Investors Short Term Capital Yield Class

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1 Annual Financial Statements MARCH 31, 2014 Copyright Investors Group Inc Trademarks owned by IGM Financial Inc. and licensed to its subsidiary corporations.

2 ANNUAL FINANCIAL STATEMENTS MARCH 31, 2014 STATEMENTS OF NET ASSETS as at March 31 (in $ 000 except per share amounts) STATEMENTS OF OPERATIONS for the periods ended March 31 (in $ 000 except per share amounts) Assets: Investments 238, ,363 Cash and short-term investments - 12,307 Accrued interest and dividends receivable 1,244 1,757 Taxes recoverable (payable) Accounts receivable for securities sold Due from brokers 1,005 1,021 Due from manager Unrealized gains on forward contracts and other derivatives - - Other assets - - 3,093 15,981 Total assets 242, ,344 Liabilities: Bank overdraft 51 - Due to brokers - 1,500 Accounts payable for securities redeemed 1 8 Accrued expenses - 49 Liability for options written - - Unrealized losses on forward contracts and other derivatives 4,269 12,663 Other liabilities - - Total liabilities 4,321 14,220 Net assets 237, , Income: Dividends - - Trust income - - Interest and other income 6,614 7,616 Income (loss) from derivatives - - Securities lending - - Foreign withholding taxes - - 6,614 7,616 Expenses: Management fees 4,118 4,781 Management fee rebates - - Service fees - - Administration fees Goods and services tax / Harmonized sales tax Independent Review Committee costs 2 2 Other 3 1 4,825 5,561 Expense reductions (415) (751) 4,410 4,810 Net income (loss) 2,204 2,806 Realized gain (loss) (323) 4,453 Unrealized gain (loss) (1,044) (1,934) Commissions and other portfolio transaction costs - - Net realized and unrealized gain (loss) from investments and foreign exchange (1,367) 2,519 Net increase (decrease) in net assets from operations 837 5,325 Net assets, end of period per share per series Series A , ,932 Series B ,273 93,866 Series Jdsc ,454 54,877 Series Jnl ,332 54,348 Series Tdsc ,298 3,888 Series Tnl ,788 2,060 Series Tjdsc Series Tjnl , ,124 Net increase (decrease) in net assets from operations per share per series Series A ,777 Series B ,771 Series Jdsc Series Jnl Series Tdsc Series Tnl Series Tjdsc Series Tjnl ,325 See accompanying notes to financial statements.

3 ANNUAL FINANCIAL STATEMENTS MARCH 31, 2014 STATEMENTS OF CHANGES IN NET ASSETS for the periods ended March 31 (in $ 000 except when stated) SERIES A SERIES B SERIES Jdsc SERIES Jnl SERIES Tdsc Net assets, beginning of period 139, ,147 93, ,610 54,877-54,348-3,888 3,260 Increase (decrease) in net assets resulting from: Operations 365 2, , Dividends: Ordinary Capital gains Return of capital (73) (73) Management fee rebates Total dividends (73) (73) Share transactions Proceeds from sale of shares 3,403 58,430 6, ,991 15,210 63,488 12,097 76, ,491 Reinvested from dividends Payment on redemption of shares (47,495) (95,422) (53,421) (116,506) (15,921) (8,937) (33,181) (22,113) (621) (869) Total share transactions (44,092) (36,992) (46,680) (12,515) (711) 54,551 (21,084) 53,995 (532) 641 Increase (decrease) in net assets (43,727) (34,215) (46,593) (10,744) (423) 54,877 (21,016) 54,348 (590) 628 Net assets, end of period 96, ,932 47,273 93,866 54,454 54,877 33,332 54,348 3,298 3,888 Increase (decrease) in shares (in thousands): Shares outstanding, beginning of period 11,784 14,913 7,906 8,960 5,443 5, Add (deduct): Shares sold 287 4, ,830 1,510 6,333 1,200 7, Reinvested from dividends Shares redeemed (4,008) (8,090) (4,512) (9,884) (1,584) (890) (3,303) (2,203) (63) (88) Shares outstanding, end of period 8,063 11,784 3,962 7,906 5,369 5,443 3,289 5, SERIES Tnl SERIES Tjdsc SERIES Tjnl TOTAL Net assets, beginning of period 2,060 1, , ,489 Increase (decrease) in net assets resulting from: Operations ,325 Dividends: Ordinary Capital gains Return of capital (40) (38) (17) (7) (9) (6) (139) (124) Management fee rebates Total dividends (40) (38) (17) (7) (9) (6) (139) (124) Share transactions Proceeds from sale of shares 127 1, , ,452 Reinvested from dividends Payment on redemption of shares (377) (868) (19) (5) (180) (337) (151,215) (245,057) Total share transactions (241) (69) 466 (113,134) 61,434 Increase (decrease) in net assets (272) (77) 463 (112,436) 66,635 Net assets, end of period 1,788 2, , ,124 Increase (decrease) in shares (in thousands): Shares outstanding, beginning of period Add (deduct): Shares sold Reinvested from dividends Shares redeemed (38) (88) (2) - (18) (34) Shares outstanding, end of period See accompanying notes to financial statements.

4 ANNUAL FINANCIAL STATEMENTS MARCH 31, 2014 STATEMENT OF INVESTMENTS as at March 31, 2014 No. of Units, Average Fair Shares, or Cost Value Country Sector Par Value ($ 000) ($ 000) FIXED INCOME Bank of Montreal 1.89% Canada Corporate - Non Convertible 8,000,000 7,990 8,045 Bank of Montreal 2.96% Callable Canada Corporate - Non Convertible 5,000,000 5,102 5,138 Bank of Montreal 2.24% Callable Canada Corporate - Non Convertible 5,000,000 4,979 5,021 Bank of Montreal 2.84% Canada Corporate - Non Convertible 1,500,000 1,500 1,509 The Bank of Nova Scotia 1.80% Canada Corporate - Non Convertible 3,000,000 2,973 3,007 The Bank of Nova Scotia 2.10% Canada Corporate - Non Convertible 3,000,000 3,000 3,020 The Bank of Nova Scotia 2.598% Canada Corporate - Non Convertible 1,250,000 1,250 1,275 bcimc Realty Corp. 2.96% Canada Corporate - Non Convertible 1,400,000 1,399 1,430 Bell Canada 3.35% Canada Corporate - Non Convertible 3,000,000 2,995 3,079 Cadillac Fairview Finance Trust 3.24% Callable Canada Provincial Governments 3,000,000 3,087 3,100 Calloway Real Estate Investment Trust 3.749% Canada Corporate - Non Convertible 1,000,000 1,001 1,004 Canada Housing Trust No % Canada Federal Government 2,400,000 2,559 2,548 Canadian Imperial Bank of Commerce 3.40% Canada Corporate - Non Convertible 5,500,000 5,744 5,674 Canadian Imperial Bank of Commerce 1.75% Canada Corporate - Non Convertible 4,000,000 4,001 4,007 Canadian Imperial Bank of Commerce 2.65% Canada Corporate - Non Convertible 7,400,000 7,430 7,557 Canadian Imperial Bank of Commerce 2.35% Canada Corporate - Non Convertible 1,500,000 1,480 1,514 Canadian Western Bank 3.077% Series DPNT Canada Corporate - Non Convertible 1,000,000 1,000 1,017 CNH Capital Canada Receivables Trust 2.338% Canada Corporate - Non Convertible 667, Enbridge Gas Distribution Inc. 5.16% Callable Canada Corporate - Non Convertible 2,000,000 2,289 2,217 Enbridge Inc. F/R Canada Corporate - Non Convertible 1,600,000 1,600 1,616 Enbridge Inc. 5.00% Callable Canada Corporate - Non Convertible 3,800,000 4,170 4,072 Ford Credit Canada Ltd % Canada Corporate - Non Convertible 1,000,000 1,000 1,070 Golden Credit Card Trust 3.824% Canada Corporate - Non Convertible 2,300,000 2,300 2,361 Government of Canada 2.75% Canada Federal Government 3,500,000 3,652 3,635 Government of Canada 1.50% Canada Federal Government 1,700,000 1,710 1,707 Government of Canada 2.75% Canada Federal Government 3,000,000 3,123 3,116 Home Trust Co. 3.40% Canada Corporate - Non Convertible 1,000,000 1,000 1,013 Hydro One Inc. 2.95% Callable Canada Corporate - Non Convertible 2,000,000 2,000 2,045 Hydro One Inc. 2.78% Series MTN Canada Corporate - Non Convertible 7,250,000 7,269 7,406 International Business Machines Corp. 2.20% Canada Corporate - Non Convertible 1,000, ,009 John Deere Canada Funding Inc. 2.30% Canada Corporate - Non Convertible 3,000,000 2,999 3,039 JPMorgan Chase & Co. 2.92% United States Corporate - Non Convertible 1,500,000 1,500 1,531 Manulife Bank of Canada F/R Canada Corporate - Non Convertible 2,000,000 2,000 2,010 Manulife Bank of Canada 2.383% Canada Corporate - Non Convertible 2,000,000 2,000 2,022 Manulife Bank of Canada F/R Canada Corporate - Non Convertible 1,500,000 1,500 1,497 Manulife Financial Corp % Canada Corporate - Non Convertible 1,500,000 1,500 1,549 Master Credit Card Trust 2.626% Canada Corporate - Non Convertible 1,000,000 1,000 1,021 MCAP Commercial LP 3.955% Canada Corporate - Non Convertible 3,000,000 3,000 2,998 Molson Coors Capital Finance ULC 5.00% Canada Corporate - Non Convertible 1,700,000 1,784 1,778 National Bank of Canada 2.05% Canada Corporate - Non Convertible 3,000,000 3,000 3,022 1 Power Corp. of Canada 7.57% Callable Canada Corporate - Non Convertible 500, Province of Ontario 1.90% Canada Provincial Governments 11,700,000 11,761 11,789 Province of Ontario 2.10% Canada Provincial Governments 1,800,000 1,810 1,807 Province of Ontario 4.40% Canada Provincial Governments 3,500,000 3,876 3,868 Province of Ontario 4.00% Canada Provincial Governments 3,400,000 3,591 3,672 Province of Quebec 3.50% Canada Provincial Governments 1,000,000 1,027 1,028 Rogers Communications Inc. 3.00% Canada Corporate - Non Convertible 2,000,000 1,998 2,049 Rogers Communications Inc. 2.80% Canada Corporate - Non Convertible 1,500,000 1,500 1,496 Rogers Communications Inc. 4.70% Callable Canada Corporate - Non Convertible 1,000, ,086 Royal Bank of Canada 3.03% Canada Corporate - Non Convertible 10,500,000 10,717 10,806 Royal Bank of Canada 2.68% Canada Corporate - Non Convertible 1,500,000 1,518 1,533 Royal Bank of Canada 2.77% Series DPNT Canada Corporate - Non Convertible 3,500,000 3,499 3,555 Royal Bank of Canada 2.98% Canada Corporate - Non Convertible 1,600,000 1,569 1,637 Shaw Communications Inc. F/R Canada Corporate - Non Convertible 1,000,000 1,000 1,000 Shaw Communications Inc. 6.15% Canada Corporate - Non Convertible 650, Shaw Communications Inc. 5.65% Canada Corporate - Non Convertible 800, Suncor Energy Inc. 5.80% Callable Canada Corporate - Non Convertible 2,000,000 2,326 2,264 TELUS Corp. 3.65% Canada Corporate - Non Convertible 1,900,000 1,893 1,973 TELUS Corp. 5.05% Canada Corporate - Non Convertible 1,900,000 1,889 2,114 TELUS Corp. 5.05% Canada Corporate - Non Convertible 2,000,000 2,179 2,226 TELUS Corp. 3.35% Callable 2022 Canada Corporate - Non Convertible 1,000, Thomson Reuters Corp % Canada Corporate - Non Convertible 2,000,000 2,000 2,043 The Toronto-Dominion Bank 2.30% Canada Mortgage Backed 3,655,214 3,700 3,711 The Toronto-Dominion Bank 1.50% Canada Mortgage Backed 2,271,344 2,205 2,274 The Toronto-Dominion Bank 2.433% Canada Corporate - Non Convertible 2,000,000 2,000 2,030 TransCanada PipeLines Ltd. 5.10% Canada Corporate - Non Convertible 1,000,000 1,125 1, , ,590 EQUITIES Canfor Corp. Canada Materials 281,049 6,135 7,318 Catamaran Corp. United States Health Care 126,000 6,122 6,226 Celestica Inc. Sub. voting Canada Information Technology 564,000 6,148 6,824 CGI Group Inc. Class A Sub. voting Canada Information Technology 167,000 6,146 5,700 1 The issuer of this security is related to the Manager of the Fund. See accompanying notes to financial statements.

5 ANNUAL FINANCIAL STATEMENTS MARCH 31, 2014 STATEMENT OF INVESTMENTS (continued) as at March 31, 2014 No. of Units, Average Fair Shares, or Cost Value Country Sector Par Value ($ 000) ($ 000) EQUITIES (continued) Dominion Diamond Corp. Canada Materials 449,473 6,135 6,657 Element Financial Corp. Canada Financials 477,083 6,135 7,099 Tourmaline Oil Corp. Canada Energy 138,000 6,163 7,198 TransGlobe Energy Corp. Canada Energy 667,793 6,130 5,596 Valeant Pharmaceuticals International Inc. United States Health Care 53,000 6,141 7,708 55,255 60,326 TOTAL INVESTMENTS 231, ,916 Net Assets (see Schedule 1): Total investments 238,916 Cash and short-term investments (51) Unrealized losses on forward contracts (see Schedule 2) (4,269) Other net assets (liabilities) 3, ,688 Schedule 1 - Asset Composition as at March 31, 2014 BY ASSET TYPE % of net asset value Fixed Income 98.4 Cash and short-term investments 0.2 Other net assets (liabilities) 1.4 Total BY CURRENCY Canadian dollars 98.4 BY SECTOR Corporate 57.8 Federal Government 24.3 Provincial Governments 13.7 Mortgage Backed as at March 31, 2013 BY ASSET TYPE % of net asset value Fixed Income 95.5 Cash and short-term investments 3.8 Other net assets (liabilities) 0.7 Total BY CURRENCY Canadian dollars 95.5 BY SECTOR Corporate 48.6 Federal Government 31.9 Provincial Governments 12.7 Mortgage Backed See accompanying notes to financial statements.

6 ANNUAL FINANCIAL STATEMENTS MARCH 31, 2014 Schedule 2 - Unrealized Losses on Forward Contracts as at March 31, 2014 Fair Fair Unrealized No. of value No. of value Settlement losses contracts Sold ($ 000) Bought shares ($ 000) date ($ 000) 1 Canadian Common Stock (see below) 60,326 Investors Group Short Term Income Fund 5,612,682 56, (4,269) Note: The Fund enters into derivative contracts in order to provide a return similar to what would be achieved by an investment directly in units of Investors Group Short Term Income Fund. The Fund has entered into a forward purchase and sale agreement with a Canadian chartered bank (the Counterparty). The Counterparty is not a related party. Under the terms of the forward agreement, the Counterparty has agreed to pay the Fund an amount equal to the redemption proceeds of the number of Series O units of the Investors Group Short Term Income Fund, net of any forward fees payable to the Counterparty, in exchange for the Fund s common share portfolio. The terms of the agreement also provide for early settlement of the forward contract, in whole or in part, at any time prior to the settlement date at the parties discretion. Recent amendments to the Income Tax Act will, subject to the transitional and grandfathering rules, tax gains or losses realized from the settlement of the forward contracts on account of income and not capital. The Fund expects to limit or eliminate the use of forward contracts in the future. Investors Group Short Term Income Fund is an Investors Group sponsored fund that is not otherwise offered to the public and which aims to generate income by investing primarily in Canadian corporate and government fixed-income securities with average terms to maturity primarily concentrated between one and five years. Average Fair Canadian Common Stock No. of cost value sold under forward contract shares ($ 000) ($ 000) Canfor Corp. 281,049 6,135 7,318 Catamaran Corp. 126,000 6,122 6,226 Celestica Inc. Sub. voting 564,000 6,148 6,824 CGI Group Inc. Class A Sub. voting 167,000 6,146 5,700 Dominion Diamond Corp. 449,473 6,135 6,657 Element Financial Corp. 477,083 6,135 7,099 Tourmaline Oil Corp. 138,000 6,163 7,198 TransGlobe Energy Corp. 667,793 6,130 5,596 Valeant Pharmaceuticals International Inc. 53,000 6,141 7,708 55,255 60,326 See accompanying notes to financial statements.

7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS MARCH 31, ORGANIZATION OF THE CORPORATION, THE FUND, FISCAL PERIODS AND GENERAL INFORMATION (a) Organization of the Corporation, the Fund and fiscal periods Investors Group Corporate Class Inc. (the Corporation) is a mutual fund corporation incorporated under the laws of Canada on July 17, The Fund is a class of shares of the Corporation. The Corporation is authorized to issue an unlimited number of common shares and mutual fund shares. If issued, Series P and Z shares are only available for purchase by other Investors Group Funds or other qualified investors. All series generally share in the operations of the Fund, including net income, realized gain (loss) and unrealized gain (loss), on a pro rata basis except for items that can be specifically attributed to one or more series. Dividends for each series may vary, partly due to the differences in expenses between the series. The financial statements of the Fund are presented as at and for the 12-month periods ended March 31, 2014 and If applicable, financial results for the Fund or series established during the periods are presented from the date operations commenced to March 31 of that fiscal period. (b) General information I.G. Investment Management, Ltd. is the Manager of the Fund. I.G. Investment Management, Ltd. and/or I.G. International Management Limited acts as Portfolio Advisor(s) to the Fund. In some cases, I.G. Investment Management (Hong Kong) Limited has been engaged as sub-advisor to provide investment services to the Fund. The Fund is distributed by Investors Group Financial Services Inc. and Investors Group Securities Inc. (collectively, the Distributors). These companies are, indirectly, wholly owned subsidiaries of IGM Financial Inc. IGM Financial Inc. is a subsidiary of Power Financial Corp. and Power Corporation of Canada. Power Financial Corp. also owns a majority of Great-West Lifeco Inc. and its related companies and, therefore, those companies are considered affiliates of the Manager and Distributors. The Fund may invest in certain securities within the Power Group of Companies, subject to certain governance criteria, and these holdings, as at the end of the period, have been identified on the Statement of Investments for the Fund. Any transactions during the period were executed through market intermediaries and under prevailing market terms and conditions. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). GAAP requires Management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from such estimates. The significant accounting policies of the Fund are as follows: (a) Valuation of investments Investments are deemed to be held for trading in accordance with CPA Canada Handbook Section 3855, Financial Instruments Recognition and Measurement (Section 3855) and therefore are recorded at fair value. Investment purchase and sale transactions are recorded as of the trade date. Realized and unrealized gains and losses on investments are calculated based on average cost of investments, excluding brokerage commissions and other transaction costs. Brokers commissions and other transaction costs are immediately charged to net income in the period incurred. Cost of securities presented in the Statement of Investments represents the amount paid for each security, including brokerage commissions and other transaction costs, and is determined on an average cost basis. See Note 10 for the fair value classification of financial instruments as at the end of the period. (i) Equity securities, fixed-income securities and other mutual funds Investments in securities listed on a public securities exchange or traded on an over-the-counter market are valued at the closing bid price. Securities with no available closing bid prices are valued at the last trade or closing price. Investments in securities of another mutual fund are valued at the net asset value per security calculated in accordance with the offering documents of such mutual fund. Unlisted or non-exchange traded securities, or securities for which a bid price, last sale or closing price are unavailable or securities for which market quotations are, in the Manager s opinion, inaccurate, unreliable or not reflective of all available material information, are valued at their estimated fair value, determined by using appropriate and accepted industry valuation techniques including valuation models. The estimated fair value of a security determined using valuation models requires the use of inputs and assumptions based on observable market data including volatility and other applicable rates or prices. In limited circumstances, the estimated fair value of a security may be determined using valuation techniques that are not supported by observable market data. (ii) Futures contracts Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. The value of a contract is the gain or loss that would be realized upon closure. Margin deposited in respect of futures contracts, net of the unrealized gain or loss, is included on the Statements of Net Assets. Any change in the margin requirement is settled daily. (iii) Forward contracts Forward contracts, including forward currency contracts, are valued at the gain or loss that would arise as a result of closing the position at the reporting date. (iv) Options contracts Premiums received from writing options are included in the Statements of Net Assets as a liability and subsequently adjusted daily to fair value. If a written option expires unexercised, the premium received is recognized as a realized gain. If a written call option is exercised, the difference between the proceeds of the sale plus the value of the premium and the cost of the security is recognized as a realized gain or loss. If a written put option is exercised, the cost of the security acquired is the exercise price of the option less the premium received. (b) Cash and short-term investments Cash and short-term investments are comprised of cash on deposit and short-term investments with terms to maturity of less than one year at acquisition. Cash and short-term investments are carried at fair value. (c) Currency All amounts are expressed in Canadian dollars. Foreign currency amounts have been expressed in Canadian dollars on the following bases: (i) Fair value of investments and other assets and liabilities at the rate of exchange at the end of the period. (ii) Income, expenses, purchases and sales of investments at the rate of exchange on the dates of such transactions. (d) Income recognition Income from investments is recognized on an accrual basis. Dividend income is recognized at the time a security trades on an ex-dividend basis. Interest income is based on the number of days the investment is held during the period. (e) Securities lending and repurchase transactions (f) The Fund may be permitted to enter into securities lending, repurchase and reverse repurchase transactions as set out in the Fund s Simplified Prospectus. These transactions involve the temporary exchange of securities for collateral with a commitment to deliver the same securities on a future date. Income is earned from these transactions in the form of fees paid by the counterparty and, in certain circumstances, interest paid on cash or securities held as collateral. Income earned from these transactions is recognized on the accrual basis and included in the Statements of Operations. All the counterparties have a sufficient, approved credit rating and the value of cash or securities held as collateral must be at least 102% of the fair value of the securities loaned, sold or purchased. The value of securities loaned and collateral received from securities lending as of the end of the periods, if applicable, is disclosed in Note 10. Collateral received is comprised of debt obligations of the Government of Canada and other countries, Canadian provincial and municipal governments, and financial institutions. Per share information (i) Net assets per share is computed by dividing the net assets attributable to the series, determined in accordance with GAAP, by the total number of shares of the series outstanding. (ii) Net increase/(decrease) in net assets from operations per share, represents the net increase/ (decrease) in net assets of the series from operations for the period divided by the weighted average shares outstanding for the series during the period. (g) Other assets and liabilities For the purposes of categorization in accordance with Section 3855, accrued interest and dividends receivable, receivables for securities issued, amounts due from brokers and the Manager, and other net assets are designated as loans and receivables and recorded at cost or amortized cost. Similarly, amounts due to brokers, accounts payable for securities redeemed, accrued expenses and other liabilities are designated as other financial liabilities and reported at cost or amortized cost. Cost or amortized cost approximates fair value for these assets and liabilities. (h) Future accounting changes Investment funds that are publicly accountable enterprises are required by the Canadian Accounting Standards Board (AcSB) to adopt International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) for fiscal years beginning on or after January 1, Accordingly, the Fund will adopt IFRS for its fiscal period beginning April 1, 2014, and will issue its initial financial statements in accordance with IFRS, including comparative information, for the interim period ending September 30, Based on the Manager s current assessment, the adoption of IFRS is not expected to have a significant impact on the calculation of net asset value per security (pricing NAV). The requirements under IFRS will likely result in changes to the overall presentation of the Fund s financial statements and additional disclosure in the accompanying notes. The potentially significant impacts on the Fund s financial statements under IFRS are as follows: IFRS 1 First Time Adoption of IFRS sets out requirements to be applied in the year of adoption of IFRS, including the requirement for presenting an opening statement of net assets. For the Fund, this will require the presentation of three statements of net assets as of the date of transition: April 1, 2013, March 31, 2014 and September 30, Any changes to recognition and measurement between GAAP and IFRS will be required to be applied retrospectively, meaning that the opening balances as of the comparative period would need to be restated to reflect IFRS. IAS 7 Statement of Cash Flows requires the Fund to present a Statement of Cash Flow as an integral part of its financial statements. Under GAAP, the Fund is exempt from this requirement. IFRS 10 Consolidated Financial Statements defines criteria for an entity to qualify as an investment entity and exempts such entities from consolidation requirements. Where the Fund holds controlling interest in an investment, the Manager expects that the Fund will qualify as an investment entity with accounting policies that are consistent with existing treatment under GAAP. IFRS 13 Fair Value Measurement sets out guidance on the measurement of fair value and allows for the use of closing market prices to value investments. This standard may eliminate the difference under GAAP between net assets per security and net asset value per security at the financial statement reporting date. IAS 32 Financial Instruments: Presentation requires net assets attributable to security holders to be classified as a liability in the financial statements unless certain conditions are met. The Manager has assessed the Fund s capital structure and expects that net assets attributable to security holders will be classified as a liability in the Fund s financial statements. The Manager continues to monitor changes to IFRS proposed by the IASB and relevant amendments by the AcSB. The current assessment may change in response to any new standards or new interpretations of existing standards.

8 NOTES TO THE ANNUAL FINANCIAL STATEMENTS MARCH 31, MANAGEMENT FEES AND OTHER EXPENSES (a) Each series of the Fund will incur expenses that can be specifically attributed to that series. Common expenses of the Fund are allocated across the series of the Fund on a pro rata basis. Common expenses of the Corporation are allocated across the Funds on a pro rata basis. (b) The Manager provides or arranges for the provision of investment and advisory services for a management fee. See Note 10 for the annual rates paid (as a percent of average assets) by the Fund. (c) The Fund pays the Manager an administration fee and in return the Manager will bear the operating expenses of the Fund, other than certain specified Fund costs. See Note 10 for the annual rates paid (as a percent of average assets) by the Fund. Other Fund costs include taxes (including but not limited to GST/HST and income tax), transaction costs related to the purchase and sale of investments and derivatives, interest and borrowing costs, and Independent Review Committee (IRC) costs. (d) The Fund may pay the Distributors a service fee to compensate them for providing or arranging for the provision of services to the Fund. See Note 10 for the annual rates paid (as a percent of average assets) by the Fund. (e) An advisory fee is charged by the Distributors for investment advice and administrative services related to Series U and Tu, if issued. The advisory fee is payable monthly directly by investors in Series U and Tu, and not by the Fund. (f) GST/HST paid by the Fund on its expenses is not recoverable. In these financial statements, reference to GST/HST includes QST (Québec sales tax), as applicable. (g) Other expenses are comprised of interest and borrowing charges and other miscellaneous expenses. (h) The Manager may, at its discretion, pay certain expenses of the Fund so the Fund s performance remains competitive; however, there is no assurance that this will occur in the future. Any expenses absorbed by the Manager during the periods have been identified in the Statements of Operations. 4. NET ASSET VALUE PER SHARE Net asset value (or pricing NAV) per share is computed by dividing the net asset value attributable to a series of the Fund, determined for the purchase and redemption of shares in accordance with the Fund s Prospectus and Annual Information Form, by the total number of shares of the series outstanding. This amount may be different from the net asset per share calculation, which is presented on the Statements of Net Assets. Generally, any difference is due to valuing actively traded securities at bid price for GAAP purposes while pricing NAV typically utilizes closing price to determine fair value for the purchase and redemption of shares. See Note 10 for the net asset values per share as of March 31, 2014 and 2013 for the Fund. 5. INCOME TAXES The Corporation qualifies as a mutual fund corporation under the Income Tax Act (Canada). As a mutual fund corporation, the Corporation computes its net income (loss) and net capital gains (losses) for income tax purposes as a single entity, not on a fund-by-fund basis. Therefore, net losses of one Corporate Class Fund may be used to offset net gains of another Corporate Class Fund to reduce the total net income or net gain of the Corporation as a whole. The taxation year-end for the Corporation is December 31. The general income tax rules associated with a public corporation also apply to a mutual fund corporation with the exception that income taxes payable on capital gains are refundable on a formula basis when issued shares of the Corporation are redeemed or capital gain dividends are paid. The Corporation is subject to a refundable tax of one-third of dividends received from certain taxable Canadian corporations. This tax is refundable at the rate of $1 for every $3 of ordinary dividends paid. To the extent there is net income from other sources (such as interest and foreign income), it is taxed at the full general corporate rate before the general rate reductions. In the event that there is an overall loss for the Corporation, this loss can be carried back three years or forward to a subsequent year and used to reduce taxes payable for those years. As of the end of the last taxation year, the Corporation had $35,167,000 of capital losses available to offset future capital gains. The Corporation, and the Fund, follows the asset and liability method of accounting for income taxes whereby future income tax assets and liabilities reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Future income tax assets and liabilities are measured based on the enacted or substantively enacted tax rates which are expected to be in effect when the underlying items of income or expense are expected to be realized. Temporary differences between the carrying value of assets and liabilities for accounting and tax purposes give rise to future income tax assets and liabilities. Where the fair value of the portfolio investments exceeds their cost, a future tax liability arises. This future tax liability for refundable taxes payable is offset with the refund expected upon payment of capital gains dividends. Where the cost of the portfolio investments exceeds their fair value, a future tax asset is generated. A full valuation allowance is taken to offset this asset given the uncertainty that such future assets will ultimately be realized by the Fund. 6. COMMISSIONS AND OTHER PORTFOLIO TRANSACTION COSTS The total brokerage commissions incurred by the Fund in connection with portfolio transactions for the periods, together with other transaction charges, is disclosed in the Statements of Operations. Brokerage business is allocated to brokers based on the best net result for the Fund. Subject to this criteria, commissions may be paid to brokerage firms which provide (or pay for) certain services, other than order execution, which may include investment research, analysis and reports, and databases or software in support of these services. Where applicable and ascertainable, the value of third-party services that were paid for by brokers during the periods is disclosed in Note 10. The value of certain proprietary services provided by brokers cannot be reasonably estimated. 7. GUARANTEES AND INDEMNITIES Agreements between the individual members of the Fund s IRC and the Manager, on behalf of the Fund, provides for the indemnification of each IRC member by the Fund from and against liabilities and costs in respect of any action or suit against the member by reason of being or having been a member of the IRC, provided that the member acted honestly and in good faith with a view to the best interest of the Fund, or, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, that they had reasonable grounds for believing that his/her conduct was lawful. No claims with respect to such occurrences have been made and, as such, no amount has been recorded in these financial statements with respect to these indemnifications. 8. FINANCIAL INSTRUMENT RISK The Fund s investment activities expose it to a variety of financial risks. See the Statement of Investments for additional information about the securities held by the Fund as at the end of the periods. (a) Liquidity risk The Fund is exposed to daily cash redemptions of redeemable shares. In accordance with securities regulations, the Fund must maintain at least 90% of its assets in liquid investments (i.e. investments that are traded in an active market and can be readily sold). In addition, the Fund retains sufficient cash and short-term investments to maintain adequate liquidity. The Fund also has the ability to borrow up to 5% of its net assets for the purposes of funding redemptions. (b) Currency risk Currency risk is the risk that financial instruments which are denominated or exchanged in a currency other than the Canadian dollar, which is the Fund s reporting currency, will fluctuate due to changes in exchange rates. Generally, foreign denominated investments increase in value when the value of the Canadian dollar (relative to foreign currencies) falls. Conversely, when the value of the Canadian dollar rises relative to foreign currencies, the value of foreign denominated investments fall. Note 10 indicates the foreign currencies, if applicable, to which the Fund had significant exposure, including the underlying principal amount of forward currency contracts in Canadian dollar terms. Other financial assets and liabilities (including dividends and interest receivable, and receivables/payables for securities sold/purchased) that are denominated in foreign currencies do not expose the Fund to significant currency risk. (c) Interest rate risk Interest rate risk arises on interest-bearing financial instruments such as bonds. The Fund is exposed to the risk that the value of interest-bearing financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. Generally, these securities increase in value when interest rates fall and decrease in value when interest rates rise. Cash and short-term investments and other money market instruments are short term in nature and are not generally subject to significant amounts of interest rate risk. Note 10 summarizes the Fund s exposure, if significant, to interest rate risk. (d) Other price risk Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate or currency risk), whether caused by factors specific to an individual investment, its issuer or other factors affecting all instruments traded in a market or market segment. All securities present a risk of loss of capital. The Manager moderates this risk through a careful selection of securities and other financial instruments within the parameters of the investment strategy. Except for certain derivative contracts, the maximum risk resulting from financial instruments is equivalent to their fair value. The maximum risk of loss on certain derivative contracts such as forwards, swaps, options written and futures contracts is equal to their notional values. However, these instruments are generally used within the overall investment management process to manage the risk from the underlying securities and do not typically increase the overall risk of loss to the Fund. Note 10 summarizes the Fund s exposure, if significant, to other price risk. (e) Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Fund. Note 10 summarizes the Fund s exposure, if significant, to credit risk. All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The carrying amount of investments represents the maximum credit risk exposure. The carrying amount of other assets also represents the maximum credit risk exposure, as they will be settled in the short term. The Fund may enter into securities lending transactions with counterparties whereby the Fund temporarily exchanges securities for collateral with a commitment by the counterparty to deliver the same securities on a future date. Credit risk associated with these transactions is considered minimal as all counterparties have a sufficient, approved credit rating and the value of cash or securities held as collateral must be at least 102% of the fair value of the securities loaned. 9. FURTHER INFORMATION AVAILABLE A copy of the Fund s current Simplified Prospectus, Annual Information Form and/or Management Report of Fund Performance, will be provided, without charge, by writing to: Investors Group Financial Services Inc., 447 Portage Avenue, Winnipeg, Manitoba, R3B 3H5 or, in Québec, 2001, rue University, Bureau 2000, Montréal, Québec, H3A 2A6, or by calling toll-free (in Québec ).

9 NOTES TO THE ANNUAL FINANCIAL STATEMENTS MARCH 31, FUND SPECIFIC INFORMATION (a) Fund and series information Recent amendments to the Income Tax Act will, subject to the transitional and grandfathering rules, tax gains or losses realized from the settlement of the forward contracts described on Schedule 2 to the Statement of Investments on account of income and not capital. The Fund expects to limit or eliminate the use of forward contracts in the future. Effective April 16, 2013, the Fund is available only for the reinvestment of distributions and investments through pre-authorized investment plans by current shareholders. Series Date operations commenced 1 Deferred sales charge (%) Management fee 2 (%) Service fee (%) Administration fee 3 (%) Net asset value per share ($) as at March as at March Series A n/a up to Series B n/a Series Jdsc July 13, 2012 up to Series Jnl July 13, Series Tdsc n/a up to Series Tnl n/a Series Tjdsc July 13, 2012 up to Series Tjnl July 13, If within the two financial periods ended March 31, Until June 29, 2012, the annual management fee rate for Series A, B, Tdsc and Tnl was 1.55%. 3 Until June 29, 2012, the annual administration fee rate for Series A and Tdsc was 0.10%. (b) Commissions for the 12 months to ($ 000) March 31, March 31, (c) Securities lending Value of Value of securities collateral ($ 000) loaned received March 31, March 31, (d) Financial instrument risk i) Risk management ii) The Manager seeks to minimize potential adverse effects of financial instrument risks on the Fund s performance by employing professional, experienced portfolio advisors, daily monitoring of the Fund s positions and market events, diversifying the investment portfolio within the constraints of the investment objective, and periodically may use derivatives to hedge certain risk exposures. To assist in managing risk, the Manager also uses internal guidelines that identify the target exposures for each type of risk, maintains a governance structure that oversees the Fund s investment activities and monitors compliance with the Fund s stated investment strategy, internal guidelines and securities regulations. The Fund invests in equity securities and enters into forward contracts which will provide a return similar to the performance of Investors Group Short Term Income Fund. The Fund may also invest directly in fixed income securities. Currency risk As at March 31, 2014 and 2013, the Fund did not have a significant exposure to currency risk. iii) Interest rate risk The table below summarizes the Fund s exposure, directly and indirectly through derivative contracts, to interest rate risk by remaining term to maturity. The table also illustrates the potential impact to the Fund s net assets had prevailing interest rates increased or decreased by 1%, assuming a parallel shift in the yield curve, all other variables held constant. The Fund s sensitivity to interest rate changes was estimated using the weighted average duration of the bond portfolios. In practice, the actual trading results may differ and the difference could be material. Impact on net assets Bonds ($ 000) Less than 1 year 1-3 years 3-5 years > 5 years Total ($000) (%) March 31, ,245 83,240 31, ,899 7, March 31, , , ,222 46, ,474 9, iv) Other price risk As at March 31, 2014 and 2013, the exposure to other price risk arising from the Fund s investment in equity securities was offset by the forward contract to sell those securities.

10 NOTES TO THE ANNUAL FINANCIAL STATEMENTS MARCH 31, FUND SPECIFIC INFORMATION (d) Financial instrument risk (continued) v) Credit risk The Fund s greatest concentration of credit risk is in fixed-income securities, such as bonds both directly and indirectly through derivative contracts. The fair value of fixed-income securities includes consideration of the creditworthiness of the issuer. The maximum direct and indirect exposure to any one issuer as at March 31, 2014, was 24.3% (Government of Canada) of the net assets of the Fund (March 31, %). The tables below summarize the direct and indirect exposure to securities by credit rating: Percent of total March 31, 2014 net assets (%) AAA 29.8 AA 39.5 A 21.4 BBB 7.7 Total 98.4 Percent of total March 31, 2013 net assets (%) AAA 37.4 AA 36.5 A 18.2 BBB 3.4 Total 95.5 Credit ratings are based on DBRS, Standard & Poor s or Moody s ratings. (e) Fair value of financial instruments The tables below summarize the fair value of the Fund s financial instruments using the following fair value hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and Level 3 Inputs that are not based on observable market data. as at March 31, 2014 ($ 000) Level 1 Level 2 Level 3 Total Fixed income - 178, ,590 Equities 60, ,326 Total investments 60, , ,916 Short-term investments Derivative assets Derivative liabilities - (4,269) - (4,269) Total 60, , ,647 as at March 31, 2013 ($ 000) Level 1 Level 2 Level 3 Total Fixed income - 279, ,712 Equities 68, ,651 Total investments 68, , ,363 Short-term investments - 12,172-12,172 Derivative assets Derivative liabilities - (12,663) - (12,663) Total 68, , ,872 (f) During the periods, there were no significant transfers between Level 1 and Level 2. Manager s investment in the Fund The number of shares held by the Manager was as follows: as at as at March 31 March Series Tjdsc Series Tjnl - 100

11 MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING MARCH 31, 2014 The accompanying financial statements have been prepared by I.G. Investment Management, Ltd., as Manager of the Fund. The Manager is responsible for the integrity, objectivity and reliability of the data presented. This responsibility includes selecting appropriate accounting principles and making judgments and estimates consistent with Canadian generally accepted accounting principles. The Manager is also responsible for the development of internal controls over the financial reporting process, which are designed to provide reasonable assurance that relevant and reliable financial information is produced. The Board of Directors (the Board ) of I.G. Investment Management, Ltd. is responsible for reviewing and approving the financial statements and overseeing the Manager s performance of its financial reporting responsibilities. The Board is assisted in discharging this responsibility by an Audit Committee, which reviews the financial statements and recommends them for approval by the Board. The Audit Committee also meets regularly with the Manager, the internal auditor and external auditors to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues. Deloitte LLP are the external auditors of the Fund. They are appointed by the Board. The external auditors have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out below. On behalf of I.G. Investment Management, Ltd., Manager of the Fund Murray J. Taylor Chairman of the Board and President BJ Reid Authorized Signing Officer and Chief Financial Officer, Investors Group Mutual Funds June 5, 2014 INDEPENDENT AUDITOR S REPORT TO THE SECURITYHOLDERS OF INVESTORS SHORT TERM CAPITAL YIELD CLASS (THE FUND ) We have audited the accompanying financial statements of the Fund, which comprise the Statements of Investments and Net Assets as at March 31, 2014, and the Statements of Operations and Changes in Net Assets for the period then ended, as indicated in note 1, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at March 31, 2014, and the results of its operations and the changes in its net assets for the period then ended, as indicated in note 1, in accordance with Canadian generally accepted accounting principles. Other Matters The financial statements of the Fund for the year ended March 31, 2013, were audited by another firm of Chartered Accountants who expressed an unmodified opinion on those statements on June 4, Chartered Accountants June 5, 2014 Winnipeg, Canada