by the fund) through securities lending transactions

9 ORGANIZATION AND MANAGEMENT OF THE LONSDALE WEALTH PARTNERS FUNDS MANAGER Newport Private Wealth Inc. 469 King Street West, 4 th Floor, Toronto, Ontario, M5V 1K4 TRUSTEE Newport Private Wealth Inc. Toronto, Ontario PORTFOLIO ADVISER Newport Private Wealth Inc. Toronto, Ontario PRINCIPAL DISTRIBUTOR Newport Private Wealth Inc. Toronto, Ontario CUSTODIAN NBCN Inc. Toronto, Ontario REGISTRAR Citigroup Fund Services Canada Inc. Mississauga, Ontario AUDITOR Deloitte LLP Toronto, Ontario The Manager is responsible for the management of the overall business and operations of the Funds. See the Fund-specific information, beginning on page 13 of this document, for more information. The Trustee holds legal title to a Fund s property on behalf of the Fund s securityholders. The Portfolio Adviser provides investment advice and portfolio management services to the Funds by selecting investments. The principal distributor markets the units of the Funds through its own sales force only to investors who are clients of Lonsdale Wealth Partners, a division of Newport Private Wealth Inc., and have a managed account with it. The custodian is responsible for the safekeeping of all portfolio securities and other assets of each Fund on behalf of the Fund. The registrar maintains a register of the owners of units for each Fund and processes the purchases, switches and sales of units of the Funds. The auditor audits the annual financial statements of each Fund and provides an opinion as to whether they fairly present the Fund s financial position and results of operations in accordance with generally accepted accounting principles

10 INDEPENDENT REVIEW COMMITTEE The Independent Review Committee (the IRC ) provides recommendations or approval, as required, to the Manager regarding any conflict of interest matter regarding the Funds referred to it by the Manager. The IRC s responsibilities also includes reviewing and providing input on the Manager s written policies and procedures which deal with conflict of interest matters for the Manager and reviewing such conflict of interest matters. The IRC may approve a merger between a Fund and other mutual funds, and any change of the auditor of the Funds. Subject to any securities law requirements, securityholder approval may not be obtained in such circumstances, but you will be sent a written notice at least 60 days before the effective date of any such transaction or change of auditor. The IRC prepares, at least annually, a report for securityholders which will be available on the Lonsdale Wealth Partners Internet site at or, at no cost on request of a securityholder, by contacting Lonsdale Wealth Partners at info@lonsdalewealth.com. The IRC currently consists of three members, each of whom is independent of the Manager, its affiliates and the Funds. Additional information concerning the IRC, including the names of its members, and governance of the Funds is available in the annual information form of the Funds. PURCHASES, SWITCHES AND REDEMPTIONS Purchases and Switches Each Fund has an agreement with the Manager appointing it the sole distributor of its units. The Funds are only offered to our clients who have opened a managed account with us. The managed account agreement gives us the discretion and authority to manage your investment in the Funds, which allows us to buy, switch or sell units in the Funds on your behalf, based on your investment objectives and your tolerance for risk. Whether you are buying, switching or selling units (or we are doing so on your behalf, pursuant to your managed account agreement), we base the transaction on the value of a Fund unit. The price of a unit is called the net asset value or NAV per unit, or the unit value. We calculate NAV per unit by taking the value of the assets of the Fund, subtracting any liabilities of the Fund, and dividing the balance by the number of units outstanding. We calculate NAV per security as at 4:00 p.m. Toronto time on each valuation day, which is any day that the Toronto Stock Exchange is open for business. In order to receive the Fund s unit value on a particular valuation day, your request and payment must reach us by 4:00 p.m. (Toronto time) on that day. Requests received after 4:00 p.m. (Toronto time) will be processed and priced at the unit value on the next valuation day. When you switch out of a Fund and into another Fund, you are redeeming the units of the Fund and using the proceeds to buy units of the other Fund. See Income Tax Considerations for Investors, beginning on page 10 of this document, for more information. There are no fees or charges applicable when you purchase or switch any of the Fund s units other than the trading charges paid to NBCN Inc. relating to your managed account with us

11 Redemptions If you want to sell all or part of your units, you must send your written redemption request to us. The money you receive when you sell units will be based on the NAV per unit on the valuation day the request is processed. We will send you the proceeds as soon as possible, and in any event no later than three business days after the valuation day on which your units were sold unless there are extraordinary circumstances (see below). If there is a change in your investment objectives, we may redeem units in a Fund on your behalf. No fees or other charges are charged in respect of any redemption of units. If you terminate your managed account agreement with us, all your units in the Funds will be redeemed on the valuation day after we receive the required documents. Under extraordinary circumstances, we may be unable to process your redemption order. We may, in our sole discretion, suspend the right of securityholders to redeem securities, suspend the payment of, or from time to time, delay the date fixed for payment with respect to redeemed securities, of a Fund where: normal trading is suspended on any stock exchange within or outside of Canada on which are listed securities which represent more than 50% by value of the total assets of such Fund, without allowance for liabilities; the Ontario Securities Commission consents to such suspension or delay. In addition, in the above-mentioned circumstances, the Manager may cause a Fund to pay for redeemed securities pro rata from among those securityholders from whom requests for redemption have been received and delay or suspend the payment for their remaining securities. If the Manager decides to suspend or delay payment for redeemed securities of a Fund, it will promptly send notice of the decision to the securities commissions or similar authority in each province and territory of Canada and, within 10 days after such decision, shall send notice of the decision to every securityholder of such Fund who has requested redemption. A Fund will not accept or process any purchase orders during any period when the right to redeem units is suspended. Short-Term Trading Short-term trading (buying and redeeming units of a Fund over a short period of time) can harm a Fund s performance and the value of other investors holdings in the fund because such trading can increase brokerage and other administrative costs of a Fund and interfere with the investment decision making of the Investment Adviser. Because you, and all other investors, will have a managed account with us and we buy, switch or sell units in the Funds on your behalf, based on your investment objectives and your tolerance for risk, short-term trading is significantly reduced. OPTIONAL SERVICES Registered Plans You may establish with us one or more registered retirement savings plans ( RRSPs ), registered retirement income funds ( RRIFs ), registered education savings plans ( RESPs ), tax-free savings accounts ( TFSAs ), locked-in retirement accounts, life income accounts, locked-in retirement income accounts, and locked-in retirement saving plans. All of the foregoing Registered Plans may invest in units of a Fund because the Fund is a qualified investment as defined in the Tax Act for Registered Plans. All of the provisions concerning the Registered Plans are contained your managed account agreement and the Funds declaration of trust. There is an administration fee payable to the trustee of the Registered Plan for this service

12 Automatic Reinvestment of Distributions We automatically reinvest distributions made by the Fund in additional units unless you direct us otherwise. If you prefer to receive your distributions in cash, please provide us with written instructions whether to pay you by cheque, direct deposit to your bank account or to leave the funds in your managed account with us. FEES AND EXPENSES The following table lists the fees and expenses that you may have to pay if you invest in the Funds. You may have to pay some of these fees and expenses directly. A Fund may have to pay some of these fees and expenses, which will therefore reduce the value of your investment in the Fund. Other than as described below, securityholders will be sent a written notice at least 60 days before the effective date of a change which could result in an increase in charges to a Fund. In some circumstances we may waive all or a portion of a fee or expense that is otherwise payable by a Fund. In these circumstances, we may cease to waive such a fee or expense at any time and without notice to securityholders. If a Fund holds securities of another mutual fund: (a) there are fees and expenses payable by the other mutual fund in addition to the fees and expenses payable by the Fund; (b) no management fees or incentive fees are payable by the Fund that, to a reasonable person, would duplicate a fee payable by the other mutual fund for the same service; (c) no sales fees or redemption fees are payable by the Fund in relation to its purchases or redemptions of securities of the other mutual fund if the other mutual fund is managed by the Manager or an affiliate or associate of the Manager; and (d) no sales fees or redemption fees are payable by the Fund in relation to its purchases or redemptions of securities of the other mutual fund that, to a reasonable person, would duplicate a fee payable by an investor in the Fund. Fees and Expenses Payable by the Funds Management Fees Operating Expenses Each Fund pays us an annual management fee of 2% to cover the costs of managing the Funds. The management fees are paid to us in consideration for, among other things, providing management, distribution and portfolio advisory services. Business development expenses, office overhead and personnel expenses related to the Manager s activities and the fees of external sub-advisors are paid by us out of the management fees received from the Funds. Each Fund pays all operating expenses including day-to-day expenses such as costs of accounting, custodial services, recordkeeping, valuation, audit and legal fees, brokerage commissions, taxes, administrative expenses and securityholder communications. The compensation and other reasonable expenses of the IRC will be paid out of the assets of the Funds. The main components of compensation are a fee of $2,250 for each meeting of the IRC attended (includes meetings attended by conference call), plus expenses for each meeting. The Chairman of the IRC is entitled to an additional retainer of $3,000. Expenses of the IRC include an annual fee of $25,000 payable to a service provider to run the IRC, to act as the IRC s secretariat and to provide secretarial services to the IRC, premiums for insurance coverage, travel expenses and reasonable out-of-pocket expenses. The fees and expenses, plus associated legal costs, are allocated among the Funds in a manner that is considered by the Manager to be fair and reasonable

13 Fees and Expenses Payable Directly by You Sales Charges Switch Fee Redemption Fees Short-Term Trading Fees Early Redemption Fees Registered Plan Fees None None None None None If your units are held in a RRSP, RRIF, RESP, TFSA, locked-in retirement account, life income account, locked-in retirement income account, or locked-in retirement saving plan, you pay the trustee of the registered plan an annual trustee fee of $50.00 per registered plan as well as other fees imposed by the trustee. You will also pay fees to the custodian who holds the assets in your managed account based on its fee schedule, including transfer out fee, certified cheque fee, NSF cheque fee, cheque stop payment fee, wire transfer out fee, bank wire-in fee and trade transaction fee. These fees are set out in your managed account agreement with us. Sales Charges You will not pay any administration or sales charges in connection with the purchase or redemption of units of the Fund other than those charges paid to NBCN relating to your managed account with us. DEALER COMPENSATION We distribute units of the Fund only to our clients who have entered into managed account agreements with us. We will pay a referral fee to persons who refer you to us. The annual referral fee will be calculated as a percentage of the value of the Funds in your managed account with us at a rate of 0.80% or 0.90% per annum. DEALER COMPENSATION FROM MANAGEMENT FEES No management fees paid by Lonsdale Wealth Partners funds were used to fund commissions or other promotional activities of Lonsdale Wealth Partners funds in the Manager s most recently completed financial year. INCOME TAX CONSIDERATIONS FOR INVESTORS This section is a summary of how investing in the Funds can affect your taxes. It assumes that you are a Canadian resident that deals at arm s length with and holds units of the Funds as capital property. This information may or may not apply to you. We recommend that you consult your tax adviser about your own situation. This summary is not intended to be legal advice or tax advice. We have tried to make this discussion easy to understand. As a result, it may not be technically precise, or cover all the tax consequences that may be relevant to you. Accordingly, you should consult your own tax adviser having regard to your own particular circumstances when you consider purchasing, switching or redeeming units of a Fund. More detailed information is available in the Funds Annual Information Form

14 How Your Investment can Make Money Your investment in a Fund can make money from: any earnings the Fund makes or realizes on its investments which are allocated to you in the form of distributions. any capital gains that you realize when you switch or sell your securities of the Fund at a profit. If you switch or sell your investment at a loss, it is called a capital loss How Your Investment is Taxed The tax you pay on your mutual fund investment depends on whether you hold your units in a non-registered account or in a Registered Plan, such as an RRSP or a TFSA. Units held in a Registered Plan If you hold units of a Fund in a Registered Plan, you generally pay no tax on distributions or dividends you receive or on any capital gains that your Registered Plan makes from selling or switching or otherwise disposing of these units. Generally, any withdrawals from Registered Plans are subject to tax. However, withdrawals from a TFSA are not subject to tax, and RESPs are subject to special rules. Units held in a Non-registered Account If you hold units of a Fund in a non-registered account, you must include your share of the Fund s distributions of net income and the taxable portion of net capital gains (in Canadian dollars) in your income. These amounts generally are taxed as if you had received them directly. Distributions must be included in your income, whether you receive them in cash or have them reinvested in additional units of the Fund. Distributions may include a return of capital. When the net income and net realized capital gains available for distribution of a mutual fund is less than the amount distributed, the difference may be a return of capital. A return of capital is generally not taxable, but will reduce the adjusted cost base of your securities of the Fund. We explain how to calculate adjusted cost base below. We will issue a tax slip to you each year that shows the amount and character of distributions the Fund made or made payable to you, including any return of capital, where applicable. You generally can claim any tax credits that apply to those earnings. For example, if a Fund s distributions include Canadian dividend income or foreign income, you may qualify for tax credits for such amounts as permitted by the Income Tax Act (Canada). All switches and sales of units are considered dispositions for tax purposes. If the value of the units sold is greater than the adjusted cost base of the units, you will have a capital gain. In general, you must include one-half of the amount of a capital gain ( taxable capital gain ) in your income for tax purposes. If the value of the units sold is less than the adjusted cost of the units, you will have a capital loss one-half of which can be applied against taxable capital gains. Calculating Adjusted Cost Base In general, the aggregate adjusted cost base of your investment in a Fund equals: your initial investment, including any applicable sales charges you paid, plus any additional investments in units of the Fund, including any applicable sales charges you paid, plus any reinvested distributions or dividends, minus any distributions that were a return of capital, minus the adjusted cost base of any units of the Fund previously disposed of

15 To the extent that the adjusted cost base of your units would otherwise be a negative amount as a result of you receiving a distribution from a Fund that is a return of capital, the negative amount will be deemed to be a capital gain realized by you from a disposition of the units and your adjusted cost base of the units would be increased by the amount of such deemed gain. You should keep detailed records of the cost of your investments, distributions and dividends you receive on those units so you can calculate their adjusted cost base. You may wish to consult a tax adviser to help you with these calculations. Buying Units Late in the Year The Funds may make their largest distribution in December. If you buy units of a Fund just before it makes such a distribution, you will be taxed on the entire distribution even though the Fund may have earned the income or realized the gain giving rise to the distribution or dividend before you owned the units. That means you may have to pay tax on your proportionate share of the net income or net realized capital gains the Fund earned in the year, prior to the time you invested in the Fund. WHAT ARE YOUR LEGAL RIGHTS? Securities legislation in some provinces and territories gives you the right to withdraw from an agreement to buy mutual funds within two business days of receiving the Simplified Prospectus or Fund Facts, or to cancel your purchase within 48 hours of receiving confirmation of your order. Securities legislation in some provinces and territories also allows you to cancel an agreement to buy mutual fund units and get your money back, or to make a claim for damages, if the Simplified Prospectus, Annual Information Form, Fund Facts or financial statements misrepresent any facts about the fund. These rights must usually be exercised within certain time limits. For more information, refer to the securities legislation of your province or territory or consult your lawyer. YOUR RIGHTS AS A SECURITYHOLDER Your rights as a securityholder in a Fund cannot be changed without 60 days notice to securityholders. For certain matters, the regulators require a change to be approved by a majority vote of securityholders. As a securityholder, you may vote only whole securities. You may not vote fractional securities. Your rights are described in more detail in the Annual Information Form. For more information you may refer to the securities legislation of your province or territory or consult your lawyer

16 SPECIFIC INFORMATION ABOUT EACH OF THE MUTUAL FUNDS DESCRIBED IN THIS DOCUMENT Introduction In the pages that follow, we have provided specific information about each of the Funds. Please read this introductory section for general information that also applies to each Fund. Investment Risk Classification Methodology We assign fund risk ratings to the Funds as an additional guide to help you decide whether a Fund is right for you. Our determination of the risk rating for the Funds is guided by the methodology recommended by the Fund Risk Classification Task Force of The Investment Funds Institute of Canada (the Task Force ). The Task Force concluded that the most comprehensive, easily understood form of risk is the historical volatility of the fund as measured by the standard deviation of its performance. However, you should be aware that other types of risk, both measurable and non-measurable, also exist. Additionally, just as historical performance may not be indicative of future returns, a fund s historical volatility may not be indicative of its future volatility. The Task Force guidelines suggest that managers refer to standard deviation bands associated with fund categories as a point of reference where historical performance does not exist. Consistent with the Task Force guidelines, qualitative factors are also considered before making a final determination of the appropriate risk ratings. Here are the Task Force s risk rating categories: Low for mutual funds with a level of risk that is typically associated with investments in money market funds and Canadian fixed-income funds; Low to medium for mutual funds with a level of risk that is typically associated with investments in balanced funds and global and/or corporate fixed-income funds; Medium for mutual funds with a level of risk that is typically associated with investments in equity portfolios that are broadly-diversified among a number of large-capitalization Canadian and/or international equity units; Medium to high for mutual funds with a level of risk that is typically associated with investments in equity funds that may concentrate their investments in specific regions or in specific sectors of the economy; and High for mutual funds with a level of risk that is typically associated with investment in equity portfolios that may concentrate their investments in specific regions or in specific sectors of the economy where there is a substantial risk of loss (e.g., emerging markets, precious metals). A fund may be suitable for you as an individual component within your entire portfolio, even if the fund s risk rating is higher or lower than your personal risk tolerance level. When you choose investments through your financial adviser, you should consider your whole portfolio, investment objectives, your time horizon, and your personal risk tolerance level. Using this methodology, we have assigned a risk rating to each of the Funds. In certain instances, we may classify a Fund either higher or lower than the risk rating indicated by the Task Force s methodology. We may do so where qualitative factors, such as style and sector concentration, may contribute to the Fund s overall volatility and therefore the risk rating of the Fund. We review annually the risk rating assigned to each Fund and our recommendation concerning tolerance for risk is based primarily on our review of the past volatility of the Fund. A copy of the methodology we use to identify the investment risk level of the Funds is available on request, at no cost, by calling us locally at or toll-free at , by writing to us at 469 King Street West, 4 th Floor, Toronto, Ontario, M5V 1K4 or by contacting us at info@lonsdalewealth.com

17 Securities Lending Transactions The Funds may engage in securities lending transactions. Risks associated with securities lending transactions are described in the What are the Risks of Investing in a Mutual Fund, beginning on page 2 of this document. Securities lending, repurchase and reverse repurchase transactions earn additional income for mutual funds. That income comes from the fees paid by the transaction counterparty and interest paid on the cash or securities held as collateral. On any securities lending transaction, a Fund must, unless it has been granted relief: deal only with counterparties who meet generally accepted creditworthiness standards and who are unrelated to the Fund s portfolio adviser, manager or trustee as defined in NI ; hold collateral equal to a minimum 102% of the market value of the portfolio securities loaned (for securities lending transactions), sold (for repurchase transactions) or purchased (for reverse repurchase transactions); adjust the amount of the collateral on each business day to ensure the value of the collateral relative to the market value of the portfolio securities loaned, sold or purchased remains at or above the minimum 102% limit; and limit the aggregate value of all portfolio securities loaned or sold through units lending and repurchase transactions to no more than 50% of the total assets of the Fund (without including the collateral for loaned securities and cash for sold securities). Use of Derivatives The Funds may use derivatives for hedging purposes, to reduce the Fund s exposure to changes in securities prices, interest rates, exchange rates or other risks. Derivatives may also be used for non-hedging purposes, as substitute investments for stocks or a stock market, to gain exposure to other currencies, to seek to generate additional income, or for any other purpose that is consistent with the Fund s investment objectives. If a Fund intends to use derivatives as part of its investment strategy, we have indicated in the Fund s description of investment strategies whether derivatives may be used for hedging purposes, non-hedging purposes or both. See Derivative Risk, beginning on page 2 of this document, for an explanation of the risks which accompany the use of derivatives

18 THE LONSDALE TACTICAL BALANCED PORTFOLIO Fund Details Type of Fund Units Offered Registered Plan Eligibility Canadian Balanced units Qualified investment for registered plans Date Fund Established December 9, 2013 Portfolio Adviser Newport Private Wealth Inc., Toronto, Ontario What Does the Fund Invest In? Investment Objectives The primary objective of The Lonsdale Tactical Balanced Portfolio is to maximize total investment return using a balance of current income and longer term capital growth. Preservation of capital is paramount with each investment made. The Fund may invest directly or indirectly in cash and cash equivalents, government bonds, corporate bonds, maple bonds, high yield bonds, debentures, convertible bonds, preferred shares, mortgages, listed securities, public equities, private equities, real estate, and other yield based securities that meet the return and risk parameters of the Manager. The investment objectives of the Fund may not be changed without securityholder approval. Investment Strategies The Manager will execute the Fund s investment strategy by investing approximately equally in investments selected to generate income and in investments selected to generate capital growth, with the assistance of advice provided by external sub-advisers. The Manager will allocate the capital of the Fund into various asset classes within the following ranges: Cash and cash equivalents: 0-35% Yield investments: 20-80% Growth investments: 20-80% Other investments: 0-20% The Manager evaluates the mix of asset classes of the Fund on a regular basis and makes a formal determination every quarter. This entails a review of how much to invest into each of the asset classes and asset categories, including bonds, mortgages, real estate, public equities, private equities and other investments, following which portfolio changes may be made. In this approach, the Manager makes tactical choices within each of these asset classes based on its view of their relative valuation and ability to achieve the Fund s investment objectives. From time to time, the Fund may invest up to 60% of its net assets in other mutual funds, including mutual funds advised by external sub-advisors of the Fund. The criteria for evaluating these mutual fund securities will be the same as the criteria for evaluating individual securities. The Fund may not invest in other mutual funds managed by the Manager or an associate or affiliate of the Manager

19 THE LONSDALE TACTICAL BALANCED PORTFOLIO The Fund may use derivatives from time to time for hedging and non-hedging purposes. The Fund may enter into securities lending transactions and other transactions to generate additional income from securities held in the Fund as permitted. The majority of the Fund s investments will be Canadian. The Fund may invest up to 20% in foreign securities to achieve its investment objectives. For non-canadian investments, the Manager may use currency hedges to mitigate currency risk. In the event of adverse economic conditions, the Fund may depart from its investment strategies and target asset class ranges to either protect capital or seek incremental returns due to market volatility. The Manager will engage sub-advisers to provide advice to it with respect to various asset categories within the Fund, from time to time. The Manager may make changes to its sub-advisers from time to time deemed to be in the best interest of the Fund. The following is a description of the Manager s principal external sub-advisers. Addenda Capital Inc. ( Addenda Capital ) will provide advice with respect to 30-70% of the Fund s portfolio allocated to yield investments. Addenda Capital employs a wide range of investment strategies based on economic and market forecasts to manage bond portfolios, such as interest rate anticipation, yield curve management, trading among sectors and individual security selection. Bluewater Investment Management Inc. ( Bluewater ) will provide advice with respect to 30-70% of the Fund s portfolio allocated to growth investments. Bluewater focuses on a small number of North American growth companies with a long-term view. All of Bluewater s portfolios are concentrated collections of what Bluewater believes to be solid, well-managed companies bought at a discount to their intrinsic value. Bluewater s valuation discipline adds a strong element of capital preservation. Canso Investment Counsel Ltd. ( Canso ) will provide advice with respect to 30-70% of the Fund s portfolio allocated to yield investments. Canso conducts a full review of the financial condition and operations of the issuer of a security. The security is then valued using Canso s estimates of the issuer s recurring cash flows and a long-term discount rate determined by their in-house rating of the issuer. Growth prospects are taken into account in the analysis, on a normalized basis. Marret Asset Management Inc. ( Marret ) will provide advice with respect to 30-70% of the Fund s portfolio allocated to yield investments. Marret uses an active managed approach in specialized high yield debt strategies designed to maximize risk-adjusted returns and preserve capital in each phase of the credit cycle. Over the course of a credit cycle, the goal is to generate returns consistent with the long-term performance of equity indices, but with the volatility and risk characteristics consistent with 10-year US Treasury notes. Marret will employ hedging strategies, including shorting securities and holding cash, designed to generate positive returns and/or protect the portfolio against the risk of losses from currency fluctuations, interest rate changes and market declines. Taylor Asset Management Inc. ( Taylor ) will provide advice with respect to 30-70% of the Fund s portfolio allocated to growth investments. Taylor manages a concentrated portfolio of North American equities. Taylor s investment process focused on undervalued stocks. Taylor manages individual security and sector exposures, and continually monitors the stocks in its portfolios to ensure their ongoing suitability. Cash, foreign content and foreign currency hedging are used strategically to help manage risk. What are the Risks of Investing in the Fund? Investing in this fund is subject to the risks set out below. See What is a Mutual Fund and What are the Risks of Investing in a Mutual Fund?, beginning on page 2 of this document, for descriptions of these specific risks. Concentration Risk Credit Risk