Allegro Balanced Portfolio Class

Transcription

1 Interim Management Report of Fund Performance FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 3, 17 CAUTION REGARDING FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Portfolio Fund, including its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Portfolio Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Portfolio Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Portfolio Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forwardlooking statements. Further, you should be aware of the fact that the Portfolio Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance. CAUTION REGARDING FUTURE PERFORMANCE Sales commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Portfolio Fund s offering documents before investing. The indicated rates of return are the historical annual compounded total returns including changes in security value and reinvestment of all dividends (except for fee rebates) and do not take into account sales, redemption, distribution or optional charges, advisory fees payable directly by securityholders in certain series, or income taxes payable by any investor that would have reduced returns. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated. Investors Group Corporate Class Inc. has separate classes of securities and separate series of each class. Each class of securities represents a separate investment fund which has a separate portfolio of investments. The following report is for the above-named investment fund, which is one such class of Investors Group Corporate Class Inc. This interim Management Report of Fund Performance contains financial highlights, but does not contain the complete interim financial report or audited annual financial statements of the investment fund. If the interim financial report of your investment fund did not accompany the mailing of this report, you may receive a copy of it or the audited annual financial statements, or annual Management Report of Fund Performance, at your request, and at no cost, by calling ( if you live in Quebec) or by writing to us at 447 Portage Avenue, Winnipeg, Manitoba, R3B 3H5 (1, boulevard Robert-Bourassa, bureau, Montréal (Québec), H3A 2A6 if you live in Québec), or by visiting our website at or SEDAR at Securityholders may also use one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. Every effort has been made to ensure that the information contained in this Report is accurate as of September 3, 17 (except when stated otherwise), however, the Portfolio Fund cannot guarantee the accuracy or the completeness of this material. Please refer to the Portfolio Fund s Prospectus and audited annual financial statements for more information. References to Consultant or Consultants mean Representative or Representatives in Quebec. For current net asset values per security for the Portfolio Fund and for more recent information on general market events, please visit our website at Copyright Investors Group Inc. 17 Trademarks, including Investors Group, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.

2 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Management Discussion of Fund Performance This management discussion of Portfolio Fund performance presents views of the portfolio management team about the significant factors and developments during the past six months that have affected the Portfolio Fund s performance and outlook since March 31, 17, the Portfolio Fund s most recent fiscal year-end. This report should be read in conjunction with the annual Management Report of Fund Performance for the year ended March 31, 17. Please read the caution regarding forward-looking statements located on the first page of this document. Results of Operations CHANGES IN NET ASSETS The Portfolio Fund s net assets decreased by 1.5% during the period to $944.6 million. This change was comprised primarily of gains from operations of $4.3 million and a decrease of $18.3 million due to net securityholder activity. FEES AND EXPENSES The management expense ratios (MERs) for Series B, Jnl, Tnl, Tjnl, Tu and U are lower than the MERs for the 12-month period ended March 31, 17 primarily due to recent reductions in fee rates. MERs for all other series are generally similar to the MERs for the prior period. Total expenses paid also vary period to period as a result of changes in average assets in each series. Average net assets of the Portfolio Fund for the period were $947.8 million, an increase of.3% compared to the period ended September 3, 16. Investors International Equity Fund contributed the most to the Portfolio Fund s performance before it was removed from the Portfolio in May 17. Investors U.S. Large Cap Value Fund, representing about 12% of net assets at period end, detracted the most from the Portfolio Fund s performance. Recent Developments (BASED ON INFORMATION AS AT OCTOBER, 17) The surging Canadian dollar held the MSCI World Index (Net) $ CAD to a small gain, although almost all major equity markets advanced as economic data and corporate earnings remained firm. The Asia Pacific (ex Japan) region posted the strongest regional performance, while Japanese and European equities came under pressure from strong currencies. The Canadian economy posted its highest growth rates in over a decade during the period. However, the S&P/TSX Composite Index trended lower until a September jump in oil prices and global bond yields abruptly lifted energy and financial stocks and brought the period to a close with a modest gain. As the economy strengthened, the Bank of Canada raised its overnight interest rate by a half percentage point to 1%, resulting in rising bond yields. As a result, government bond returns were negative across all bond maturities (bond prices fall as yields rise). Short-term and mid-term corporate bonds also generated negative returns, although they outperformed government bonds due to narrower credit spreads and higher coupon income. Long-term corporate bonds generated positive returns. INVESTMENT PERFORMANCE In accordance with National Instrument 81-6, the following comparison to broad-based indices has been included to help you understand the Portfolio Fund s performance relative to the general performance of the markets. However, the portfolio management team cautions that the Portfolio Fund s mandate may be different from the indices shown. Also, it is important to note that investors cannot invest in an index. Indirect investments in an index are available; however, there are fees and transaction costs and other variables that will impact returns when investing in these products. Index returns included in the comparison below do not reflect these costs and variables. In addition, unlike the index, the Portfolio Fund may be subject to valuation adjustments as the result of non-north American equities held by the Underlying Funds in which the Portfolio Fund invests, as outlined in the Underlying Funds valuation policies. A fair value adjustment can either positively or negatively impact the Portfolio Fund s rate of return. For the returns of all series and for longer-term performance of the Portfolio Fund, see the Past Performance section of this report. Performance will vary by series primarily because fees and expenses may differ between series, or because securities of a series were not issued and outstanding for the entire reporting period. See Series Information for the annual expense rates for each series. For the six-month period ended September 3, 17, the Series A securities returned.1% (after deducting fees and expenses paid by the Portfolio Fund). In comparison, the FTSE TMX Canada Universe Bond Index returned -.7%, the S&P/TSX Composite Index returned 2.% and the MSCI World Index (Net) $ CAD returned 2.3%. The Portfolio Fund performed in line with the FTSE TMX Canada Universe Bond Index. The Portfolio Fund underperformed the S&P/ TSX Composite Index and the MSCI World Index (Net) $ CAD due in part to its exposure to fixed-income markets.

3 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Related Party Transactions I.G. Investment Management, Ltd. is the Manager and Portfolio Advisor of the Portfolio Fund. The Portfolio Fund is offered through the Consultants of Investors Group Financial Services Inc. and Investors Group Securities Inc., together referred to as the Distributors. The Manager, Portfolio Advisor and Distributors are, indirectly, wholly owned subsidiaries of IGM Financial Inc. Effective November 1, 17, the following sub-advisor has been retained to provide investment services to the Portfolio Fund: Mackenzie Financial Corporation Mackenzie Financial Corporation is, indirectly, a wholly owned subsidiary of IGM Financial Inc. The Portfolio Fund paid a management fee to the Manager and Portfolio Advisor for management and portfolio advisory services (see Management Fees). The Portfolio Fund also paid the Manager an administration fee and in exchange the Manager paid the operating costs and expenses of the Portfolio Fund, except for certain specified costs. The Portfolio Fund paid the Distributors a service fee as compensation for providing or arranging for the provision of services to the Portfolio Fund, including the issue or allotment of securities. The Portfolio Fund also paid the Distributors a distribution fee in recognition for distributing the Portfolio Funds to all Investors Group clients, including those who do not have a minimum of $15, in household investments. See Series Information for the annual rates paid by each series (as a percent of average net assets) for these fees. Securityholders in Series Tu and U also pay an advisory fee directly to Investors Group. This fee is not included in the Portfolio Fund s expenses. The Portfolio Fund s investments consist of securities of funds managed by the Manager and/or affiliates of the Manager (called the Underlying Funds) and/or Exchange Traded Funds (ETFs). Please see the Summary of Investment Portfolio later in this report, for more details. All transactions in Underlying Funds are executed in accordance with standing instructions approved by the Investors Group Funds Independent Review Committee and based on the net asset value per security determined in accordance with the stated policies of the Underlying Fund on each transaction day. No commissions or other transaction fees were paid by the Portfolio Fund for transactions relating to the Underlying Funds. Management Fees The Portfolio Fund pays Investors Group a management fee. The management fee paid by each series is calculated as a percentage of the net asset value of the series, as of the close of business on each business day (see Series Information for rates payable by each series). Generally, management fees are used in part to pay costs incurred in providing investment advisory and management services and distribution-related services provided by the Distributors. Securityholders in Series U and Tu pay an advisory fee directly to the Distributors and therefore the management fee in those series is for investment advisory and management services only. For all other retail series (i.e. excluding Series F, P and S if issued), approximately 7% of management fees paid during the period represents investment advisory and management services, and approximately 3% represents distribution-related services. This may vary by series. Approximately 69% of the total fees paid by the Portfolio Fund for the period relates to services provided by the Manager and Portfolio Advisor, and approximately 31% relates to services provided by the Distributors.

4 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Summary of Investment Portfolio AT SEPTEMBER 3, 17 The largest positions of the Portfolio Fund (up to 25) at the end of the period, and the Portfolio Fund s investment mix are indicated below. This summary of investment portfolio may change due to ongoing portfolio transactions. The Portfolio Fund s summary of investment portfolio will be updated as at the end of the next quarter. Please see the front page for information about how it can be obtained. The Management Report of Fund Performance, Prospectus, Financial Statements and other information for each of the Underlying Funds in which the Portfolio Fund invests are available upon request, and at no cost, by using one of the methods located on the front of this document. Summary of Top 25 Long Positions % of net assets Investors Mortgage and Short Term Income Fund 17.9 IG FI Canadian Equity Fund 12.5 Investors U.S. Large Cap Value Fund 12.2 Investors Canadian Large Cap Value Fund.1 Investors Real Property Fund 9.9 IG Mackenzie Dividend Growth Fund 9.6 Investors European Mid-Cap Equity Fund 5.9 IG AGF Global Equity Fund 5. Investors Global Bond Fund 4.9 IG Mackenzie Income Fund 4.8 Investors Pan Asian Equity Fund 4. Investors Group Equity Pool 1.4 Investors Group Income Pool Summary of Top 25 Short Positions % of net assets n/a - Summary of Composition of the Portfolio PORTFOLIO ALLOCATION % of net assets Canadian Equity Funds 32.2 Fixed Income Funds 28.9 Foreign Equity Funds 28.5 Investors Real Property Fund 9.9 Cash and cash equivalents - Other net assets (liabilities).5 Total. Series Information AT SEPTEMBER 3, 17 Inception Management Distribution Service Administration Series date 1 fee * (%) fee (%) fee ** (%) fee *** (%) Series A 7/13/ Series B 7/13/ Series Jdsc 7/12/ Series Jnl 7/12/ Series Tdsc 7/13/ Series Tnl 7/13/ Series Tjdsc 7/12/ Series Tjnl 7/12/ Series Tu 7/12/ Series U 7/12/ The fee rates in the table above are rounded to two decimals. 1 Inception dates of the series are shown if within ½ years. * Until December 31, 16, the annual management fee rate for Series Tu and U was.71%. Until August 31, 17, the annual management fee rates were as follows: Series A, B, Tdsc and Tnl: 1.8%; Series Jdsc, Jnl, Tjdsc and Tjnl: 1.55%; Series Tu and U:.64%. ** Until December 31, 16, the annual service fee rate for Series B, Jnl, Tnl and Tjnl was.29%. *** Until August 31, 17, the annual administration fee rate was.22%.

5 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Past Performance It is important to remember that past performance doesn t necessarily indicate future performance. The returns presented below: assume that all dividends are reinvested into the Portfolio Fund; do not include sales charges, income taxes, optional expenses or advisory fees payable directly by securityholders in certain series, that reduce returns; show performance based on Canadian dollar returns; and show performance for the six-month period ended September 3, 17 and for each of the past financial years, or since the series started. Financial years are as follows: - 8 nths ended September 3-9 six months ended March 31 - to 17 nths ended March 31 Inception dates of the series within these periods are shown in Series Information. Performance during these periods may have been impacted by the following events: Effective July 1,, the administration fees for Series A, B, Tdsc and Tnl decreased by.2% to.22%. Effective June 3, 12, the annual management fee rate for Series A, B, Tdsc and Tnl decreased by.% to 1.8%. Effective June 3, 12, the annual distribution fee rate for Series A, B, Tdsc and Tnl decreased by.5% to.%. Effective June 3, 12, the annual service fee rate for Series B and Tnl decreased by.3% to.29%. Effective January 1, 17, the annual management fee rate for Series Tu and U decreased by.68% to.641%. Effective January 1, 17, the annual service fee rate for Series B, Jnl, Tnl and Tjnl decreased by.75% to.2%. Effective September 1, 17, the annual management fee rate for Series A, B, Tdsc and Tnl decreased by.1% to 1.79%, for Series Jdsc, Jnl, Tjdsc and Tjnl the rate decreased by.1% to 1.54% and for Series Tu and U the rate decreased by.1% to.631%. Effective September 1, 17, the annual administration fee rate for the Portfolio Fund decreased by.1% to.21%. Year-by-Year Returns These bar charts show how much an investment in securities made on the first day of each financial year would have increased or decreased by the end of the respective period. For the first year of a series, the percentage shown will be the actual return of the series from its inception date. The charts illustrate how the Portfolio Fund s performance has changed over time. SERIES A - SERIES B - SERIES Jdsc - SERIES Jnl - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (4.8) (2.3) /8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (4.9) (2.4) /8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (2.) /8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (2.1) SERIES Tdsc - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (4.8) (2.4)

6 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 YEAR-BY-YEAR RETURNS (continued) SERIES Tnl - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (4.9) (2.4) SERIES Tjdsc - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (2.1) SERIES Tjnl - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (2.1) SERIES Tu - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (.9) SERIES U - 9/8 3/9 3/ 3/11 3/12 3/13 3/14 3/15 3/16 3/17 9/17 % (.9)

7 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Financial Highlights The following tables show selected key financial information about the Portfolio Fund and are intended to help you understand the Portfolio Fund s financial performance for the six-month period ended September 3, 17 and up to the past five financial years. Footnotes are presented after Ratios and Supplemental Data. Net Assets per Security 1 SERIES A SERIES B (in $) , beginning of period (in $) , beginning of period Total revenue Total expenses (.19) (.37) (.36) (.35) (.32) (.29) for the period for the period (.23).51 (.85) operations (.34) Ordinary - (.14) Capital gains Return of capital dividends - (.14) at period end Total revenue Total expenses (.19) (.37) (.36) (.35) (.32) (.3) for the period for the period (.23).51 (.85) operations (.35) Ordinary - (.13) Capital gains Return of capital dividends - (.13) at period end SERIES Jdsc JDSC (in $) , beginning of period n/a Total revenue n/a Total expenses (.14) (.27) (.27) (.26) (.17) n/a for the period n/a for the period (.).43 (.71) n/a operations.3.94 (.25) n/a Ordinary - (.15) n/a Capital gains n/a Return of capital n/a dividends - (.15) n/a at period end n/a SERIES Jnl JNL (in $) , beginning of period n/a Total revenue n/a Total expenses (.14) (.28) (.27) (.27) (.17) n/a for the period n/a for the period (.19).42 (.71) n/a operations.3.92 (.25) n/a Ordinary - (.14) n/a Capital gains n/a Return of capital n/a dividends - (.14) n/a at period end n/a

8 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Net Assets per Security 1 (continued) SERIES Tdsc TDSC SERIES Tjdsc TJDSC (in $) (in $) , beginning of period Total revenue Total expenses (.12) (.24) (.25) (.25) (.24) (.23) for the period for the period (.15).34 (.58) operations.1.7 (.24) Ordinary - (.9) Capital gains Return of capital (.25) (.47) (.55) (.56) (.55) (.55) dividends (.25) (.56) (.55) (.56) (.55) (.55) at period end SERIES Tnl TNL SERIES Tjnl TJNL (in $) (in $) , beginning of period Total revenue Total expenses (.12) (.24) (.25) (.26) (.25) (.24) for the period for the period (.15).33 (.58) operations.1.69 (.24) Ordinary - (.8) Capital gains Return of capital (.25) (.47) (.55) (.56) (.55) (.55) dividends (.25) (.55) (.55) (.56) (.55) (.55) at period end , beginning of period n/a Total revenue n/a Total expenses (.11) (.23) (.23) (.24) (.16) n/a for the period n/a for the period (.16).36 (.62) n/a operations.2.77 (.21) n/a Ordinary - (.12) n/a Capital gains n/a Return of capital (.28) (.53) (.62) (.62) (.47) n/a dividends (.28) (.65) (.62) (.62) (.47) n/a at period end n/a, beginning of period n/a Total revenue n/a Total expenses (.11) (.23) (.24) (.24) (.17) n/a for the period n/a for the period (.16).36 (.62) n/a operations.2.77 (.22) n/a Ordinary - (.12) n/a Capital gains n/a Return of capital (.27) (.52) (.62) (.62) (.47) n/a dividends (.27) (.64) (.62) (.62) (.47) n/a at period end n/a

9 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Net Assets per Security 1 (continued) SERIES Tu TU (in $) , beginning of period n/a Total revenue n/a Total expenses (.5) (.11) (.12) (.12) (.8) n/a for the period n/a for the period (.16).37 (.64) n/a operations..91 (.11) n/a Ordinary - (.25) n/a Capital gains n/a Return of capital (.28) (.54) (.63) (.63) (.47) n/a dividends (.28) (.79) (.63) (.63) (.47) n/a at period end n/a SERIES U (in $) , beginning of period n/a Total revenue n/a Total expenses (.7) (.14) (.13) (.13) (.8) n/a for the period n/a for the period (.).44 (.73) n/a operations (.12) n/a Ordinary - (.29) n/a Capital gains n/a Return of capital n/a dividends - (.29) n/a at period end n/a Ratios and Supplemental Data SERIES A ($ s) 146,43 164,25 179,93 223,71 249, ,168 outstanding ( s) 9,838 11,34 12,86 15,646 18,719,5 expense ratio (%) or absorptions (%) ratio (%) rate (%) SERIES B ($ s) 79,252 76,224 73,5 86,363 83,317 62,769 outstanding ( s) 5,355 5,157 5,281 6,89 6,283 5,316 expense ratio (%) or absorptions (%) ratio (%) rate (%) SERIES Jdsc JDSC ($ s) 173, ,344 37, ,134 93,436 n/a outstanding ( s) 13,956 18,366 26,43,277 8,433 n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a

10 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Ratios and Supplemental Data (continued) SERIES Jnl JNL ($ s) 71,614 86,276 98,822 82,358 36,698 n/a outstanding ( s) 5,756 6,952 8,52 6,935 3,314 n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a SERIES Tjdsc TJDSC ($ s) 23,992 32,574 4,61 23,333 8,76 n/a outstanding ( s) 2,462 3,258 4,56 2, n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a SERIES Tdsc TDSC ($ s) 18,628,319 23,239 43,26 46,823 43,23 outstanding ( s) 2,34 2,162 2,5 4,38 4,716 4,619 expense ratio (%) or absorptions (%) ratio (%) rate (%) SERIES Tnl TNL ($ s) 9,3 9,74 8,474,518 9,75,163 outstanding ( s) 989 1, , ,91 expense ratio (%) or absorptions (%) ratio (%) rate (%) SERIES Tjnl TJNL ($ s) 7,615 9,37 9,779 7,289 2,96 n/a outstanding ( s) n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a SERIES Tu TU ($ s) 45,652 37,196 19,141 12,397 5,246 n/a outstanding ( s) 4,59 3,64 1,877 1, n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a

11 INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE SEPTEMBER 3, 17 Ratios and Supplemental Data (continued) SERIES U ($ s) 368, , ,949 4,634 27,39 n/a outstanding ( s) 28,57 22,989 14,65 8,632 2,453 n/a expense ratio (%) n/a or absorptions (%) n/a ratio (%) n/a rate (%) n/a 1 These calculations are prescribed by securities regulations and are not intended to be a reconciliation between opening and closing net assets per security. This information is derived from the Portfolio Fund s audited annual financial statements and unaudited September 3, 17 interim financial report. The financial information is determined in accordance with IFRS, except for information for periods prior to April 1, 13, which is derived from financial statements prepared in accordance with Canadian GAAP. 2 Net asset value and dividends are based on the actual number of securities outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of securities outstanding over the financial period. In the period a series is established, the financial information is provided from the date of inception to the end of the period. 3 Dividends were paid in cash, reinvested in additional securities of the Portfolio Fund, or both. 4 ratio (MER) is based on total expenses, excluding commissions and other portfolio transaction costs, income taxes, and withholding taxes, for the stated period and is expressed as an annualized percentage of daily average net assets during the period, except as noted. In the period a series is established, the MER is annualized from the date of inception to the end of the period. Where a Portfolio Fund directly or indirectly via derivative contract invests in securities of an Underlying Fund, the MERs presented for the Portfolio Fund include the portion of MERs of the Underlying Fund(s) attributable to this investment. Correspondingly, the MERs presented for the Portfolio Fund exclude any management or other fees that are waived as a result of its investment in the Underlying Fund(s). Certain expenses that are non-recurring and/or otherwise uncertain as to their future timing and amount have not been annualized. 5 The trading expense ratio (TER) represents total commissions and other portfolio transaction costs incurred as an annualized percentage of daily average net assets during the period. Where a Portfolio Fund invests in securities of an Underlying Fund, the TERs presented for the Portfolio Fund include the portion of TERs of the Underlying Fund(s) attributable to this investment. 6 The Portfolio Fund s portfolio turnover rate indicates how actively the Portfolio Fund s Portfolio Advisor manages its portfolio investments. A portfolio turnover rate of % is equivalent to the Portfolio Fund buying and selling all of the securities in its portfolio once in the course of the period. Generally, the higher a Portfolio Fund s portfolio turnover rate in a period, the greater the trading costs payable by it in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a Portfolio Fund. Transactions incurred to realign the Portfolio Fund s portfolio after a fund merger, if any, are excluded from the portfolio turnover rate.

12 Memo