Scotia® Mutual Funds Simplified Prospectus Dated June 10, 2005 and Amended and Restated Simplified Prospectus Dated June 10, 2005 Amending and Restating the Simplified Prospectus Dated October 29, 2004, as Amended on December 17, 2004 and on May 27, 2005 Class A and Class F units (unless otherwise noted) and Class I units where noted

Cash Equivalent Funds Foreign Equity Funds Scotia T-Bill Fund (Class A units only) Scotia American Stock Index Fund (Class I units available) Scotia American Growth Fund (Class I units available) Scotia Premium T-Bill Fund (Class A units only) Scotia CanAm Stock Index Fund Scotia Money Market Fund (Class A and Class I units only) Scotia Nasdaq Index Fund ® Scotia CanAm U.S. $ Money Market Fund (Class A units only) Scotia Young Investors® Fund (Class A units only) Scotia International Stock Index Fund Income Funds (Class I units available) Scotia Canadian Bond Index Fund (Class I units available) Scotia Global Growth Fund (Class I units available) Scotia Mortgage Income Fund (Class I units available) Scotia European Growth Fund Scotia Pacific Rim Growth Fund (Class I units available) Scotia Canadian Income Fund (Class I units available) Scotia Latin American Growth Fund (Class I units available) Scotia CanAm U.S. $ Income Fund Scotia CanGlobal Income Fund (Class I units available) Capital International Series Funds Capital U.S. Large Companies Fund Balanced Funds Capital U.S. Large Companies RSP Fund Capital U.S. Small Companies Fund Scotia Diversified Monthly Income Fund Capital U.S. Small Companies RSP Fund Scotia Canadian Balanced Fund Capital International Large Companies Fund Scotia Total Return Fund Capital International Large Companies RSP Fund Capital Global Discovery Fund Scotia Selected™ Funds Capital Global Discovery RSP Fund Scotia Selected Income & Modest Growth Fund Capital Global Small Companies Fund Scotia Selected Balanced Income & Growth Fund Capital Global Small Companies RSP Fund Scotia Selected Conservative Growth Fund Scotia Selected Conservative Growth RSP Fund This is a simplified prospectus with respect to the Scotia Selected Aggressive Growth Fund offering of Class A units of Scotia Vision Conservative Scotia Selected Aggressive Growth RSP Fund 2010 Fund, Scotia Vision Aggressive 2010 Fund, Scotia Partners Portfolios® Scotia Vision Conservative 2015 Fund, Scotia Vision Scotia Partners™ Income & Modest Growth Portfolio Aggressive 2015 Fund, Scotia Vision Conservative Scotia Partners Balanced Income & Growth Portfolio 2020 Fund, Scotia Vision Aggressive 2020 Fund, Scotia Scotia Partners Conservative Growth Portfolio Vision Conservative 2030 Fund and Scotia Vision Scotia Partners Aggressive Growth Portfolio Aggressive 2030 Fund and with respect to the offering Scotia Vision™ Funds of Class A and Class F units of Scotia Diversified Scotia Vision Conservative 2010 Fund (Class A units only) Monthly Income Fund. This is an amended and Scotia Vision Aggressive 2010 Fund (Class A units only) restated simplified prospectus with respect to the Scotia Vision Conservative 2015 Fund (Class A units only) offering of Class I units of Scotia Money Market Fund, Scotia Vision Aggressive 2015 Fund (Class A units only) Scotia Canadian Bond Index Fund, Scotia Canadian Scotia Vision Conservative 2020 Fund (Class A units only) Stock Index Fund, Scotia Canadian Blue Chip Fund, Scotia Vision Aggressive 2020 Fund (Class A units only) Scotia American Stock Index Fund, Scotia Global Scotia Vision Conservative 2030 Fund (Class A units only) Growth Fund, Scotia Pacific Rim Growth Fund and Scotia Vision Aggressive 2030 Fund (Class A units only) Scotia Latin American Growth Fund. No changes are being made with respect to any of the Equity Funds other funds. Canadian Equity Funds No securities regulatory authority has expressed an Scotia Canadian Stock Index Fund (Class I units available) opinion about these units. It is an offence to claim Scotia Canadian Dividend Fund (Class I units available) otherwise. Scotia Canadian Blue Chip Fund (Class I units available) The Scotia Mutual Funds and the units they offer Scotia Canadian Growth Fund (Class I units available) under this simplified prospectus are not registered Scotia Canadian Small Cap Fund (Class I units available) with the U.S. Securities and Exchange Commission. Scotia Resource Fund Units of the funds may be offered and sold in the United States only in reliance on exemptions from registration. Table of contents

Introduction ...... i Fund-specific information ...... 1

Cash Equivalent Funds Scotia T-Bill Fund ...... 6 Scotia Money Market Fund ...... 10 Scotia Premium T-Bill Fund ...... 8 Scotia CanAm U.S. $ Money Market Fund...... 12

Income Funds Scotia Canadian Bond Index Fund...... 16 Scotia CanAm U.S. $ Income Fund ...... 26 Scotia Mortgage Income Fund ...... 19 Scotia CanGlobal Income Fund...... 29 Scotia Canadian Income Fund ...... 23

Balanced Funds Scotia Diversified Monthly Income Fund ...... 34 Scotia Partners Balanced Income & Growth Portfolio ...... 63 Scotia Canadian Balanced Fund...... 36 Scotia Partners Conservative Growth Portfolio ...... 66 Scotia Total Return Fund ...... 39 Scotia Partners Aggressive Growth Portfolio ...... 69

Scotia Selected Funds Scotia Vision Funds Scotia Selected Income & Modest Growth Fund...... 42 Scotia Vision Conservative 2010 Fund...... 72 Scotia Selected Balanced Income & Growth Fund ...... 45 Scotia Vision Aggressive 2010 Fund ...... 74 Scotia Selected Conservative Growth Fund...... 48 Scotia Vision Conservative 2015 Fund...... 76 Scotia Selected Conservative Growth RSP Fund ...... 51 Scotia Vision Aggressive 2015 Fund ...... 78 Scotia Selected Aggressive Growth Fund ...... 54 Scotia Vision Conservative 2020 Fund...... 80 Scotia Selected Aggressive Growth RSP Fund...... 57 Scotia Vision Aggressive 2020 Fund ...... 82 Scotia Vision Conservative 2030 Fund...... 84 Scotia Partners Portfolios Scotia Vision Aggressive 2030 Fund ...... 86 Scotia Partners Income & Modest Growth Portfolio...... 60

Equity Funds Canadian Equity Funds Scotia Canadian Stock Index Fund ...... 90 Scotia European Growth Fund...... 125 Scotia Canadian Dividend Fund ...... 93 Scotia Pacific Rim Growth Fund...... 128 Scotia Canadian Blue Chip Fund...... 96 Scotia Latin American Growth Fund ...... 130 Scotia Canadian Growth Fund ...... 99 Capital International Series Funds Scotia Canadian Small Cap Fund ...... 102 Capital U.S. Large Companies Fund...... 133 Scotia Resource Fund ...... 105 Capital U.S. Large Companies RSP Fund...... 136 Foreign Equity Funds Capital U.S. Small Companies Fund...... 139 Scotia American Stock Index Fund ...... 108 Capital U.S. Small Companies RSP Fund ...... 142 Scotia American Growth Fund ...... 110 Capital International Large Companies Fund ...... 145 Scotia CanAm Stock Index Fund ...... 113 Capital International Large Companies RSP Fund...... 148 Scotia Nasdaq Index Fund ...... 115 Capital Global Discovery Fund...... 151 Scotia Young Investors Fund ...... 118 Capital Global Discovery RSP Fund ...... 154 Scotia International Stock Index Fund ...... 120 Capital Global Small Companies Fund...... 157 Scotia Global Growth Fund ...... 123 Capital Global Small Companies RSP Fund...... 160

What is a mutual fund and what are the risks of Fees and expenses ...... 177 investing in a mutual fund? ...... 163 Dealer compensation ...... 181 Organization and management of the Dealer compensation from management fees ...... 183 Scotia Mutual Funds ...... 168 Income tax considerations for investors ...... 183 Purchases, switches and redemptions...... 170 What are your legal rights? ...... 184 Optional services ...... 173 Additional information ...... 184 Introduction

In this document, we, us, and our refer to Scotia Securities Inc.

Scotiabank Group includes The Bank of Nova Scotia (Scotiabank),

Montreal Trust, National Trust, The Bank of Nova Scotia Trust

Company (Scotiatrust) and Scotia Capital Inc.

This simplified prospectus contains selected important information to help you make an informed investment decision about the Scotia

Mutual Funds and to understand your rights as an investor.

It’s divided into two parts. The first part, from pages 1 to 162, contains specific information about each of the Scotia Mutual Funds.

The second part, from pages 163 to 185, contains general information that applies to all of the Scotia Mutual Funds.

Additional information about each fund is available in its annual information form, its most recently filed annual and interim financial statements and its most recently filed annual and interim manage- ment reports of fund performance. These documents are incorpo- rated by reference into this simplified prospectus. That means they legally form part of this simplified prospectus just as if they were printed in it.

You can get a copy of the funds’ annual information form, financial statements, including a statement of portfolio transactions, and, when available, management reports of fund performance at no charge by calling 1-800-268-9269 (416-750-3863 in Toronto) for

English, or 1-800-387-5004 for French, or by asking your mutual fund representative. You’ll also find this simplified prospectus, the

financial statements and, when available, the management reports of fund performance on the Internet at www.scotiabank.com.

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

i Specific information about each of the mutual funds described in this document

Scotia Mutual Funds is a family of 63 no-load mutual funds in Under current law, if you hold more than the permitted four categories: Cash Equivalent, Income, Balanced (including foreign content in your registered plan, a penalty tax may the Scotia Partners Portfolios, Scotia Selected Funds and apply. The foreign content limit doesn’t apply to RESPs. On Scotia Vision Funds) and Equity (including the Capital February 23, 2005, the Minister of Finance (Canada) an- International Series Funds). All of the Scotia Mutual Funds nounced as part of the Federal Budget that the foreign offered for sale under this simplified prospectus offer Class A property limit in the Tax Act will be repealed effective as of units. Some of the funds also offer Class F units, Scotia 2005. As of the date of this simplified prospectus, this measure Private Client units and Class I units. Only Class A, Class F has not been passed into law and there can be no assurance and Class I units are offered for sale under this simplified that it will be passed into law. prospectus. What does the fund invest in? The classes have different management fees and are intended for different investors. Class A units are available to all This section tells you the fund’s fundamental investment investors. Class F units are generally available only to objectives and the strategies it uses in trying to achieve those investors who have fee-based accounts with ScotiaMcLeod, a objectives. Any change to the fundamental investment objec- division of Scotia Capital Inc. We may make Class F units tives must be approved by a majority of votes cast at a available to other investors from time to time. Scotia Private meeting of unitholders called for that purpose. Client units are for investors who have signed a discretionary investment management agreement with Scotia Cassels Invest- About derivatives ment Counsel Limited or Scotiatrust. Class I units are not Derivatives are investments that derive their value from the available to the general public. You’ll find more information price of another investment or from anticipated movements in about the different classes of units on page 170. interest rates, currency exchange rates or market indexes. Derivatives are usually contracts with another party to buy or About the fund descriptions sell an asset at a later time and at a set price. Examples of On the following pages, you’ll find detailed descriptions of derivatives are options and forward contracts. each of the Scotia Mutual Funds to help you make your ) Options give holders the right, but not the obligation, to buy investment decisions. Here’s what each section of the fund or sell an asset, such as a security or currency, at a set descriptions tells you: price and a set time. Option holders normally pay the other party a cash payment, called a premium, for agreeing to Fund details give them the option. This section gives you some basic information about each ) Forward contracts are agreements to buy or sell an asset, fund, such as when it was established and its eligibility for such as a security or currency, at a set price and a set registered plans, including Registered Retirement Savings time. The parties have to complete the deal, or sometimes Plans (RRSPs), Registered Retirement Income Funds (RRIFs), make or receive a cash payment, even if the price has and Registered Education Savings Plans (RESPs). changed by the time the deal closes.

All of the funds are, or are expected to be, eligible A fund can use derivatives as long as it uses them in a way investments for registered plans. In certain cases, we may that’s consistent with the fund’s investment objectives and restrict purchases of units of certain funds by certain with Canadian securities regulations. All of the funds may use registered plans. derivatives to hedge their investments against losses from changes in currency exchange rates, interest rates and stock Some of the funds are considered foreign property for market prices. Some of the funds may also use derivatives to registered plans other than RESPs. The Income Tax Act gain exposure to financial markets or to invest indirectly in (Canada) (the Tax Act) limits the amount of foreign property securities or other assets. This can be less expensive than you can hold in these registered plans. The limit is currently buying securities or assets directly. 30% of the cost of the investments in your registered plan.

1 When a fund uses derivatives for purposes other than hedging, Funds, the mutual funds from the Scotia Mutual Funds family it holds enough cash or money market instruments to fully make up a large portion of the Funds’ investments. cover its positions, as required by securities regulations. The Scotia Partners Portfolios, Scotia Selected Funds and

About the RSP Funds Scotia Vision Funds give you: ) strategic asset allocation The RSP Funds are designed to provide exposure above the ) foreign content limit while remaining 100% eligible for geographic diversification registered plans. Each of the RSP Funds, other than the Scotia ) portfolio advisor style diversification Selected Conservative Growth RSP Fund and Scotia Selected ) ongoing oversight of the asset mix and fund selection Aggressive Growth RSP Fund, currently does this by investing ) foreign content monitoring and ongoing portfolio rebalancing in units of a mutual fund that’s considered foreign property to ensure that the appropriate long-term asset mix is (called the underlying fund) up to the foreign content limit maintained. and by using forward contracts and other derivatives that are linked to the performance of the underlying fund. They may The selection of underlying funds for the Scotia Partners place the balance of their assets on deposit with one or more Portfolios, Scotia Selected Funds and Scotia Vision Funds is Canadian financial institutions or may invest in Canadian subject to a multi-step investment process. money market instruments to cover their positions in the derivatives. Prior to recommending a fund for the Scotia Partners Portfolios, a team of analysts at ScotiaMcLeod researches Each of these RSP Funds enters into the forward contracts hundreds of mutual funds each year and in most cases meets with a financial institution called a counterparty. The fund with their portfolio managers. When recommending a mutual and the counterparty make payments to each other under the fund, the team attempts to gain a thorough understanding of forward contracts. The payments are based on the price of the the portfolio management process, style and discipline, the underlying fund and on the cost of the forward contracts. mandate of the fund and the risks inherent in that mandate and style of management. These RSP Funds will enter into forward contracts with The Bank of Nova Scotia, the parent company of Scotia Securities The creation of the Scotia Selected Funds began with an Inc. The Bank of Nova Scotia may act as a counterparty to the analysis of the Scotia Mutual Funds lineup, and the portfolio RSP Funds if the terms and conditions of the forward advisors responsible for the funds. Then, working from contracts are at least as favourable as the terms and predetermined asset mixes, each designed for different types conditions of forward contracts that The Bank of Nova Scotia of investors with different risk/reward characteristics, efficient enters into with comparable unrelated mutual funds. The RSP combinations of various funds were created. The Scotia Funds must engage an independent accounting firm to review Selected Funds hold a portfolio of other mutual funds selected the forward contracts and make this assessment before the largely from the Scotia Mutual Funds lineup, diversified on first forward contract is executed and on each simplified multiple levels by asset class, market capitalization, geography prospectus renewal or pricing amendment to the forward and investment style and can include both passive and active contracts. investment strategies.

Investing in other mutual funds Similar to the Scotia Selected Funds, the creation of the Scotia Vision Funds began with an analysis of the available The Scotia Partners Portfolios, Scotia Selected Funds and funds and their portfolio advisors. The asset allocation for Scotia Vision Funds provide investors with professionally each fund was professionally designed to be diversified on managed solutions designed to suit their investment profile. multiple levels to emphasize a balanced total return while Unlike most mutual funds, which invest in individual securi- minimizing risk. In addition, each Scotia Vision Fund is ties, each of the Scotia Partners Portfolios, Scotia Selected monitored on an ongoing basis to ensure appropriate diversifi- Funds and Scotia Vision Funds invests in a mix of other cation. Its asset allocation strategy is professionally adjusted to mutual funds. The mutual funds included in the Scotia become more conservative as its target date approaches. The Partners Portfolios are offered by some of the most prominent Scotia Vision funds are ideally suited to investors who have a mutual fund families in Canada, including the Scotia Mutual defined financial goal and a defined time horizon in which to Funds. For the Scotia Selected Funds and the Scotia Vision realize their goal.

2 Scotia Capital Inc. reviews the Scotia Partners Portfolios, the funds may only rely on the exemption in accordance with Scotia Selected Funds and the Scotia Vision Funds and plays a certain conditions imposed by the regulators. key role in monitoring the underlying funds and the asset The funds may expand their participation in affiliated dealer mixes on an ongoing basis. underwritings if permitted to do so by the regulators. The Capital International Series Funds invest some or all of their assets in other mutual funds. Top 10 holdings

Some of the other funds may invest a portion of their assets This is a list of the fund’s 10 largest investments at in other mutual funds from time to time. When deciding to September 30, 2004. The list will change as the portfolio invest in other mutual funds, the portfolio advisor may advisor buys and sells securities. You can get the most recent consider a variety of criteria, including management style, list by calling 1-800-268-9269 (416-750-3863 in Toronto) for investment performance and consistency, risk attributes and English, 1-800-387-5004 for French, or from the Internet at the quality of the fund’s manager or portfolio advisor. www.scotiabank.com. Top 10 holdings aren’t shown for cash equivalent funds or if a fund is new. Funds that engage in repurchase and reverse repurchase transactions What are the risks of investing in the fund?

Some of the funds may enter into repurchase or reverse This section tells you the risks of investing in the fund. You’ll repurchase agreements to generate additional income from find a description of each risk in Specific risks of mutual securities held in a fund’s portfolio. When a mutual fund funds on page 164. agrees to sell a security at one price and buy it back on a specified later date at a lower price, it is entering into a Who should invest in this fund? repurchase transaction. When a mutual fund agrees to buy a security at one price and sell it back on a specified later date This section can help you decide if the fund might be suitable at a higher price, it is entering into a reverse repurchase for your portfolio. It’s meant as a general guide only. For transaction. For a description of the strategies the funds use advice about your portfolio, you should consult your mutual to minimize the risks associated with these transactions, see fund representative. If you don’t have a mutual fund the discussion under Repurchase and reverse repurchase representative, you can speak with one of our representatives transaction risk on page 166. at any Scotiabank branch or by calling a ScotiaMcLeod office.

Funds that lend their securities Past performance

Some of the funds may enter into securities lending transac- Past performance is no guarantee of how a fund will perform tions to generate additional income from securities held in a in the future, but it can give you an idea of how volatile the fund’s portfolio. A mutual fund may lend securities held in its fund has been in the past. Volatility is a measure of how often portfolio to qualified borrowers who provide adequate collat- and by how much the price of a fund changes. It’s also a eral. For a description of the strategies the funds use to measure of risk. The higher the volatility, the greater the risk. minimize the risks associated with these transactions, see the The information in the charts and tables: discussion under Securities lending risk on page 166. ) shows the performance of Class A units of all the funds and the performance of Class F and Class I units if a fund offers Funds that are advised by our affiliates Class F or Class I units and if they were sold to the public Funds that are advised by our affiliates have received an before October 29, 2003 exemption from the Canadian securities regulators that allows ) assumes that all distributions are reinvested in additional them to invest in certain debt securities that they would have units of the fund. If you hold your units in a non-registered been prohibited from investing in without this exemption. As a account, distributions you receive are taxable. For more result, these funds may acquire non-government debt securi- information, see Income tax considerations for investors ties underwritten by our affiliates during the offering of these ) doesn’t take into account any optional charges or income securities or at anytime during the 60 day period following taxes, which would reduce your returns. completion of the offering. These funds may also purchase or sell non-government and government debt securities in the The year-by-year return bar chart shows in percentage terms secondary market from, or to, one of our affiliates. These how much an investment held on January 1 in each year

3 would have increased or decreased by December 31 of that management fees and other expenses during the year. The year. MER is shown at an annualized rate if the financial year is less than 12 months. The method of calculating the MER of The overall past performance line graph shows how a $10,000 mutual funds was changed by securities regulators on investment in the fund would have changed in value for the February 1, 2000. Some expenses, such as taxes and interest, indicated number of years, compared with one or more are now included in the calculation. indexes. Indexes include reinvested income but not fees.

The annual compound returns table shows the historical Portfolio turnover rate annual compound returns for the periods indicated, compared Portfolio turnover rate indicates how often the portfolio with the same indexes as the line graph. advisor bought and sold securities for the fund, excluding If a fund is new, no past performance information is available. securities having maturity dates at acquisition of one year or less. A portfolio turnover rate of 100% is the same as the fund Distribution policy buying and selling all of the securities in its portfolio once during the year. In general, the higher the portfolio turnover This tells you when the fund usually distributes any income rate, the higher the fund’s trading costs in that year and the and capital gains to unitholders. The funds may make greater the chance that you’ll receive a distribution of capital distributions at other times. gains. Distributions of capital gains and income are taxable if Distributions on units held in Scotia registered plans and you hold the fund outside a registered plan. There is not Copilot non-registered accounts are always reinvested in necessarily a relationship between portfolio turnover rate and additional units of the fund. Distributions on units held in fund performance. Portfolio turnover rate isn’t shown for cash other registered plans and non-registered accounts are rein- equivalent funds. vested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque Fund expenses indirectly borne by investors or by deposit to your bank account. For information about how This is an example of how much the fund might pay in distributions are taxed, see Income tax considerations for expenses. It is intended to help you compare the cost of investors. investing in the fund with the cost of investing in other mutual funds. Each fund pays its own expenses, but they Financial highlights affect you because they reduce the fund’s returns. The tables in this section show selected key financial The table shows how much the fund would pay in expenses on information about the fund for the past five years (or less if a $1,000 investment with a 5% annual return. The information the fund is less than five years old). If a fund does not offer in the tables assumes that the fund’s MER was the same Class F or Class I units or did not distribute Class F or Class I throughout each period shown as it was during its last units prior to December 31, 2003, no financial information is completed financial year. If a fund does not offer Class F or available for that Class. If a fund is new, no financial Class I units or did not distribute Class F or Class I units highlights are available. The information in the tables: prior to December 31, 2003, no fund expenses information is ) is based on the fund’s audited annual financial statements available for that Class. If a fund is new, no fund expense ) is at December 31 for each year information is available. You’ll find more information about fees and expenses in Fees and expenses starting on page 177. ) assumes that all distributions are reinvested.

You can get a copy of the audited financial statements by calling 1-800-268-9269 (416-750-3863 in Toronto) for English, 1-800-387-5004 for French, or from the Internet at www.scotiabank.com. You can also write to us at the address on the back cover of this simplified prospectus.

Management expense ratio

The management expense ratio (MER) shows the percentage of the fund’s daily average net assets that was paid in

4 Cash Equivalent Funds

Scotia T-Bill Fund

Scotia Premium T-Bill Fund

Scotia Money Market Fund

Scotia CanAm U.S. $ Money Market Fund

The cash equivalent funds aim to provide safety plus interest income. They have the lowest risk of the Scotia Mutual Funds because they invest in very high quality short-term investments, such as treasury bills and other money market instruments. These funds are managed to attempt to maintain a constant unit value. Interest income will vary with short-term interest rates.

Cash equivalent funds can add stability and liquidity to your portfolio. They’re also a good choice if you need quick access to your money or are looking for an alternative to other short- term investments or a savings account. Cash Equivalent Funds

5 Scotia T-Bill Fund

Fund details The fund aims to maintain a constant unit value of $10.00 by crediting income and capital gains daily and distribut- Fund type Canadian money market fund ing them monthly. Date established October 3, 1991

SCOTIA T-BILL FUND Type of securities Class A units of a mutual fund trust The fund may participate in repurchase, reverse repur- Eligible for Yes. Units of the fund are not foreign chase and securities lending transactions to achieve the registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel fund’s overall investment objectives and to enhance the Limited fund’s returns. You’ll find more information about repur- chase, reverse repurchase and securities lending transac- tions on page 3. What does the fund invest in?

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to provide income and liquidity, The main risk of investing in this fund is interest rate while maintaining a high level of safety. It invests risk. primarily in Government of Canada treasury bills and other short-term debt instruments guaranteed by the The fund may have these additional risks: Government of Canada. ) derivative risk ) Any change to the fundamental investment objectives repurchase and reverse repurchase transaction risk must be approved by a majority of votes cast at a meeting ) securities lending risk. of unitholders called for that purpose. You’ll find details about each of these risks starting on Investment strategies page 164.

The fund invests in securities with a maturity of up to The fund aims to maintain a constant unit value of one year. The average term to maturity of the fund’s $10.00, but there’s a risk the price could change. investments can vary between 30 and 90 days. Who should invest in this fund? The portfolio advisor uses interest rate and yield curve analysis to select individual investments and to manage This fund may be suitable for you if: the fund’s average term to maturity. It may also use ) you want interest income and liquidity with a high level derivatives such as options and futures to adjust the of safety fund’s average term to maturity. It will only use ) you’re investing for the short term derivatives as permitted by securities regulations. ) you’re looking for low risk and safety of principal. CASH EQUIVALENT FUNDS

6 Past performance at December 31 Financial highlights at December 31 Distributions and net asset value per unit This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 1999 2000 2001 2002 2003

figures don’t tell you how the fund will perform in the Distributions SCOTIA T-BILL FUND future. from net income $ 0.37 0.44 0.34 0.14 0.17 from realized gain $ ––––– Year-by-year returns return of capital$––––– Total annual distributions $ 0.37 0.44 0.34 0.14 0.17 This chart shows the fund’s annual performance, which Net asset value per unit $ 10.00 10.00 10.00 10.00 10.00 changes from year to year. % Ratios and supplemental data 10 1999 2000 2001 2002 2003 8 Net assets (000’s) $ 326,375 276,467 438,706 392,375 329,514 6.20% 6 Number of units 4.30% 4.50% outstanding (000’s) 32,638 27,647 43,871 39,238 32,951 4 3.80% 3.80% 3.80% 3.50% MER1 %1.071.071.071.111.13 2.20% 1.73% 1 We may from time to time absorb some of the operating expenses that 2 1.40% the fund would otherwise pay. In 2003, the management expense ratio 0 of the fund would have been 1.20% had we not absorbed some of 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 these expenses.

Distribution policy Fund expenses indirectly borne by investors

The fund distributes any income by the last business day This example shows the fund’s expenses on a $1,000 of each month. It distributes any capital gains by the last investment with a 5% annual return. business day of each calendar year. Fees and expenses Distributions on units held in Scotia registered plans and payable over 1 year 3 years 5 years 10 years $ 11.58 36.51 64.00 145.68 Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. CASH EQUIVALENT FUNDS

7 Scotia Premium T-Bill Fund

Fund details The fund aims to maintain a constant unit value of $10.00 by crediting income and capital gains daily and distribut- Fund type Canadian money market fund ing them monthly. Date established July 10, 1992 Type of securities Class A units of a mutual fund trust The fund may participate in repurchase, reverse repur- Eligible for Yes. Units of the fund are not foreign chase and securities lending transactions to achieve the registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel fund’s overall investment objectives and to enhance the Limited fund’s returns. You’ll find more information about repur-

SCOTIA PREMIUM T-BILL FUND chase, reverse repurchase and securities lending transac- tions on page 3. What does the fund invest in?

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to provide income and liquidity, The main risk of investing in this fund is interest rate while maintaining a high level of safety. It invests risk. The fund may have these additional risks: primarily in Government of Canada treasury bills and ) derivative risk other short-term debt instruments guaranteed by the ) Government of Canada. repurchase and reverse repurchase transaction risk ) securities lending risk. The fund pays a rebate, called a management fee distribution, of 0.20% when the value of the fund within You’ll find details about each of these risks starting on an account is $250,000 to $1 million and 0.35% when the page 164. value of the fund within an account is more than $1 The fund aims to maintain a constant unit value of million. If you are eligible for a management fee $10.00, but there’s a risk the price could change. distribution, you can expect to realize more income from the fund than you would otherwise realize. Who should invest in this fund? Any change to the fundamental investment objectives This fund may be suitable for you if: must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. ) you have at least $100,000 to invest in the fund ) you want interest income with a high level of safety Investment strategies and liquidity The fund invests in securities with a maturity of up to ) you’re investing for the short term one year. The average term to maturity of the fund’s ) you’re looking for low risk and safety of principal. investments can vary between 30 and 90 days.

The portfolio advisor uses interest rate and yield curve analysis to select individual investments and to manage the fund’s average term to maturity. It may also use derivatives such as options and futures to adjust the fund’s average term to maturity. It will only use derivatives as permitted by securities regulations. CASH EQUIVALENT FUNDS

8 Past performance at December 31 Financial highlights at December 31 Distributions and net asset value per unit This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 1999 2000 2001 2002 2003 figures don’t tell you how the fund will perform in the Distributions future. from net income $ 0.42 0.49 0.39 0.20 0.23 from realized gain $ ––––– Year-by-year returns return of capital$–––––

Total annual distributions $ 0.42 0.49 0.39 0.20 0.23 SCOTIA PREMIUM T-BILL FUND This chart shows the fund’s annual performance, which Net asset value per unit $ 10.00 10.00 10.00 10.00 10.00 changes from year to year. % Ratios and supplemental data 10 1999 2000 2001 2002 2003 8 6.60% Net assets (000’s) $ 857,438 978,467 2,139,410 1,880,791 1,751,891 6 Number of units 5.00% 4.50% 4.30% 4.30% 4.30% 4.00% outstanding (000’s) 85,744 97,847 213,941 188,079 175,189 4 2.70% MER % 0.56 0.56 0.55 0.55 0.55 2.00% 2.32% 2

0 Fund expenses indirectly borne by investors 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 This example shows the fund’s expenses on a $1,000 Distribution policy investment with a 5% annual return.

The fund distributes any income by the last business day Fees and expenses of each month. It distributes any capital gains by the last payable over 1 year 3 years 5 years 10 years $ 5.64 17.77 31.15 70.91 business day of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. CASH EQUIVALENT FUNDS

9 Scotia Money Market Fund

Fund details The fund aims to maintain a constant unit value of $10.00 by crediting income and capital gains daily and distribut- Fund type Canadian money market fund ing them monthly. Date established August 30, 1990 Type of securities Class A and Class I units of a mutual The fund may participate in repurchase, reverse repur- fund trust chase and securities lending transactions to achieve the Eligible for Yes. Units of the fund are not foreign registered plans? property. fund’s overall investment objectives and to enhance the Portfolio advisor Scotia Cassels Investment Counsel fund’s returns. You’ll find more information about repur-

SCOTIA MONEY MARKET FUND Limited chase, reverse repurchase and securities lending transac- tions on page 3. What does the fund invest in? What are the risks of investing in the fund? Investment objectives The main risks of investing in this fund are: The fund’s objective is to provide income and liquidity, ) while maintaining a high level of safety. It invests interest rate risk primarily in high quality, short-term fixed income securi- ) credit risk. ties issued by Canadian federal, provincial and municipal The fund may have these additional risks: governments, Canadian chartered banks and trust compa- nies, and corporations. ) derivative risk ) class risk Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting ) repurchase and reverse repurchase transaction risk of unitholders called for that purpose. ) underlying fund risk ) securities lending risk. Investment strategies You’ll find details about each risk starting on page 164. The fund invests in securities with a maturity of up to one year and a credit rating of R1 or better by Dominion The fund aims to maintain a constant unit value of Bond Rating Service Limited (DBRS), or an equivalent $10.00, but there’s a risk the price could change. rating by another approved rating agency. The average term to maturity of the fund’s investments can vary Who should invest in this fund? between 30 and 90 days. This fund may be suitable for you if: The portfolio advisor uses interest rate, yield curve and ) you want interest income and liquidity with a high level credit analysis to select individual investments and to of safety manage the fund’s average term to maturity. It may also ) use derivatives such as options and futures to adjust the you’re investing for the short term fund’s average term to maturity. It will only use ) you’re looking for low risk and safety of principal. derivatives as permitted by securities regulations. CASH EQUIVALENT FUNDS

10 Past performance at December 31 Financial highlights at December 31 Distributions and net asset value per unit This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 1999 2000 2001 2002 2003 figures don’t tell you how the fund will perform in the Distributions future. from net income $ 0.39 0.46 0.35 0.16 0.20 from realized gain $ ––––– Year-by-year returns return of capital$–––––

Total annual distributions $ 0.39 0.46 0.35 0.16 0.20 SCOTIA MONEY MARKET FUND This chart shows the fund’s annual performance, which Net asset value per unit $ 10.00 10.00 10.00 10.00 10.00 changes from year to year. % Ratios and supplemental data 10 1999 2000 2001 2002 2003 8 Net assets (000’s) $ 791,766 780,483 1,322,632 1,298,955 1,252,690 6.20% 6 Number of units 4.70% 4.20% 4.00% 4.00% outstanding (000’s) 79,177 78,048 132,263 129,896 125,269 4 3.80% 3.60% MER1 % 1.07 1.07 1.07 1.11 1.14 2.30% 2.04% 1 2 1.60% We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio 0 of the fund would have been 1.16% had we not absorbed some of 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 these expenses.

Distribution policy Fund expenses indirectly borne by investors

The fund distributes any income by the last business day This example shows the fund’s expenses on a $1,000 of each month. It distributes any capital gains by the last investment with a 5% annual return. business day of each calendar year. Fees and expenses Distributions on units held in Scotia registered plans and payable over 1 year 3 years 5 years 10 years $ 11.69 36.84 64.57 146.97 Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. CASH EQUIVALENT FUNDS

11 Scotia CanAm U.S. $ Money Market Fund

Fund details The fund aims to maintain a constant unit value of US$10.00 by crediting income and capital gains daily and Fund type U.S. money market fund distributing them monthly. Date established September 3, 1996 Type of securities Class A units of a mutual fund trust The fund may participate in repurchase, reverse repur- Eligible for Yes. Units of the fund are not foreign chase and securities lending transactions to achieve the registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel fund’s overall investment objectives and to enhance the Limited fund’s returns. You’ll find more information about repur- chase, reverse repurchase and securities lending transac- tions on page 3. What does the fund invest in?

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to provide income and liquidity, The main risks of investing in this fund are: while maintaining a high level of safety. It invests SCOTIA CANAM U.S. $ MONEY MARKET FUND ) currency risk primarily in treasury bills and other money market ) instruments that are denominated in U.S. dollars and are interest rate risk issued by Canadian federal, provincial and municipal ) credit risk. governments and corporations, and by supranational The fund may have these additional risks: entities, such as the World Bank. These securities aren’t considered foreign property under the Tax Act. ) derivative risk ) class risk Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting ) repurchase and reverse repurchase transaction risk of unitholders called for that purpose. ) securities lending risk.

Investment strategies You’ll find details about each risk starting on page 164.

The fund invests in securities with a maturity of up to The fund aims to maintain a constant unit value of one year and a credit rating of R1 or better by DBRS, or US$10.00, but there’s a risk the price could change. an equivalent rating by another approved rating agency. The average term to maturity of the fund’s investments Who should invest in this fund? can vary between 30 and 90 days. This fund may be suitable for you if: The portfolio advisor uses interest rate, yield curve and ) you want interest income, exposure to the U.S. dollar credit analysis to select individual investments and to and liquidity with a high level of safety manage the fund’s average term to maturity. It may also ) you’re investing for the short term use derivatives such as options and futures to adjust the ) fund’s average term to maturity. It will only use you’re looking for low risk and safety of principal. derivatives as permitted by securities regulations. CASH EQUIVALENT FUNDS

12 Past performance at December 31 Financial highlights at December 31 Distributions and net asset value per unit This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 1999 2000 2001 2002 2003 figures don’t tell you how the fund will perform in the Distributions future. from net income US$ 0.41 0.53 0.33 0.07 0.01 from realized gain US$ ––––– Year-by-year returns return of capitalUS$––––– Total annual distributions US$ 0.41 0.53 0.33 0.07 0.01 This chart shows the fund’s annual performance, which Net asset value per unit US$10.00 10.00 10.00 10.00 10.00 changes from year to year. % Ratios and supplemental data 10 1999 2000 2001 2002 2003 8 Net assets (000’s) US$ 49,553 50,889 116,348 131,191 110,018 SCOTIA CANAM U.S. $ MONEY MARKET FUND 6 5.40% Number of units 4.60% 4.60% 4.10% outstanding (000’s) 4,955 5,089 11,635 13,119 11,002 4 3.40% MER1 %1.071.071.141.141.11 1 We may from time to time absorb some of the operating expenses that 2 1.40% 0.75% the fund would otherwise pay. In 2003, the management expense ratio 0.14% 0 of the fund would have been 1.15% had we not absorbed some of 1996 1997 1998 1999 2000 2001 2002 2003 these expenses. All figures in US$

Fund expenses indirectly borne by investors Distribution policy This example shows the fund’s expenses on a $1,000 The fund distributes any income by the last business day investment with a 5% annual return. of each month. It distributes any capital gains by the last business day of each calendar year. Fees and expenses payable over 1 year 3 years 5 years 10 years Distributions on units held in Scotia registered plans and $ 11.38 35.87 62.87 143.11 Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. CASH EQUIVALENT FUNDS

13

Income Funds

Scotia Canadian Bond Index Fund

Scotia Mortgage Income Fund

Scotia Canadian Income Fund

Scotia CanAm U.S. $ Income Fund

Scotia CanGlobal Income Fund

The income funds aim to offer the potential for higher interest income than the cash equivalent funds. They invest primarily in high quality fixed income securities such as bonds, mortgages and dividend-paying shares. These funds are riskier than cash equivalent funds because they’re more sensitive to changes in interest rates and the creditworthiness of issuers.

Income funds can add income potential to your portfolio. They’re also a good choice if you want higher income in the medium to long term and can accept possible declines in the value of your investment in the short term. Income Funds

15 Scotia Canadian Bond Index Fund

Fund details fund’s returns. You’ll find more information about repur- chase, reverse repurchase and securities lending transac- Fund type Canadian bond fund tions on page 3. Date established November 8, 1999 Type of securities Class A, Class F and Class I units of a mutual fund trust Top 10 holdings at September 30, 2004 Eligible for Yes. Units of the fund are not foreign registered plans? property. Government of Canada 6.00% 060108 3.61% Portfolio advisor State Street Global Advisors, Ltd. Government of Canada 5.25% 060113 3.29% Canada Housing Trust 4.40% 031508 2.96% What does the fund invest in? Government of Canada 6.00% 060111 2.31% Government of Canada 5.75% 060133 2.08%

SCOTIA CANADIAN BOND INDEX FUND Investment objectives Government of Canada 8.00% 060123 2.06% The fund’s objective is to provide a high level of regular Government of Canada 8.00% 060127 2.05% interest income and modest capital gains by tracking the Canada Housing Trust 4.65% 091509 1.70% performance of a generally recognized Canadian bond Government of Canada 5.75% 060129 1.68% index, currently the Scotia Capital (SC) Universe Bond Government of Canada 5.75% 090106 1.50% Index. It invests primarily in: ) bonds and treasury bills issued by Canadian federal, What are the risks of investing in the fund? provincial and municipal governments and Canadian corporations The main risks of investing in this fund are: ) ) money market instruments issued by Canadian corpora- interest rate risk tions, including commercial paper and bankers’ ) credit risk acceptances. ) index risk Any change to the fundamental investment objectives ) concentration risk must be approved by a majority of votes cast at a meeting ) liquidity risk. of unitholders called for that purpose. The fund may have these additional risks: Investment strategies ) derivative risk The portfolio advisor aims to track the performance of the ) repurchase and reverse repurchase transaction risk SC Universe Bond Index as closely as possible by: ) securities lending risk ) investing in fixed income securities that have similar ) underlying fund risk. characteristics to the securities that are included in the SC Universe Bond Index You’ll find details about each risk starting on page 164. ) keeping the portfolio as fully invested as possible Who should invest in this fund? ) minimizing transaction costs. This fund may be suitable for you if: The portfolio advisor may use derivatives such as options ) you want a high level of regular interest income while and futures to adjust the fund’s average term to maturity, tracking the performance of a major Canadian bond to gain exposure to income-producing securities and to index hedge against changes in interest rates. It will only use derivatives as permitted by securities regulations. ) you’re investing for at least three years ) you can accept low-to-medium risk. The fund may participate in repurchase, reverse repur- chase and securities lending transactions to achieve the

INCOME FUNDS fund’s overall investment objectives and to enhance the

16 Past performance at December 31 mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the This section shows how the fund has performed in the average duration is 6.03 years. past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the Annual compound returns future. This table shows the fund’s annual compound returns, compared with the SC Universe Bond Index. Year-by-year returns Since These charts show the fund’s annual performance, which 1 year 3 years inception Scotia Canadian Bond Index Fund changes from year to year. Class A units % 5.46 6.53 6.91 % Class A Units Class F units % – – 8.831 10 9.06% 2

SC Universe Bond Index % 6.69 7.83 SCOTIA CANADIAN BOND INDEX FUND 1 8 7.32% September 18, 2003 6.83% 2 Class A units 8.14% and Class F units 12.95% 6 5.46%

4 Distribution policy

2 The fund distributes any income by the last business day 0.20% 0 of each month. It distributes any capital gains in 1999 2000 2001 2002 2003 December of each calendar year. % Class F Units 10 8.83% Distributions on units held in Scotia registered plans and 8 Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in 6 other registered plans and non-registered accounts are 4 reinvested in additional units of the fund, unless you tell

2 us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. 0 2003* * Sept. 18, 2003 to Dec. 31, 2003 Financial highlights, Class A units Overall past performance at December 31 This chart shows how a $10,000 investment in the fund Distributions and net asset value per unit would have changed in value, compared with the Scotia 1 1999 2000 2001 2002 2003 Capital (SC) Universe Bond Index. Distributions $ from net income $ 0.06 0.59 0.57 0.53 0.51 20,000 from realized gain $ –––––

$13,854 return of capital$–––––

$13,208 Total annual distributions $ 0.06 0.59 0.57 0.53 0.51 10,000 Net asset value per unit $ 9.97 10.25 10.36 10.57 10.62 $10,309(a) $10,214(b)

Ratios and supplemental data

0 19991 2000 2001 2002 2003 Nov. 8 Dec. Dec. Dec. Dec. Dec. 1999 1999 2000 2001 2002 2003 Net assets (000’s) $ 23,520 56,862 67,424 72,238 79,980 Class A Units Number of units Scotia Canadian Bond Index Fund outstanding (000’s) 2,359 5,547 6,508 6,837 7,531 SC Universe Bond Index MER1 %0.860.931.021.221.15 Class F Units Portfolio turnover rate % – 33.08 45.25 41.83 24.94 (a) SC Universe Bond Index 1 (b) Scotia Canadian Bond Index Fund These figures are for the period from September 20, 1999 to December 31, 1999. The SC Universe Bond Index is a broad measure of the total return of INCOME FUNDS Canadian bonds that mature in more than one year. It includes approxi-

17 Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 20032 Distributions from net income$––––0.17 from realized gain $ ––––– return of capital$––––– Total annual distributions $––––0.17 Net asset value per unit $––––10.62 SCOTIA CANADIAN BOND INDEX FUND Ratios and supplemental data

1999 2000 2001 2002 20032 Net assets (000’s) $ ––––26 Number of units outstanding (000’s) ––––2 MER3 %––––0.64 Portfolio turnover rate % ––––24.94 2 These figures are for the period from September 18, 2003 to December 31, 2003. 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.03% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 11.79 37.16 65.13 148.26 Class F units $ 6.56 20.68 36.25 82.51 INCOME FUNDS

18 Scotia Mortgage Income Fund

Fund details hedge against changes in interest rates. It will only use Fund type Canadian mortgage fund derivatives as permitted by securities regulations. Date established November 30, 1992 ) temporarily invest the fund’s assets in cash or cash- Type of securities Class A, Class F and Class I units of a mutual fund trust equivalent securities to try to protect the fund during a Eligible for Yes. Units of the fund are not foreign market downturn or for other reasons. registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel The fund may participate in repurchase, reverse repur- Limited chase and securities lending transactions to achieve the fund’s overall investment objectives and to enhance the

What does the fund invest in? fund’s returns. You’ll find more information about repur- SCOTIA MORTGAGE INCOME FUND chase, reverse repurchase and securities lending transac- Investment objectives tions on page 3. The fund’s objective is to provide regular interest income. It invests primarily in high quality mortgages on residen- Top 10 holdings at September 30, 2004 tial properties in Canada. These mortgages are: Mortgages of 6-month remaining maturity 28.42% ) insured or guaranteed by Canadian federal or provincial Mortgages of 4-year remaining maturity 22.12% governments, or their agencies, or Mortgages of 2-year remaining maturity 13.63% ) conventional first mortgages with loan-to-value ratios of Mortgages of 5-year remaining maturity 10.36% no more than 75%, unless the excess is insured by an Mortgages of 7-year remaining maturity 7.68% insurance company registered or licensed under federal Mortgages of 3-year remaining maturity 4.31% or provincial legislation. Mortgages of 1-year remaining maturity 1.69% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting What are the risks of investing in the fund? of unitholders called for that purpose. The main risk of investing in this fund is interest rate risk. Investment strategies The fund may have these additional risks: The portfolio advisor uses interest rate and yield curve ) analysis to select individual investments and manage the credit risk fund’s average term to maturity. Scotiabank will buy any ) foreign investment risk mortgage that is in default if it was purchased from ) currency risk Scotia Mortgage Corporation. It will buy the mortgage at a ) price equal to the principal value plus any unpaid derivative risk interest. That means the fund doesn’t assume the risk of ) class risk default on these mortgages. ) repurchase and reverse repurchase transaction risk The fund may invest up to 25% of its assets in fixed ) securities lending risk income securities issued by Canadian federal, provincial ) underlying fund risk. and municipal governments, and by corporations. The fund can invest up to 25% of its assets in foreign You’ll find details about each risk starting on page 164. securities. It can invest anywhere in the world, but generally won’t invest in emerging markets. Who should invest in this fund?

The portfolio advisor may: This fund may be suitable for you if: ) ) use derivatives such as options, futures and forward you want regular interest income contracts to adjust the fund’s average term to maturity, ) you’re investing for at least three years to gain exposure to income-producing securities and to INCOME FUNDS ) you can accept low-to-medium risk.

19 Past performance at December 31 Overall past performance

This section shows how the fund has performed in the This chart shows how a $10,000 investment in the fund past and gives you an idea of the risk involved. These would have changed in value, compared with the Scotia figures don’t tell you how the fund will perform in the Capital (SC) Universe Bond Index and the SC Mortgage future. Market Index. $ 25,000 $21,200 Year-by-year returns $20,622 20,000 These charts show the fund’s annual performance, which $16,873 (a)

SCOTIA MORTGAGE INCOME FUND 15,000 $12,176 changes from year to year. $11,983(b)

% 10,000 (c) Class A Units $11,354 15 (d) 13.05% $10,570 5,000 $10,476(e) $10,375(f) 10 9.51% 8.24% 0 6.50% Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 5.65% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 5 3.00% 3.53% 3.44% Class A Units 1.81% Scotia Mortgage Income Fund 0 -0.34% SC Universe Bond Index SC Mortgage Market Index -5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class F Units (a) SC Universe Bond Index % Class F Units 15 (b) SC Mortgage Market Index (c) Scotia Mortgage Income Fund

10 Class I Units (d) SC Universe Bond Index (e) SC Mortgage Market Index 5 4.40% 4.24% 4.28% (f) Scotia Mortgage Income Fund

0 The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- mately 900 Canadian federal, provincial, municipal and corporate bonds -5 2001* 2002 2003 rated BBB or higher. The average term to maturity is 9.51 years and the * Aug. 14, 2001 to Dec. 31, 2001 average duration is 6.03 years. The SC Mortgage Market Index represents yields on a sample of mortgages % Class I Units 10 from Canadian chartered banks. The index assumes a 5-year term before December 1980 and a 3-year term from December 1980, and an 8 amortization period of 25 years.

6 5.67%

4

2

0 2003* * April 28, 2003 to Dec. 31, 2003 INCOME FUNDS

20 Annual compound returns Ratios and supplemental data

This table shows the fund’s annual compound returns, 1999 2000 2001 2002 2003 compared with the SC Universe Bond Index and the Net assets (000’s) $ 394,581 322,313 411,108 408,201 421,126 SC Mortgage Market Index. Number of units Since outstanding (000’s) 37,609 30,259 37,413 37,473 38,943 1 year 3 years 5 years 10 years inception MER1 %1.671.691.721.571.71 Scotia Mortgage Portfolio Income Fund turnover rate % 35.04 36.91 35.79 82.42 130.23 Class A units % 3.44 5.05 4.68 5.37 1 We may from time to time absorb some of the operating expenses that Class F units%4.28–––5.591 the fund would otherwise pay. In 2003, the management expense ratio

of the fund would have been 1.75% had we not absorbed some of SCOTIA MORTGAGE INCOME FUND 2 Class I units%––––5.67 these expenses. SC Universe Bond Index % 6.69 7.83 6.44 7.80 3 Financial highlights, Class F units SC Mortgage Market Index % 6.19 8.16 7.21 7.51 4 at December 31 1 August 14, 2001 Distributions and net asset value per unit 2 April 28, 2003 3 Class F units 8.80% and Class I units 8.67% 1999 2000 20012 2002 2003 4 Class F units 8.06% and Class I units 7.22% Distributions from net income $ – – 0.22 0.55 0.54 Distribution policy from realized gain $ ––––– The fund distributes any income by the last business day return of capital$––––– Total annual distributions $ – – 0.22 0.55 0.54 of each month. It distributes any capital gains in Net asset value per unit $ – – 10.99 10.89 10.80 December of each calendar year.

Distributions on units held in Scotia registered plans and Ratios and supplemental data Copilot non-registered accounts are always reinvested in 1999 2000 20012 2002 2003 additional units of the fund. Distributions on units held in Net assets (000’s) $ – – 14 33 133 other registered plans and non-registered accounts are Number of units reinvested in additional units of the fund, unless you tell outstanding (000’s) – – 1 3 12 us in writing that you want to receive cash distributions MER3 % – –0.670.850.95 by cheque or by deposit to your bank account. Portfolio turnover rate % – – 35.79 82.42 130.23 2 These figures are for the period from August 14, 2001 to December 31, Financial highlights, Class A units 2001. at December 31 3 We may from time to time absorb some of the operating expenses that Distributions and net asset value per unit the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 1.48% had we not absorbed some of these expenses. 1999 2000 2001 2002 2003 Distributions from net income $ 0.50 0.50 0.52 0.47 0.45 Financial highlights, Class I units from realized gain $ –––––at December 31 return of capital$–––––Distributions and net asset value per unit Total annual distributions $0.500.500.520.470.45 1999 2000 2001 2002 20034 Net asset value per unit $ 10.49 10.65 10.99 10.89 10.81 Distributions from net income$––––0.41 from realized gain $ ––––– return of capital$––––– Total annual distributions $––––0.41 Net asset value per unit $––––10.81 INCOME FUNDS

21 Ratios and supplemental data

1999 2000 2001 2002 20034 Net assets (000’s) $ ––––9,738 Number of units outstanding (000’s) ––––901 MER5 %––––– Portfolio turnover rate % ––––130.23 4 These figures are for the period from April 28, 2003 to December 31, 2003.

SCOTIA MORTGAGE INCOME FUND 5 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.01% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 17.53 55.26 96.85 220.46 Class F units $ 9.74 30.70 53.81 122.48 Class I units $–––– INCOME FUNDS

22 Scotia Canadian Income Fund

Fund details The fund can invest in foreign securities up to the foreign content limit. It can invest anywhere in the world, but Fund type Canadian bond fund generally won’t invest in emerging markets. Date established November 1957 Type of securities Class A, Class F and Class I units of a The portfolio advisor may: mutual fund trust Eligible for Yes. Units of the fund are not foreign ) use derivatives such as options, futures and forward registered plans? property. contracts to adjust the fund’s average term to maturity, Portfolio advisor Scotia Cassels Investment Counsel to gain exposure to income-producing securities and to Limited hedge against changes in interest rates. It will only use derivatives as permitted by securities regulations. SCOTIA CANADIAN INCOME FUND What does the fund invest in? ) temporarily invest the fund’s assets in cash or cash- Investment objectives equivalent securities to try to protect the fund during a The fund’s objective is to provide a high level of regular market downturn or for other reasons. interest income and modest capital gains. It invests The portfolio advisor may actively trade the fund’s primarily in: investments. This can increase trading costs, which may ) bonds and treasury bills issued by Canadian federal, lower the fund’s returns. It also increases the chance that provincial and municipal governments and Canadian you’ll receive taxable capital gains if you hold the fund in corporations a non-registered account. ) money market instruments issued by Canadian corpora- The fund may participate in repurchase, reverse repur- tions. These include commercial paper, bankers’ accept- chase and securities lending transactions to achieve the ances, mortgage-backed securities and guaranteed fund’s overall investment objectives and to enhance the investment certificates fund’s returns. You’ll find more information about repur- ) high-quality dividend-paying shares of Canadian chase, reverse repurchase and securities lending transac- corporations. tions on page 3.

Any change to the fundamental investment objectives Top 10 holdings at September 30, 2004 must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. Government of Canada 8.00% 060123 18.15% Government of Canada 5.00% 060114 14.79% Investment strategies Government of Canada 3.00% 120105 13.98% Securities with a maturity of one year or less will Province of Ontario 7.50% 011906 3.11% generally have a credit rating of R1 or better by DBRS, or Royal Bank of Canada 5.00% 012014 2.48% an equivalent rating by another approved rating agency. Wells Fargo Finance Canada Corporation 6.05% 082712 2.43% Securities with a maturity of more than one year must Great-West Lifeco Inc. 6.67% 032133 2.35% have a credit rating of BBB or better by DBRS, or an Merrill Lynch Financial Assets Inc. 5.25% 061213 2.30% equivalent rating by another approved rating agency. Merrill Lynch Financial Assets Inc. 6.14% 041212 2.27% The average term to maturity of the fund’s investments Merrill Lynch Financial Assets Inc. 5.44% 031214 2.26% will vary, depending on market conditions. The portfolio advisor adjusts the average term to maturity to try to What are the risks of investing in the fund? maximize returns while minimizing interest rate risk. The main risks of investing in this fund are: The portfolio advisor uses interest rate and yield curve ) interest rate risk analysis to select individual investments and manage the ) fund’s average term to maturity. It analyzes credit risk to credit risk. identify securities that offer the potential for higher yields at an acceptable level of risk. INCOME FUNDS

23 % Class I Units The fund may have these additional risks: 30 25.95% ) foreign investment risk 25 ) currency risk 20 ) derivative risk 15 ) 10 class risk 5.81% 5 ) repurchase and reverse repurchase transaction risk 0 ) 2002* 2003 securities lending risk * Dec. 9, 2002 to Dec. 31, 2002 SCOTIA CANADIAN INCOME FUND ) underlying fund risk. Overall past performance You’ll find details about each risk starting on page 164. This chart shows how a $10,000 investment in the fund Who should invest in this fund? would have changed in value, compared with the Scotia This fund may be suitable for you if: Capital (SC) Universe Bond Index. ) $ you want a high level of regular interest income 25,000 ) you’re investing for at least three years $21,200 20,000 ) you can accept low-to-medium risk. $19,805 15,000 $12,176(a) $12,040(b) Past performance at December 31 10,000 $10,889(c) $10,722(d) This section shows how the fund has performed in the 5,000 past and gives you an idea of the risk involved. These 0 figures don’t tell you how the fund will perform in the Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1993 future. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units Scotia Canadian Income Fund Year-by-year returns SC Universe Bond Index

These charts show the fund’s annual performance, which Class F Units changes from year to year. (a) SC Universe Bond Index (b) Scotia Canadian Income Fund % Class A Units 25 Class I Units 21.24% (c) SC Universe Bond Index 20 (d) Scotia Canadian Income Fund 15 11.62% The SC Universe Bond Index is a broad measure of the total return of 10 8.31% 9.26% 9.18% Canadian bonds that mature in more than one year. It includes approxi- 7.17% 8.11% 6.02% mately 900 Canadian federal, provincial, municipal and corporate bonds 5 rated BBB or higher. The average term to maturity is 9.51 years and the 0 average duration is 6.03 years. -2.02% -5 -5.88% -10 Annual compound returns 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

% Class F Units This table shows the fund’s annual compound returns, 25 compared with the SC Universe Bond Index. 20 Since 1 year 3 years 5 years 10 years Inception 15 Scotia Canadian Income Fund 10 8.70% 6.64% Class A units % 6.02 7.10 5.61 7.07 – 5 3.90% Class F units % 6.64 – – – 8.281 0 Class I units % 5.81 – – – 7.042 -5 SC Universe Bond Index % 6.69 7.83 6.44 7.80 3 -10 2001* 2002 2003 1 August 14, 2001 INCOME FUNDS * Aug. 14, 2001 to Dec. 31, 2001 2 December 9, 2002 3 Class F units 8.80% and Class I units 8.67%

24 Distribution policy Ratios and supplemental data 1999 2000 20012 2002 2003 The fund distributes any income by the last business day Net assets (000’s) $ – – 64 150 124 of each month. It distributes any capital gains in Number of units December of each calendar year. outstanding (000’s) – – 5 11 12 MER3 %– –0.540.660.61 Distributions on units held in Scotia registered plans and Portfolio turnover rate % – – 272.00 214.77 203.21 2 These figures are for the period from August 14, 2001 to December 31, Copilot non-registered accounts are always reinvested in 2001. additional units of the fund. Distributions on units held in 3 We may from time to time absorb some of the operating expenses that the other registered plans and non-registered accounts are fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.86% had we not absorbed some of these expenses. SCOTIA CANADIAN INCOME FUND reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions Financial highlights, Class I units by cheque or by deposit to your bank account. at December 31 Distributions and net asset value per unit Financial highlights, Class A units 4 at December 31 1999 2000 2001 2002 2003 Distributions Distributions and net asset value per unit from net income $ – – – 0.03 0.72 1999 2000 2001 2002 2003 from realized gain $ – – – 0.05 0.18 Distributions return of capital$––––– from net income $ 0.62 0.67 0.60 0.59 0.60 Total annual distributions $ – – – 0.08 0.90 from realized gain $ – – – 0.05 0.18 Net asset value per unit $ – – – 13.05 13.03 return of capital$––––– Total annual distributions $0.620.670.600.640.78 Ratios and supplemental data Net asset value per unit $ 12.02 12.42 12.69 13.04 13.03 1999 2000 2001 20024 2003 Net assets (000’s) $ – – – 991 63,740 Ratios and supplemental data Number of units 1999 2000 2001 2002 2003 outstanding (000’s) – – – 76 4,891 Net assets (000’s) $ 759,851 840,731 876,919 1,011,287 820,793 MER %––––0.01 Number of units Portfolio turnover rate % – – – 214.77 203.21 outstanding (000’s) 63,210 67,690 69,121 77,529 81,821 4 These figures are for the period from December 9, 2002 to December 31, 2002. MER1 %1.221.211.241.231.18 Portfolio turnover rate % 285.37 148.23 272.00 214.77 203.21 Fund expenses indirectly borne by investors 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio This example shows the fund’s expenses on a $1,000 of the fund would have been 1.75% had we not absorbed some of these expenses. investment with a 5% annual return. Fees and expenses Financial highlights, Class F units payable over 1 year 3 years 5 years 10 years at December 31 Class A units $ 12.10 38.13 66.83 152.13 Class F units $ 6.25 19.71 34.55 78.64 Distributions and net asset value per unit Class I units $ 0.10 0.32 0.57 1.29 1999 2000 20012 2002 2003 Distributions from net income $ – – 0.25 0.71 0.67 from realized gain $ – – – 0.05 0.18 return of capital$––––– Total annual distributions $ – –0.250.760.85 Net asset value per unit $ – – 12.68 13.04 13.03 INCOME FUNDS

25 Scotia CanAm U.S. $ Income Fund

Fund details The portfolio advisor may:

Fund type U.S. bond fund ) use derivatives such as options, futures and forward Date established November 27, 1991 contracts to adjust the fund’s average term to maturity, Type of securities Class A and Class F units of a mutual to gain exposure to income-producing securities and to fund trust hedge against changes in interest rates. It will only use Eligible for Yes. Units of the fund are not foreign derivatives as permitted by securities regulations. registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel ) temporarily invest the fund’s assets in cash or cash- Limited equivalent securities to try to protect the fund during a market downturn or for other reasons. What does the fund invest in?

SCOTIA CANAM U.S. $ INCOME FUND The fund may participate in repurchase, reverse repur- Investment objectives chase and securities lending transactions to achieve the fund’s overall investment objectives and to enhance the The fund’s objective is to provide a high level of interest fund’s returns. You’ll find more information about repur- income. It invests primarily in bonds and treasury bills chase, reverse repurchase and securities lending transac- that are denominated in U.S. dollars and are issued by tions on page 3. Canadian federal, provincial and municipal governments, Canadian corporations and supranational entities, such as Top 10 holdings at September 30, 2004 the World Bank. These securities aren’t considered foreign property under the Tax Act. Province of British Columbia 4.30% 053013 10.35% Province of New Brunswick 7.63% 021513 10.33% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting Province of Manitoba 7.50% 022210 7.42% of unitholders called for that purpose. Province of Nova Scotia 5.75% 022712 6.78% Export Development Corporation 2.38% 042106 6.23% Investment strategies Government of Canada 5.25% 110508 5.85% Province of Ontario 5.13% 071712 4.44% Securities with a maturity of one year or less will Province of Ontario 4.38% 021513 4.21% generally have a credit rating of R1 or better by DBRS, or Coca-Cola Enterprises Inc. 5.38% 081506 3.93% an equivalent rating by another approved rating agency. Securities with a maturity of more than one year must GE Capital Corporation 7.38% 011910 3.64% have a credit rating of BBB or better by DBRS, or an equivalent rating by another approved rating agency. What are the risks of investing in the fund? The main risks of investing in this fund are: The average term to maturity of the fund’s investments will vary depending on market conditions, but it won’t be ) currency risk more than eight years. The maturity of each security ) interest rate risk won’t be more than 10 years. The portfolio advisor adjusts ) credit risk. the average term to maturity to try to maximize returns while minimizing interest rate risk. The fund may have these additional risks: ) foreign investment risk The portfolio advisor uses interest rate and yield curve ) analysis to select individual investments and manage the derivative risk fund’s average term to maturity. It analyzes credit risk to ) class risk identify securities that offer the potential for higher yields ) repurchase and reverse repurchase transaction risk at an acceptable level of risk. ) securities lending risk The fund can invest in foreign securities up to the foreign ) underlying fund risk. content limit. INCOME FUNDS You’ll find details about each risk starting on page 164.

26 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want a high level of regular interest income and would have changed in value, compared with the Salomon U.S. dollar exposure Smith Barney World Government Bond Index. $ ) you’re investing for at least three years 30,000 ) you can accept medium risk. $19,291 $16,663 20,000 Past performance at December 31

This section shows how the fund has performed in the 10,000 $14,245(a) $12,002(b) SCOTIA CANAM U.S. $ INCOME FUND past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. future. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 All figures in U.S. $ Class A Units Year-by-year returns Scotia CanAm U.S. $ Income Fund Salomon Smith Barney World These charts show the fund’s annual performance, which Government Bond Index changes from year to year. Class F Units (a) Salomon Smith Barney World Government Bond Index % Class A Units 25 (b) Scotia CanAm U.S. $ Income Fund 20 The Salomon Smith Barney World Government Bond Index is an index of 17.23% approximately 750 government bonds from 14 countries. Its returns are in 15 U.S. dollars. 10.66% 9.54% 10 7.55% 6.34% 7.38% 5 2.26% Annual compound returns 0.58% 0 -2.73% This table shows the fund’s annual compound returns, -5 -4.56% -10 compared with the Salomon Smith Barney World 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Government Bond Index. % Class F Units Since 15 1 year 3 years 5 years 10 years inception1 11.56% Scotia CanAm U.S. $ 10 Income Fund Class A units % 2.26 6.77 5.34 5.24 – 5 4.30% 3.13% Class F units % 3.13 – – – 7.84 Salomon Smith Barney 0 World Government Bond Index % 14.91 10.78 5.75 6.79 15.77 -5 All figures in U.S. $ 2001* 2002 2003 1 * Jul. 11, 2001 to Dec. 31, 2001 Class F units only: July 11, 2001 All figures in U.S. $ INCOME FUNDS

27 Distribution policy Financial highlights, Class F units at December 31 The fund distributes any income by the last business day Distributions and net asset value per unit of each month. It distributes any capital gains in 1999 2000 20012 2002 2003 December of each calendar year. Distributions from net income US$ – – 0.23 0.50 0.48 Distributions on units held in Scotia registered plans and from realized gain US$ ––––– Copilot non-registered accounts are always reinvested in return of capitalUS$––––– additional units of the fund. Distributions on units held in Total annual distributions US$ – – 0.23 0.50 0.48 other registered plans and non-registered accounts are Net asset value per unit US$ – – 10.52 11.19 11.06 reinvested in additional units of the fund, unless you tell

SCOTIA CANAM U.S. $ INCOME FUND us in writing that you want to receive cash distributions Ratios and supplemental data by cheque or by deposit to your bank account. 1999 2000 20012 2002 2003 Financial highlights, Class A units Net assets (000’s) US$ – – 104 88 11 at December 31 Number of units Distributions and net asset value per unit outstanding (000’s) – – 10 8 1 MER3 % – –0.801.030.99 1999 2000 2001 2002 2003 Portfolio turnover rate % – – 29.55 32.43 34.26 Distributions 2 These figures are for the period from July 11, 2001 to December 31, from net income US$ 0.46 0.51 0.42 0.42 0.38 2001. 3 from realized gain US$ ––––– We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio return of capitalUS$––––– of the fund would have been 1.39% had we not absorbed some of Total annual distributions US$0.460.510.420.420.38 these expenses. Net asset value per unit US$ 9.79 10.18 10.52 11.19 11.06 Fund expenses indirectly borne by investors Ratios and supplemental data This example shows the fund’s expenses on a $1,000 1999 2000 2001 2002 2003 investment with a 5% annual return. Net assets (000’s) US$ 17,507 14,576 19,502 24,808 2,983 Number of units Fees and expenses outstanding (000’s) 1,789 1,432 1,854 2,216 2,270 payable over 1 year 3 years 5 years 10 years MER1 %1.711.711.921.851.87 Class A units $ 19.17 60.43 105.91 241.09 Portfolio turnover Class F units $ 10.15 31.99 56.07 127.64 rate % 14.96 17.04 29.55 32.43 34.26 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 1.88% had we not absorbed some of these expenses. INCOME FUNDS

28 Scotia CanGlobal Income Fund

Fund details fund’s overall investment objectives and to enhance the fund’s returns. You’ll find more information about repur- Fund type Global fixed income fund chase, reverse repurchase and securities lending transac- Date established July 4, 1994 Type of securities Class A, Class F and Class I units of a tions on page 3. mutual fund trust Eligible for Yes. Units of the fund are not foreign Top 10 holdings at September 30, 2004 registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel Province of Ontario 4.13% 051413 20.87% Limited Government of Canada 5.25% 060113 9.12% Government of Canada 4.50% 042809 8.26%

What does the fund invest in? SCOTIA CANGLOBAL INCOME FUND Inter-American Development Bank 5.50% 033010 6.50% Investment objectives Asian Development Bank 4.00% 101204 6.13% The fund’s objective is to provide a high level of regular Government of Canada 4.88% 070708 6.08% interest income. It invests primarily in foreign currency- Province of Ontario 5.13% 071712 5.76% denominated bonds and money market instruments issued Province of Quebec 7.50% 071523 5.19% by Canadian federal, provincial and municipal govern- Government of Quebec 4.25% 022713 5.14% ments and Canadian corporations, and by foreign govern- Province of New Brunswick 7.63% 021513 3.83% ments and corporations, and supranational entities, such as the World Bank. What are the risks of investing in the fund? Any change to the fundamental investment objectives The main risks of investing in this fund are: must be approved by a majority of votes cast at a meeting ) currency risk of unitholders called for that purpose. ) interest rate risk Investment strategies ) credit risk The average term to maturity of the fund’s investments ) emerging markets risk will vary, depending on market conditions. The portfolio advisor adjusts the average term to maturity to try to ) foreign investment risk. maximize returns while minimizing interest rate risk. The fund may have these additional risks: The portfolio advisor uses interest rate and yield curve ) derivative risk analysis to select individual investments and manage the ) fund’s average term to maturity. It analyzes credit risk to class risk identify securities that offer the potential for higher yields ) repurchase and reverse repurchase transaction risk at an acceptable level of risk. ) securities lending risk The fund holds securities denominated in a variety of ) underlying fund risk (as at October 1, 2004, Scotia currencies for diversification. Selected Balanced Income & Growth Fund held approx- The portfolio advisor may: imately 11.4% of the outstanding units of the fund). ) use derivatives such as options, futures and forward You’ll find details about each risk starting on page 164. contracts to adjust the fund’s average term to maturity, to gain exposure to income-producing securities and to Who should invest in this fund? hedge against changes in interest rates. It will only use This fund may be suitable for you if: derivatives as permitted by securities regulations. ) you want a high level of interest income from fixed ) temporarily invest the fund’s assets in cash or cash- income securities denominated in a variety of equivalent securities to try to protect the fund during a currencies market downturn or for other reasons. ) you’re investing for at least three years The fund may participate in repurchase, reverse repur- chase and securities lending transactions to achieve the ) you can accept medium risk. INCOME FUNDS

29 Past performance at December 31 Overall past performance

This section shows how the fund has performed in the This chart shows how a $10,000 investment in the fund past and gives you an idea of the risk involved. These would have changed in value, compared with the Salomon figures don’t tell you how the fund will perform in the Smith Barney World Government Bond Index. future. $ 30,000 Year-by-year returns $17,812 20,000 These charts show the fund’s annual performance, which $16,267 (d)

SCOTIA CANGLOBAL INCOME FUND $10,029 changes from year to year. (c) $10,000 10,000 $9,879(a) % Class A Units (b) 25 $9,869

20 17.14% 16.59% 17.55% 15 0 11.36% Jul. 4 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 10 1994 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 5.20% 5 2.49% 1.00% 1.97% Class A Units 0 Scotia CanGlobal Income Fund -5 -5.25% Salomon Smith Barney World -10 Government Bond Index -15 -13.50% Class F Units -20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 (a) Salomon Smith Barney World Government Bond Index % Class F Units (b) Scotia CanGlobal Income Fund 15 Class I Units 10 (c) Salomon Smith Barney World Government Bond Index 5 (d) Scotia CanGlobal Income Fund The Salomon Smith Barney World Government Bond Index is an index of 0 -1.21% approximately 750 government bonds from 14 countries. -5 -4.22% Annual compound returns -10 2002* 2003 * Nov. 19, 2002 to Dec. 31, 2002 This table shows the fund’s annual compound returns,

% Class I Units compared with the Salomon Smith Barney World Govern- 20 ment Bond Index. Since 15 1 year 3 years 5 years inception Scotia CanGlobal Income Fund 10 Class A units % -5.25 5.42 0.76 5.30 Class F units % -4.22 – – -1.211 5 Class I units % – – – 0.432

0.43% Salomon Smith Barney 0 3 2003* World Government Bond Index % -6.01 5.36 2.15 * April 28, 2003 to Dec. 31, 2003 1 November 19, 2002 2 April 28, 2003 3 Class A units 6.32%, Class F units -1.12% and Class I units 0.00%

Distribution policy

The fund distributes any income by the last business day of each month. It distributes any capital gains in December of each calendar year.

INCOME FUNDS Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in

30 additional units of the fund. Distributions on units held in Ratios and supplemental data other registered plans and non-registered accounts are 1999 2000 2001 20022 2003 reinvested in additional units of the fund, unless you tell Net assets (000’s) $ – – – 5 7 us in writing that you want to receive cash distributions Number of units outstanding (000’s) – – – 0.4 0.8 by cheque or by deposit to your bank account. MER3 % – – – 0.80 1.16 Portfolio turnover rate % – – 16.45 70.66 Financial highlights, Class A units 2 These figures are for the period from November 19, 2002 to at December 31 December 31, 2002. Distributions and net asset value per unit 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio 1999 2000 2001 2002 2003 of the fund would have been 6.81% had we not absorbed some of SCOTIA CANGLOBAL INCOME FUND Distributions these expenses. from net income $ 0.33 0.37 0.34 0.32 0.30 from realized gain $ –––––Financial highlights, Class I units return of capital$–––––at December 31 Total annual distributions $0.330.370.340.320.30 Distributions and net asset value per unit Net asset value per unit $ 9.48 9.33 9.46 10.77 9.90 1999 2000 2001 2002 20034 Distributions Ratios and supplemental data from net income$––––0.34 from realized gain $ ––––– 1999 2000 2001 2002 2003 return of capital$––––– Net assets (000’s) $ 70,508 92,057 101,685 91,817 80,010 Total annual distributions $––––0.34 Number of units outstanding (000’s) 7,439 9,868 10,744 8,528 8,083 Net asset value per unit $––––9.89 MER1 %1.931.932.122.242.19 Portfolio turnover Ratios and supplemental data rate % 25.93 4.17 44.39 16.45 70.66 4 1 We may from time to time absorb some of the operating expenses that 1999 2000 2001 2002 2003 the fund would otherwise pay. In 2003, the management expense ratio Net assets (000’s) $ ––––5,212 of the fund would have been 2.22% had we not absorbed some of Number of units these expenses. outstanding (000’s) ––––527 MER5 %––––– Financial highlights, Class F units Portfolio turnover rate % – – – 70.66 at December 31 4 These figures are for the period from April 28, 2003 to December 31, Distributions and net asset value per unit 2003. 5 2 We may from time to time absorb some of the operating expenses that 1999 2000 2001 2002 2003 the fund would otherwise pay. In 2003, the management expense ratio Distributions of the fund would have been 0.02% had we not absorbed some of these expenses. from net income $ – – – 0.06 0.42 from realized gain $ ––––– return of capital$–––––Fund expenses indirectly borne by investors Total annual distributions $ – – – 0.06 0.42 This example shows the fund’s expenses on a $1,000 Net asset value per unit $ – – – 10.76 9.89 investment with a 5% annual return.

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 22.45 70.77 124.04 282.34 Class F units $ 11.89 37.48 65.70 149.55 Class I units $–––– INCOME FUNDS

31

Balanced Funds

Scotia Diversified Monthly Income Fund Scotia Canadian Balanced Fund Scotia Total Return Fund

The balanced funds offer a combination of equity, fixed income and cash equivalent securities in a single investment. The portfolio advisors adjust the asset allocation as market condi- tions change to increase the potential for higher returns while managing risk. Balanced funds generally have less volatility than equity funds, but more volatility than income funds. For many investors, balanced funds offer a straightforward investment choice for most or all of their portfolio.

Scotia Selected Funds Scotia Selected Income & Modest Growth Fund Scotia Selected Balanced Income & Growth Fund Scotia Selected Conservative Growth Fund Scotia Selected Conservative Growth RSP Fund Scotia Selected Aggressive Growth Fund Scotia Selected Aggressive Growth RSP Fund

Scotia Partners Portfolios Scotia Partners Income & Modest Growth Portfolio Scotia Partners Balanced Income & Growth Portfolio Scotia Partners Conservative Growth Portfolio Scotia Partners Aggressive Growth Portfolio

Scotia Vision Funds Scotia Vision Conservative 2010 Fund Balanced Funds Scotia Vision Aggressive 2010 Fund Scotia Vision Conservative 2015 Fund Scotia Vision Aggressive 2015 Fund Scotia Vision Conservative 2020 Fund Scotia Vision Aggressive 2020 Fund Scotia Vision Conservative 2030 Fund Scotia Vision Aggressive 2030 Fund

As part of our suite of industry leading asset allocation offerings, Scotia Partners Portfolios, Scotia Selected Funds and Scotia Vision Funds are a convenient and effective way to invest in other mutual funds and can help you reach the financial targets you’ve set.

Each portfolio or fund invests its assets in up to four asset classes: cash equivalents, fixed income, Canadian equities and foreign equities. The different allocations represent different investment goals, returns and exposure to risk.

33 Scotia Diversified Monthly Income Fund

Fund details market conditions. The credit quality of the fund’s investments will vary depending on the economic cycle, Fund type Canadian balanced fund industry factors, specific company situations and market Date established June 10, 2005 Type of securities Class A and Class F units of a mutual pricing considerations to try to maximize returns while fund trust minimizing portfolio risk. Eligible for Yes. Units of the fund are not foreign registered plans? property. The fund may invest in other mutual funds which are Portfolio advisor Scotia Cassels Investment Counsel managed by us or by other mutual fund managers. You’ll Limited find more information about investing in other funds on page 2. What does the fund invest in? The portfolio advisor may: Investment objectives ) use derivatives such as options, futures and forward The fund’s objective is to provide regular monthly income contracts to adjust the fund’s average term to maturity, SCOTIA DIVERSIFIED MONTHLY INCOME FUND and some capital appreciation. to gain exposure to income-producing securities and to hedge against changes in interest rates, credit spreads It invests primarily in a diversified portfolio of income and stock market prices. It will only use derivatives as generating securities such as: permitted by securities regulations ) dividend paying common shares ) temporarily invest the fund’s assets in cash or cash ) preferred shares equivalent securities to try to protect the fund during a ) investment grade bonds market downturn or for other reasons. ) convertible debentures The fund may participate in repurchase, reverse repur- ) mortgages chase and securities lending transactions to achieve the fund’s overall investment objectives and to enhance the ) high yield bonds fund’s returns. You’ll find more information about repur- ) asset-backed and mortgage-backed securities chase, reverse repurchase and securities lending transac- ) income trust units. tions on page 3.

Any change to the fundamental investment objectives Top 10 holdings must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. Because the fund is new, top 10 holdings weren’t available when this prospectus was printed. Investment strategies What are the risks of investing in the fund? The portfolio advisor determines the asset mix based on its analysis of market conditions and performance expec- The main risks of investing in this fund are: tations for each asset class in a manner consistent with ) interest rate risk the fund’s investment objectives. For the fund’s equity ) investments, the portfolio advisor uses fundamental analy- credit risk sis to identify appropriate long-term investments. This ) equity risk involves evaluating the financial condition and manage- ) income trust unit risk. ment of each company, as well as its industry and the economy. The fund’s assets are diversified by industry and The fund may also have these additional risks: company to help reduce risk. For fixed income securities, ) asset-backed and mortgage-backed securities risk the portfolio advisor analyzes credit risk to identify ) class risk securities that offer higher yields at an acceptable level of ) risk. Interest rate and yield curve analysis are used to foreign investment risk BALANCED FUNDS manage the fund’s average term to maturity depending on ) currency risk

34 ) derivative risk Fund expenses indirectly borne by investors ) repurchase and reverse repurchase transaction risk Fund expense information is not available because the ) securities lending risk fund is new. ) underlying fund risk ) liquidity risk.

You’ll find details about each of these risks starting on page 164.

Who should invest in this fund?

This fund may be suitable for you if: ) you want regular monthly income SCOTIA DIVERSIFIED MONTHLY INCOME FUND ) you’re investing for at least three years ) you can accept medium risk.

Past performance

Past performance information is not available because the fund is new.

Distribution policy

The fund distributes an amount out of income, capital gains and, if necessary, out of capital by the last business day of each month. It is not expected that the fund will make a distribution in the month in which it is established. The amount of the monthly distribution may be adjusted throughout the year as market conditions change. Any additional distributions of income and capital gains will be made in December of each calendar year. If the fund doesn’t earn enough income and capital gains to meet the monthly distribution, it may return capital to make up the difference. A return of capital will reduce the adjusted cost base of your units.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because BALANCED FUNDS the fund is new.

35 Scotia Canadian Balanced Fund

Fund details markets. It will only use derivatives as permitted by securities regulations. Fund type Canadian balanced fund Date established May 7, 1990 ) temporarily invest the fund’s assets in cash or cash- Type of securities Class A and Class F units of a mutual equivalent securities to try to protect the fund during a fund trust market downturn or for other reasons. Eligible for Yes. Units of the fund are not foreign registered plans? property. The portfolio advisor may actively trade the fund’s Portfolio advisor Scotia Cassels Investment Counsel investments. This can increase trading costs, which may Limited lower the fund’s returns. It also increases the chance that you’ll receive taxable capital gains if you hold the fund in What does the fund invest in? SCOTIA CANADIAN BALANCED FUND a non-registered account. Investment objectives The fund may participate in repurchase, reverse repur- The fund’s objective is to provide a balance between chase and securities lending transactions to achieve the earning income and obtaining capital growth over the long fund’s overall investment objectives and to enhance the term. It invests primarily in a broad range of Canadian fund’s returns. You’ll find more information about repur- equity and fixed income securities. chase, reverse repurchase and securities lending transac- Any change to the fundamental investment objectives tions on page 3. must be approved by a majority of votes cast at a meeting Top 10 holdings at September 30, 2004 of unitholders called for that purpose.

Investment strategies Government of Canada 8.00% 060123 5.82% The fund’s asset mix will generally vary within the Government of Canada 5.00% 060114 4.80% following ranges: 25-75% in equity securities and 25-75% S&P 500 Depository Receipts 4.61% in fixed income securities. The fund may also invest a Government of Canada 3.00% 120105 3.48% portion of its assets in money market instruments. The S&P/TSX 60 Index Participation Fund 2.65% portfolio advisor determines the asset mix based on its Manulife Financial Corporation 2.33% analysis of market conditions and how it expects each Toronto-Dominion Bank 2.01% asset class to perform over the long term. Bank of Montreal 1.71% Royal Bank of Canada 1.64% The fund can invest in foreign securities up to the foreign Province of Ontario 7.50% 011906 1.48% content limit. It can invest anywhere in the world, but generally won’t invest in emerging markets. What are the risks of investing in the fund? The portfolio advisor uses fundamental analysis to identify The main risks of investing in this fund are: long-term investments. This involves evaluating the finan- ) equity risk cial condition and management of each company, as well ) interest rate risk as its industry and the economy. The fund’s assets are ) credit risk. diversified by industry and company to help reduce risk. The fund may have these additional risks: The fund may invest in other mutual funds which are ) foreign investment risk managed by us or by other mutual fund managers. You’ll find more information about investing in other mutual ) currency risk funds on page 2. ) derivative risk The portfolio advisor may: ) class risk ) use derivatives such as options, futures and forward ) repurchase and reverse repurchase transaction risk contracts to hedge against losses from changes in stock ) securities lending risk prices, commodity prices, market indexes or currency ) underlying fund risk. exchange rates, and to gain exposure to financial BALANCED FUNDS You’ll find details about each risk starting on page 164.

36 Who should invest in this fund? Overall past performance This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want both interest income and growth through would have changed in value, compared with a blended asset allocation among the three major asset classes index of 50% S&P/TSX Composite Index (Total Return) ) you’re investing for at least three years and 50% Scotia Capital (SC) Universe Bond Index. ) you can accept medium risk. $ 40,000 Past performance at December 31 30,000 $21,994 This section shows how the fund has performed in the $19,069 past and gives you an idea of the risk involved. These 20,000 SCOTIA CANADIAN BALANCED FUND

figures don’t tell you how the fund will perform in the $11,823(a) 10,000 future. $10,501(b)

0 Year-by-year returns Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 These charts show the fund’s annual performance, which Class A Units Scotia Canadian Balanced Fund changes from year to year. Blend of S&P/TSX Composite Index (Total Return) and SC Universe Bond Index % Class A Units 25 Class F Units 20 17.90% (a) Blend of S&P/TSX Composite Index (Total 16.81% 15.64% 15 Return) and SC Universe Bond Index 10.30% 10.90% 10 8.49% (b) Scotia Canadian Balanced Fund 6.14% The S&P/TSX Composite Index (Total Return) tracks the performance of some 5 of the largest and most widely held stocks listed on the Toronto Stock 0 Exchange. Prior to May 1, 2002, this index was called the TSE 300 -3.18% -5 -4.54% Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. -10 -8.04% -15 The SC Universe Bond Index is a broad measure of the total return of 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Canadian bonds that mature in more than one year. It includes approxi- mately 900 Canadian federal, provincial, municipal and corporate bonds % Class F Units rated BBB or higher. The average term to maturity is 9.51 years and the 25 average duration is 6.03 years. 20 15 10.69% 10 Annual compound returns 5 3.60% This table shows the fund’s annual compound returns, 0 -5 compared with a blended index of 50% S&P/TSX Compos- -7.28% -10 ite Index (Total Return) and 50% SC Universe Bond -15 Index. 2001* 2002 2003 Since * Mar. 22, 2001 to Dec. 31, 2001 1 year 3 years 5 years 10 years inception1 Scotia Canadian Balanced Fund Class A units % 10.90 -0.42 2.94 6.67 – Class F units % 10.69 – – – 1.79 Blended Index % 16.21 2.88 6.49 8.20 6.28 1 Class F units only: March 22, 2001

Distribution policy

The fund distributes any income by the last business day of each calendar quarter. It distributes any capital gains in December of each calendar year. BALANCED FUNDS

37 Distributions on units held in Scotia registered plans and Ratios and supplemental data

Copilot non-registered accounts are always reinvested in 1999 2000 20011 2002 2003 additional units of the fund. Distributions on units held in Net assets (000’s) $ – – 28 100 15 other registered plans and non-registered accounts are Number of units reinvested in additional units of the fund, unless you tell outstanding (000’s) – – 2 6 1 2 us in writing that you want to receive cash distributions MER % – –0.800.960.88 by cheque or by deposit to your bank account. Portfolio turnover rate % – – 153.93 128.26 109.14 1 These figures are for the period from March 22, 2001 to December 31, Financial highlights, Class A units 2001. at December 31 2 We may from time to time absorb some of the operating expenses that SCOTIA CANADIAN BALANCED FUND the fund would otherwise pay. In 2003, the management expense ratio Distributions and net asset value per unit of the fund would have been 1.83% had we not absorbed some of these expenses. 1999 2000 2001 2002 2003 Distributions Fund expenses indirectly borne by investors from net income $ 0.33 0.39 0.35 0.29 0.29 from realized gain $ 0.04 0.78 – – – This example shows the fund’s expenses on a $1,000 return of capital$–––––investment with a 5% annual return. Total annual distributions $0.371.170.350.290.29 Net asset value per unit $ 18.90 18.89 17.93 16.21 17.66 Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 17.73 55.90 97.98 223.04 Ratios and supplemental data Class F units $ 9.02 28.44 49.84 113.45

1999 2000 2001 2002 2003 Net assets (000’s) $ 1,074,787 1,207,960 1,181,053 1,056,194 1,141,768 Number of units outstanding (000’s) 56,857 63,935 65,856 65,144 64,649 MER % 1.77 1.74 1.75 1.75 1.73 Portfolio turnover rate % 160.91 105.19 153.93 128.26 109.14

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 20011 2002 2003 Distributions from net income $ – – 0.58 0.45 0.39 from realized gain $ ––––– return of capital$––––– Total annual distributions $ – –0.580.450.39 Net asset value per unit $ – – 17.82 16.08 17.38 BALANCED FUNDS

38 Scotia Total Return Fund

Fund details The portfolio advisor may: Fund type Canadian tactical asset allocation fund ) use derivatives such as options, futures and forward Date established April 18, 1989 contracts to hedge against losses from changes in stock Type of securities Class A and Class F units of a mutual prices, commodity prices, market indexes or currency fund trust exchange rates, and to gain exposure to financial Eligible for Yes. Units of the fund are not foreign registered plans? property. markets. It will only use derivatives as permitted by Portfolio advisor Connor, Clark & Lunn Investment securities regulations. Management Ltd. SCOTIA TOTAL RETURN FUND ) temporarily invest the fund’s assets in cash or cash- What does the fund invest in? equivalent securities to try to protect the fund during a market downturn or for other reasons. Investment objectives The portfolio advisor may actively trade the fund’s The fund’s objective is to obtain capital growth over the investments. This can increase trading costs, which may long term, while providing modest income. It invests lower the fund’s returns. It also increases the chance that primarily in a broad range of Canadian equity and fixed you’ll receive taxable capital gains if you hold the fund in income securities. It may also invest in equity and fixed a non-registered account. income securities from around the world. The fund may participate in repurchase, reverse repur- Any change to the fundamental investment objectives chase and securities lending transactions to achieve the must be approved by a majority of votes cast at a meeting fund’s overall investment objectives and to enhance the of unitholders called for that purpose. fund’s returns. You’ll find more information about repur- Investment strategies chase, reverse repurchase and securities lending transac- The fund’s asset mix will generally vary within the tions on page 3. following ranges: 20-80% in equity securities and 20-80% Top 10 holdings at September 30, 2004 in fixed income securities. The fund may also invest a Toronto-Dominion Bank 3.13% portion of its assets in money market instruments. The Bank of Montreal 2.90% portfolio advisor determines the mix based on its analysis Government of Canada 6.00% 060108 2.84% of market conditions and how it expects each asset class to perform. Government of Canada 5.50% 060109 2.57% Government of Canada 6.00% 060111 2.51% The portfolio advisor actively manages the allocation Petro-Canada 2.09% between equity and fixed income securities to try to Canadian Imperial Bank of Commerce 1.86% maximize returns. It will aggressively pursue opportunities for capital gains or investment income, but will take Manulife Financial Corporation 1.83% measures to avoid undue risk or low returns from a Government of Canada 5.50% 060110 1.69% particular security. Royal Bank of Canada 1.45%

The fund can invest in foreign securities up to the foreign What are the risks of investing in the fund? content limit. It can invest anywhere in the world, but The main risks of investing in this fund are: generally won’t invest in emerging markets. ) equity risk The fund may invest in other mutual funds which are ) managed by us or by other mutual fund managers. You’ll interest rate risk find more information about investing in other mutual ) credit risk. funds on page 2. The fund may have these additional risks: The portfolio advisor uses fundamental analysis to identify ) foreign investment risk long-term investments. This involves evaluating the finan- ) currency risk cial condition and management of each company, as well ) derivative risk as its industry and the economy. BALANCED FUNDS

39 ) class risk Overall past performance ) repurchase and reverse repurchase transaction risk This chart shows how a $10,000 investment in the fund ) securities lending risk would have changed in value, compared with a blended index of 45% S&P/TSX Composite Index (Total Return), ) underlying fund risk. 40% Scotia Capital (SC) Universe Bond Index and 15% You’ll find details about each risk starting on page 164. Morgan Stanley Capital International (MSCI) World Index.

SCOTIA TOTAL RETURN FUND $ Who should invest in this fund? 35,000 30,000 This fund may be suitable for you if: 25,000 $21,653 $16,324 ) you want growth through asset allocation among the 20,000 three major asset classes 15,000 10,000 ) you’re investing for at least three years $11,309(a) 5,000 $8,912(b) ) you can accept medium risk. 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Past performance at December 31 Class A Units Scotia Total Return Fund This section shows how the fund has performed in the Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index past and gives you an idea of the risk involved. These Class F Units figures don’t tell you how the fund will perform in the (a) Blend of S&P/TSX Composite Index (Total Return), future. SC Universe Bond Index and MSCI World Index (b) Scotia Total Return Fund The S&P/TSX Composite Index (Total Return) tracks the performance of some Year-by-year returns of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 These charts show the fund’s annual performance, which Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. changes from year to year. The SC Universe Bond Index is a broad measure of the total return of % Class A Units Canadian bonds that mature in more than one year. It includes approxi- 30 mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the 20 17.52% average duration is 6.03 years. 13.24% 11.99% 10.73% 11.73% The MSCI World Index is an index of approximately 1,600 companies listed 10 6.08% on stock exchanges in the 22 countries that make up the MSCI national 4.21% indexes. 0 -4.77% -6.99% -10 -9.59% Annual compound returns

-20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 This table shows the fund’s annual compound returns, compared with a blended index of 45% S&P/TSX Compos- % Class F Units 20 ite Index (Total Return), 40% SC Universe Bond Index

15 12.84% and 15% MSCI World Index. Since 10 1 year 3 years 5 years 10 years inception1 5 Scotia Total Return Fund Class A units % 11.73 -2.06 1.63 5.02 – 0 -0.18% Class F units % 12.84 – – – 2.16 -5 -5.86% Blended index % 15.66 0.77 4.61 8.03 4.57 -10 1 2001* 2002 2003 Class F units only: March 22, 2001 * Mar. 22, 2001 to Dec. 31, 2001 BALANCED FUNDS

40 Distribution policy Ratios and supplemental data

The fund distributes any income by the last business day 1999 2000 20011 2002 2003 of each calendar quarter. It distributes any capital gains Net assets (000’s) $ – – 7 12 6 in December of each calendar year. Number of units outstanding (000’s) – – 0.5 1 0.5 2 Distributions on units held in Scotia registered plans and MER % – –1.211.311.34 Copilot non-registered accounts are always reinvested in Portfolio turnover rate % – – 268.89 168.29 31.19 1

These figures are for the period from March 22, 2001 to December 31, SCOTIA TOTAL RETURN FUND additional units of the fund. Distributions on units held in 2001. other registered plans and non-registered accounts are 2 We may from time to time absorb some of the operating expenses that reinvested in additional units of the fund, unless you tell the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 8.01% had we not absorbed some of us in writing that you want to receive cash distributions these expenses. by cheque or by deposit to your bank account. Fund expenses indirectly borne by investors Financial highlights, Class A units at December 31 This example shows the fund’s expenses on a $1,000 Distributions and net asset value per unit investment with a 5% annual return.

1999 2000 2001 2002 2003 Fees and expenses payable over 1 year 3 years 5 years 10 years Distributions Class A units $ 26.24 82.72 144.99 330.05 from net income $ 0.09 0.07 0.06 0.03 – Class F units $ 13.74 43.30 75.89 172.76 from realized gain $ 0.29 1.91 – – – return of capital$ ––––– Total annual distributions $ 0.381.980.060.03– Net asset value per unit $ 16.55 15.24 13.71 12.73 14.22

Ratios and supplemental data

1999 2000 2001 2002 2003 Net assets (000’s) $ 753,792 704,954 581,558 471,617 469,176 Number of units outstanding (000’s) 45,554 46,262 42,409 37,047 32,996 MER % 2.43 2.43 2.45 2.51 2.56 Portfolio turnover rate % 176.58 131.66 268.89 168.29 31.19

Financial highlights, Class F units at December 31

Distributions and net asset value per unit

1999 2000 20011 2002 2003 Distributions from net income $ – – 0.19 0.07 0.05 from realized gain $ ––––– return of capital$––––– Total annual distributions $ – –0.190.070.05 Net asset value per unit $ – – 13.72 12.86 14.26 BALANCED FUNDS

41 Scotia Selected Income & Modest Growth Fund Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established April 28, 2003 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not Scotia Canadian Income Fund Class I 29.75% registered plans? foreign property. Scotia Mortgage Income Fund Class I 29.59% Portfolio advisor Scotia Capital Inc. Scotia Canadian Growth Fund Class I 10.12% Scotia CanGlobal Income Fund Class I 9.47% What does the fund invest in? Capital International – International Equity Class I 8.53% Investment objectives Capital International – U.S. Equity Class I 5.56% Scotia Canadian Dividend Fund Class I 5.21% The fund’s objective is to achieve a balance of current income and long term capital appreciation, with a bias You can get a copy of the simplified prospectus of the towards income. It invests primarily in a diversified mix of underlying funds by calling us at 1-800-268-9269 equity and income mutual funds managed by us and by (416-750-3863 in Toronto) for English, or 1-800-387-5004 other mutual fund managers.

SCOTIA SELECTED INCOME & MODEST GROWTH FUND for French, by asking your mutual fund representative, or Any change to the fundamental investment objectives at www.sedar.com. must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. What are the risks of investing in the fund? The fund indirectly has the same risks as the underlying Investment strategies funds it holds. The fund takes on the risks of an The fund is an asset allocation fund that allocates your underlying fund in proportion to its investment in that investment between three asset classes: fixed income, fund. The risks of the underlying funds include: Canadian equities and foreign equities. ) interest rate risk ) The table below outlines the target weighting for each equity risk asset class in which the fund invests. ) credit risk Target ) foreign investment risk Asset Class Weighting ) Fixed Income 70% emerging markets risk Canadian Equities 15% ) currency risk Foreign Equities 15% ) derivative risk ) The underlying funds in which the fund invests may repurchase and reverse repurchase transaction risk change from time to time, but the weighting for each ) securities lending risk asset class will not be more than 10% above or below the ) liquidity risk amounts set out above. You’ll find more information about ) underlying fund risk. investing in other mutual funds on page 2. The fund also has class risk. Although up to 100% of the fund’s assets may be invested in other mutual funds, the fund may hold a portion of its During the 12 months preceding October 29, 2004, up to assets in cash or money market instruments while seeking 29.9% of the net assets of the fund were invested in investment opportunities or for defensive purposes. Scotia Canadian Income Fund, up to 29.6% of the net assets of the fund were invested in Scotia Mortgage Income Fund, up to 10.4% of the net assets of the fund BALANCED FUNDS were invested in Scotia Canadian Growth Fund and up to

42 $ 10.1% of the net asset of the fund were invested in Scotia 20,000 CanGlobal Income Fund. 15,000

You’ll find details about each of these risks starting on $11,020 10,000 page 164. $10,791

Who should invest in this fund? 5,000

This fund may be suitable for you if: 0 Apr. 28 Dec. ) you want a core balanced holding, which is well 2003 2003 Class A Units diversified by asset class, investment style, geography Scotia Selected Income & Modest Growth Fund and market capitalization Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index ) you can accept medium risk The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock ) you’re investing for at least three years. Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. Past performance at December 31 The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- This section shows how the fund has performed in the mately 900 Canadian federal, provincial, municipal and corporate bonds SCOTIA SELECTED INCOME & MODEST GROWTH FUND rated BBB or higher. The average term to maturity is 9.51 years and the past and gives you an idea of the risk involved. These average duration is 6.03 years. figures don’t tell you how the fund will perform in the The MSCI World Index is an index of approximately 1,600 companies listed future. on stock exchanges in the 22 countries that make up the MSCI national indexes.

Year-by-year returns Annual compound returns This chart shows the fund’s annual performance, which This table shows the fund’s annual compound returns, changes from year to year. compared with a blended index of 15% S&P/TSX Compos- % Class A Units 15 ite Index (Total Return), 70% SC Universe Bond Index

12.09% and 15% MSCI World Index. Since 10 inception Scotia Selected Income & Modest Growth Fund Class A units % 12.09 5 Blended Index % 15.68

0 Distribution policy 2003 The fund distributes any income and capital gains in Overall past performance December of each calendar year.

This chart shows how a $10,000 investment in the fund Distributions on units held in Scotia registered plans are would have changed in value, compared with a blended always reinvested in additional units of the fund. Distribu- index of 15% S&P/TSX Composite Index (Total Return), tions on units held in other registered plans and non- 70% Scotia Capital (SC) Universe Bond Index and 15% registered accounts are reinvested in additional units of Morgan Stanley Capital International (MSCI) World Index. the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. BALANCED FUNDS

43 Financial highlights, Class A units at December 31 Distributions and net asset value per unit 1999 2000 2001 2002 20031 Distributions from net income$––––0.07 from realized gain $ ––––0.03 return of capital$––––– Total annual distributions $––––0.10 Net asset value per unit $––––10.69

Ratios and supplemental data 1999 2000 2001 2002 20031 Net assets (000’s) $ ––––19,221 Number of units outstanding (000’s) ––––1,798 MER2 %––––2.08 Portfolio

SCOTIA SELECTED INCOME & MODEST GROWTH FUND turnover rate % ––––0.88 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.22% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 21.32 67.21 117.81 268.16 BALANCED FUNDS

44 Scotia Selected Balanced Income & Growth Fund Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established April 28, 2003 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Income Fund Class I 24.86% registered plans? property. Scotia Canadian Growth Fund Class I 15.18% Portfolio advisor Scotia Capital Inc. Scotia Canadian Dividend Fund Class I 14.58% Capital International – International Equity Class I 12.31% What does the fund invest in? Scotia Mortgage Income Fund Class I 9.90% Investment objectives Scotia CanGlobal Income Fund Class I 9.49% Scotia American Growth Fund Class I 4.64% The fund’s objective is to achieve a balance of current Capital International – U.S. Equity Class I 4.63% income and long term capital appreciation, with a small bias towards capital appreciation. It invests primarily in a Capital International – Global Small Cap Class I 2.82% diversified mix of equity and income mutual funds You can get a copy of the simplified prospectus of the managed by us and by other mutual fund managers. underlying funds by calling us at 1-800-268-9269

Any change to the fundamental investment objectives (416-750-3863 in Toronto) for English, or 1-800-387-5004 SCOTIA SELECTED BALANCED INCOME & GROWTH FUND must be approved by a majority of votes cast at a meeting for French, by asking your mutual fund representative, or of unitholders called for that purpose. at www.sedar.com.

Investment strategies What are the risks of investing in the fund?

The fund is an asset allocation fund that allocates your The fund indirectly has the same risks as the underlying investment between three asset classes: fixed income, funds it holds. The fund takes on the risks of an Canadian equities and foreign equities. underlying fund in proportion to its investment in that fund. The risks of the underlying funds include: The table below outlines the target weighting for each ) interest rate risk asset class in which the fund invests. ) Target credit risk Asset Class Weighting ) foreign investment risk Fixed Income 45% ) currency risk Canadian Equities 29% ) Foreign Equities 26% derivative risk ) repurchase and reverse repurchase transaction risk The underlying funds in which the fund invests may ) securities lending risk change from time to time, but the target weighting for ) each asset class will not be more than 10% above or emerging markets risk below the amounts set out above. You’ll find more ) equity risk information about investing in other mutual funds on ) liquidity risk page 2. ) underlying fund risk. Although up to 100% of the fund’s assets may be invested The fund also has class risk. in other mutual funds, the fund may hold a portion of its assets in cash or money market instruments while seeking During the 12 months preceding October 29, 2004, up to investment opportunities or for defensive purposes. 24.9% of the net assets of the fund were invested in Scotia Canadian Income Fund, up to 15.3% of the net assets of the fund were invested in Scotia Canadian BALANCED FUNDS

45 Growth Fund, up to 14.6% of the net assets of the fund Overall past performance were invested in Scotia Canadian Dividend Fund, up to This chart shows how a $10,000 investment in the fund 13.6% of the net assets of the fund were invested in would have changed in value, compared with a blended Capital International – International Equity and up to index of 29% S&P/TSX Composite Index (Total Return), 10.1% of the net asset of the fund were invested in Scotia 45% Scotia Capital (SC) Universe Bond Index and 26% CanGlobal Income Fund. Morgan Stanley Capital International (MSCI) World Index.

$ You’ll find details about each of these risks starting on 20,000 page 164. 15,000 Who should invest in this fund? $11,173

10,000 $11,410 This fund may be suitable for you if: 5,000 ) you want a core balanced holding, which is well

diversified by asset class, investment style, geography 0 and market capitalization Apr. 28 Dec. 2003 2003 ) you can accept medium risk Class A Units Scotia Selected Balanced Income & Growth Fund )

SCOTIA SELECTED BALANCED INCOME & GROWTH FUND you’re investing for at least three years. Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index The S&P/TSX Composite Index (Total Return) tracks the performance of some Past performance at December 31 of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 This section shows how the fund has performed in the Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. past and gives you an idea of the risk involved. These The SC Universe Bond Index is a broad measure of the total return of figures don’t tell you how the fund will perform in the Canadian bonds that mature in more than one year. It includes approxi- future. mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the average duration is 6.03 years. Year-by-year returns The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national This chart shows the fund’s annual performance, which indexes. changes from year to year. Annual compound returns % Class A Units 25 This table shows the fund’s annual compound returns, compared with a blended index of 29% S&P/TSX Compos- 20 18.10% ite Index (Total Return), 45% SC Universe Bond Index 15 and 26% MSCI World Index. 10 Since inception 5 Scotia Selected Balanced Income & Growth Fund Class A units % 18.10 0 2003 Blended Index % 21.88 BALANCED FUNDS

46 Distribution policy The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 Distributions and net asset value per unit 1999 2000 2001 2002 20031 Distributions from net income$––––0.04

from realized gain $ ––––0.02 SCOTIA SELECTED BALANCED INCOME & GROWTH FUND return of capital$––––– Total annual distributions $––––0.06 Net asset value per unit $––––11.11

Ratios and supplemental data 1999 2000 2001 2002 20031 Net assets (000’s)$––––29,145 Number of units outstanding (000’s) ––––2,623 MER2 %––––2.20 Portfolio turnover rate %––––0.51 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.21% had we not absorbed some of these expenses.

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 22.55 71.09 124.60 283.63 BALANCED FUNDS

47 FUND Scotia Selected Conservative Growth Fund Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established April 28, 2003 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are foreign Scotia Canadian Dividend Fund Class I 15.15% registered plans? property. Scotia Canadian Growth Fund Class I 14.83% Portfolio advisor Scotia Capital Inc. Capital International – International Equity Class I 13.15% Capital International – U.S. Equity Class I 12.91% What does the fund invest in? Scotia Canadian Income Fund Class I 10.86% Investment objectives Scotia Mortgage Income Fund Class I 9.74% Scotia Canadian Small Cap Fund Class I 7.87% The fund’s objective is to achieve a balance of current Scotia American Growth Fund Class I 4.58% income and long term capital appreciation, with a bias towards capital appreciation. It invests primarily in a Scotia CanGlobal Income Fund Class I 3.76% SCOTIA SELECTED CONSERVATIVE GROWTH diversified mix of equity and income mutual funds Capital International – Global Small Cap Class I 3.68% managed by us and by other mutual fund managers. You can get a copy of the simplified prospectus of the Any change to the fundamental investment objectives underlying funds by calling us at 1-800-268-9269 must be approved by a majority of votes cast at a meeting (416-750-3863 in Toronto) for English, or 1-800-387-5004 of unitholders called for that purpose. for French, by asking your mutual fund representative, or at www.sedar.com. Investment strategies What are the risks of investing in the fund? The fund is an asset allocation fund that allocates your investment between three asset classes: fixed income, The fund indirectly has the same risks as the underlying Canadian equities and foreign equities. funds it holds. The fund takes on the risks of an underlying fund in proportion to its investment in that The table below outlines the target weighting for each fund. The risks of the underlying funds include: asset class in which the fund invests. ) interest rate risk Target Asset Class Weighting ) credit risk Fixed Income 25% ) foreign investment risk Canadian Equities 38% ) currency risk Foreign Equities 33% ) derivative risk The underlying funds in which the fund invests may ) repurchase and reverse repurchase transaction risk change from time to time, but the target weighting for ) securities lending risk each asset class will not be more than 10% above or ) emerging markets risk below the amounts set out above. You’ll find more information about investing in other mutual funds on ) liquidity risk page 2. ) equity risk Although up to 100% of the fund’s assets may be invested ) small company risk in other mutual funds, the fund may hold a portion of its ) concentration risk assets in cash or money market instruments while seeking ) underlying fund risk. investment opportunities or for defensive purposes. The fund also has class risk. BALANCED FUNDS

48 FUND

During the 12 months preceding October 29, 2004, up to Overall past performance 15.2% of the net assets of the fund were invested in This chart shows how a $10,000 investment in the fund Scotia Canadian Dividend Fund, up to 15.1% of the net would have changed in value, compared with a blended assets of the fund were invested in Scotia Canadian index of 38% S&P/TSX Composite Index (Total Return), Growth Fund, up to 14.6% of the net assets of the fund 25% Scotia Capital (SC) Universe Bond Index and 37% were invested in Capital International – International Morgan Stanley Capital International (MSCI) World Index. Equity, up to 14.2% of the net assets of the fund were $ invested in Capital International – U.S. Equity and up to 20,000 11.0% of the net asset of the fund were invested in Scotia Canadian Income Fund. 15,000 $11,743

10,000 You’ll find details about each of these risks starting on $11,700 page 164. 5,000 Who should invest in this fund? 0 Apr. 28 Dec. SCOTIA SELECTED CONSERVATIVE GROWTH This fund may be suitable for you if: 2003 2003 Class A Units ) you want a core balanced holding, which is well Scotia Selected Conservative Growth Fund diversified by asset class, investment style, geography Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index and market capitalization The S&P/TSX Composite Index (Total Return) tracks the performance of some ) of the largest and most widely held stocks listed on the Toronto Stock you can accept medium risk Exchange. Prior to May 1, 2002, this index was called the TSE 300 ) Composite Index and it tracked the 300 largest companies listed on the you’re investing for at least three years. Toronto Stock Exchange. The SC Universe Bond Index is a broad measure of the total return of Past performance at December 31 Canadian bonds that mature in more than one year. It includes approxi- mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the This section shows how the fund has performed in the average duration is 6.03 years. past and gives you an idea of the risk involved. These The MSCI World Index is an index of approximately 1,600 companies listed figures don’t tell you how the fund will perform in the on stock exchanges in the 22 countries that make up the MSCI national indexes. future.

Annual compound returns Year-by-year returns This table shows the fund’s annual compound returns, This chart shows the fund’s annual performance, which compared with a blended index of 38% S&P/TSX Compos- changes from year to year. ite Index (Total Return), 25% SC Universe Bond Index % Class A Units 35 and 37% MSCI World Index. Since 30 27.25% inception 25 Scotia Selected Conservative Growth Fund 20 Class A Units % 27.25 15 Blended Index % 26.56 10 5 0 2003 BALANCED FUNDS

49 FUND

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 Distributions and net asset value per unit SCOTIA SELECTED CONSERVATIVE GROWTH

1999 2000 2001 2002 20031 Distributions from net income$––––0.01 from realized gain $ ––––– return of capital$––––– Total annual distributions $––––0.01 Net asset value per unit $––––11.73

Ratios and supplemental data

1999 2000 2001 2002 20031 Net assets (000’s) $ ––––2,474 Number of units outstanding (000’s) ––––211 MER2 %––––2.40 Portfolio turnover rate %––––59.70 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 5.47% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 24.60 77.55 135.93 309.42 BALANCED FUNDS

50 Scotia Selected Conservative Growth RSP Fund

Fund details Top 10 holdings at September 30, 2004 RSP FUND

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established April 28, 2003 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Dividend Fund Class I 15.60% registered plans? property. Scotia Canadian Growth Fund Class I 15.14% Portfolio advisor Scotia Capital Inc. Capital International – U.S. Equity Class I 12.93% Scotia Canadian Income Fund Class I 10.96% What does the fund invest in? Scotia Mortgage Income Fund Class I 9.93% Scotia International Stock Index Fund Class I 8.68% Investment objectives Scotia Canadian Small Cap Fund Class I 8.08% The fund’s objective is to achieve a balance of current Capital International – International Equity Class I 4.72% income and long term capital appreciation, with a bias Scotia American Growth Fund Class I 4.64% towards capital appreciation, while maintaining 100% Scotia CanGlobal Income Fund Class I 3.80% eligibility for registered plans. It invests primarily in a diversified mix of equity and income mutual funds You can get a copy of the simplified prospectus of the SCOTIA SELECTED CONSERVATIVE GROWTH managed by us and by other mutual fund managers. underlying funds by calling us at 1-800-268-9269 (416-750-3863 in Toronto) for English, or 1-800-387-5004 Any change to the fundamental investment objectives for French, by asking your mutual fund representative, or must be approved by a majority of votes cast at a meeting at www.sedar.com. of unitholders called for that purpose. What are the risks of investing in the fund? Investment strategies The fund indirectly has the same risks as the underlying The fund is an asset allocation fund that allocates your funds it holds. The fund takes on the risks of an investment between three asset classes: fixed income, underlying fund in proportion to its investment in that Canadian equities and foreign equities. fund. The risks of the underlying funds include: The table below outlines the target weighting for each ) interest rate risk asset class in which the fund invests. ) credit risk Target ) foreign investment risk Asset Class Weighting ) Fixed Income 25% currency risk Canadian Equities 38% ) derivative risk Foreign Equities 33% ) repurchase and reverse repurchase transaction risk ) securities lending risk The underlying funds in which the fund invests may change from time to time, but the target weighting for ) emerging markets risk each asset class will not be more than 10% above or ) liquidity risk below the amounts set out above. You’ll find more ) equity risk information about investing in other mutual funds on ) page 2. small company risk ) concentration risk Although up to 100% of the fund’s assets may be invested ) in other mutual funds, the fund may hold a portion of its underlying fund risk. assets in cash or money market instruments while seeking The fund also has class risk. investment opportunities or for defensive purposes. BALANCED FUNDS

51 RSP FUND During the 12 months preceding October 29, 2004, up to Year-by-year returns 15.6% of the net assets of the fund were invested in This chart shows the fund’s annual performance, which Scotia Canadian Dividend Fund, up to 15.1% of the net changes from year to year. assets of the fund were invested in Scotia Canadian % Class A Units Growth Fund, up to 14.1% of the net assets of the fund 30 26.37% were invested in Capital International – U.S. Equity and 25 up to 11.0% of the net asset of the fund were invested in 20 Scotia Canadian Income Fund. 15

You’ll find details about each of these risks starting on 10

page 164. 5

0 Who should invest in this fund? 2003

This fund may be suitable for you if: Overall past performance ) you want a core balanced holding, which is well This chart shows how a $10,000 investment in the fund diversified by asset class, investment style, geography would have changed in value, compared with a blended SCOTIA SELECTED CONSERVATIVE GROWTH and market capitalization index of 38% S&P/TSX Composite Index (Total Return), ) you can accept medium risk 25% Scotia Capital (SC) Universe Bond Index and 37% ) you’re investing for at least three years Morgan Stanley Capital International (MSCI) World Index. ) $ you hold your units in a registered plan other than an 20,000 RESP and your plan holds the maximum allowable amount of foreign property. 15,000 $11,700

If you’re investing through a non-registered account or 10,000 $11,689 RESP or your registered plan holds less than the maximum allowable amount of foreign property, you 5,000 should invest in the Scotia Selected Conservative Growth 0 Fund because you’ll usually get a better return. A portion Apr. 28 Dec. 2003 2003 of the fund’s distributions are primarily considered Class A Units income, which is taxed at a higher rate than capital gains Scotia Selected Conservative Growth RSP Fund when received outside of a registered plan. This income is Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index generally realized more frequently than capital gains The S&P/TSX Composite Index (Total Return) tracks the performance of some realized by the Scotia Selected Conservative Growth Fund. of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the Past performance at December 31 Toronto Stock Exchange. The SC Universe Bond Index is a broad measure of the total return of This section shows how the fund has performed in the Canadian bonds that mature in more than one year. It includes approxi- mately 900 Canadian federal, provincial, municipal and corporate bonds past and gives you an idea of the risk involved. These rated BBB or higher. The average term to maturity is 9.51 years and the figures don’t tell you how the fund will perform in the average duration is 6.03 years. future. The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national indexes. BALANCED FUNDS

52 RSP FUND Annual compound returns Fund expenses indirectly borne by investors

This table shows the fund’s annual compound returns, This example shows the fund’s expenses on a $1,000 compared with a blended index of 38% S&P/TSX Compos- investment with a 5% annual return. ite Index (Total Return), 25% SC Universe Bond Index Fees and expenses and 37% MSCI World Index. payable over 1 year 3 years 5 years 10 years Since inception Class A units $ 24.60 77.55 135.93 309.42 Scotia Selected Conservative Growth RSP Fund Class A units % 26.37 Blended Index % 26.56

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- SCOTIA SELECTED CONSERVATIVE GROWTH tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 20031 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $––––11.69

Ratios and supplemental data

1999 2000 2001 2002 20031 Net assets (000’s)$––––12,581 Number of units outstanding (000’s) ––––1,076 MER2 %––––2.40 Portfolio turnover rate % ––––2.59 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.76% had we not absorbed some of these expenses. BALANCED FUNDS

53 Scotia Selected Aggressive Growth Fund

Fund details you’ll receive taxable capital gains if you hold the fund in a non-registered account. Fund type Strategic asset allocation fund Date established April 28, 2003 Type of securities Class A and Class F units of a mutual Top 10 holdings at September 30, 2004 fund trust Eligible for Yes. Units of the fund are foreign The information contained in this list may change due to registered plans? property. ongoing portfolio transactions of the fund. Current hold- Portfolio advisor Scotia Capital Inc. ings may be found at www.scotiabank.com/mutualfunds.

What does the fund invest in? Scotia Canadian Growth Fund Class I 25.15% Capital International – U.S. Equity Class I 16.75% Investment objectives Capital International – International Equity Class I 15.97% The fund’s objective is long term capital appreciation. It Scotia Canadian Dividend Fund Class I 13.72% invests primarily in a diversified mix of equity mutual Scotia Canadian Income Fund Class I 10.67% funds, with additional stability derived from investments SCOTIA SELECTED AGGRESSIVE GROWTH FUND Scotia Canadian Small Cap Fund Class I 6.51% in income mutual funds, managed by us and by other Capital International – Global Small Cap Class I 4.51% mutual fund managers. Capital International – U.S. Small Cap Class I 4.13% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting You can get a copy of the simplified prospectus of the of unitholders called for that purpose. underlying funds by calling us at 1-800-268-9269 (416-750-3863 in Toronto) for English, or 1-800-387-5004 Investment strategies for French, by asking your mutual fund representative, or The fund is an asset allocation fund that allocates your at www.sedar.com. investment between three asset classes: fixed income, Canadian equities and foreign equities. What are the risks of investing in the fund? The table below outlines the target weighting for each The fund indirectly has the same risks as the underlying asset class in which the fund invests. funds it holds. The fund takes on the risks of an

Target underlying fund in proportion to its investment in that Asset Class Weighting fund. The risks of the underlying funds include: Fixed Income 10% ) interest rate risk Canadian Equities 45% ) Foreign Equities 45% credit risk ) foreign investment risk The underlying funds in which the fund invests may ) currency risk change from time to time, but the target weighting for ) each asset class will not be more than 10% above or derivative risk below the amounts set out above. You’ll find more ) repurchase and reverse repurchase transaction risk information about investing in other mutual funds on ) securities lending risk page 2. ) liquidity risk Although up to 100% of the fund’s assets may be invested ) equity risk in other mutual funds, the fund may hold a portion of its ) small company risk assets in cash or money market instruments while seeking investment opportunities or for defensive purposes. ) underlying fund risk (as at October 1, 2004, an investor held approximately 20.1% of the outstanding units of The portfolio advisor may actively trade the fund’s the fund.) investments. This can increase trading costs, which may

BALANCED FUNDS lower the fund’s returns. It also increases the chance that The fund also has class risk.

54 During the 12 months preceding October 29, 2004, up to Overall past performance 25.2% of the net assets of the fund were invested in This chart shows how a $10,000 investment in the fund Scotia Canadian Growth Fund, up to 17.9% of the net would have changed in value, compared with a blended assets of the fund were invested in Capital International – index of 45% S&P/TSX Composite Index (Total Return), U.S. Equity, up to 17.3% of the net assets of the fund 10% Scotia Capital (SC) Universe Bond Index and 45% were invested in Capital International – International Morgan Stanley Capital International (MSCI) World Index. Equity, up to 13.7% of the net assets of the fund were $ invested in Scotia Canadian Dividend Fund and up to 20,000 10.7% of the net asset of the fund were invested in Scotia Canadian Income Fund. 15,000 $11,978 $11,920 You’ll find details about each of these risks starting on 10,000 page 164. 5,000

Who should invest in this fund? SCOTIA SELECTED AGGRESSIVE GROWTH FUND 0 Apr. 28 Dec. This fund may be suitable for you if: 2003 2003 Class A Units ) you want a core balanced holding, which is well Scotia Selected Aggressive Growth Fund diversified by asset class, investment style, geography Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index and market capitalization The S&P/TSX Composite Index (Total Return) tracks the performance of some ) of the largest and most widely held stocks listed on the Toronto Stock you can accept medium to higher risk Exchange. Prior to May 1, 2002, this index was called the TSE 300 ) Composite Index and it tracked the 300 largest companies listed on the you’re investing for at least three years. Toronto Stock Exchange. The SC Universe Bond Index is a broad measure of the total return of Past performance at December 31 Canadian bonds that mature in more than one year. It includes approxi- mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the This section shows how the fund has performed in the average duration is 6.03 years. past and gives you an idea of the risk involved. These The MSCI World Index is an index of approximately 1,600 companies listed figures don’t tell you how the fund will perform in the on stock exchanges in the 22 countries that make up the MSCI national indexes. future.

Annual compound returns Year-by-year returns This table shows the fund’s annual compound returns, This chart shows the fund’s annual performance, which compared with a blended index of 45% S&P/TSX Compos- changes from year to year. ite Index (Total Return), 10% SC Universe Bond Index % Class A Units 35 and 45% MSCI World Index. 31.10% Since 30 inception 25 Scotia Selected Aggressive Growth Fund 20 Class A units % 31.10 15 Blended Index % 30.14 10 5 0 2003 BALANCED FUNDS

55 Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 SCOTIA SELECTED AGGRESSIVE GROWTH FUND Distributions and net asset value per unit

1999 2000 2001 2002 20031 Distributions from net income$––––– from realized gain $ ––––0.07 return of capital$––––– Total annual distributions $––––0.07 Net asset value per unit $––––11.97

Ratios and supplemental data

1999 2000 2001 2002 20031 Net assets (000’s) $ ––––841 Number of units outstanding (000’s) ––––70 MER2 %––––2.62 Portfolio turnover rate % ––––72.92 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 12.85% had we not absorbed some of these expenses.

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 26.86 84.66 148.39 337.78 BALANCED FUNDS

56 Scotia Selected Aggressive Growth RSP Fund Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established April 28, 2003 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Growth Fund Class I 25.47% registered plans? property. Capital International – U.S. Equity Class I 16.96% Portfolio advisor Scotia Capital Inc. Scotia International Stock Index Fund Class I 16.47% Scotia Canadian Dividend Fund Class I 13.60% What does the fund invest in? Scotia Canadian Income Fund Class I 10.18% Investment objectives Scotia Canadian Small Cap Fund Class I 7.13% Capital International – Global Small Cap Class I 4.70% The fund’s objective is long term capital appreciation, Capital International – U.S. Small Cap Class I 4.42% while maintaining 100% eligibility for registered plans. It invests primarily in a diversified mix of equity mutual You can get a copy of the simplified prospectus of the funds, with additional stability derived from investments underlying funds by calling us at 1-800-268-9269 SCOTIA SELECTED AGGRESSIVE GROWTH RSP FUND in income mutual funds, managed by us and by other (416-750-3863 in Toronto) for English, or 1-800-387-5004 mutual fund managers. for French, by asking your mutual fund representative, or Any change to the fundamental investment objectives at www.sedar.com. must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. What are the risks of investing in the fund? The fund indirectly has the same risks as the underlying Investment strategies funds it holds. The fund takes on the risks of an The fund is an asset allocation fund that allocates your underlying fund in proportion to its investment in that investment between three asset classes: fixed income, fund. The risks of the underlying funds include: Canadian equities and foreign equities. ) interest rate risk The table below outlines the target weighting for each ) credit risk asset class in which the fund invests. ) foreign investment risk Target ) currency risk Asset Class Weighting ) Fixed Income 10% derivative risk Canadian Equities 45% ) repurchase and reverse repurchase transaction risk Foreign Equities 45% ) securities lending risk ) The underlying funds in which the fund invests may liquidity risk change from time to time, but the target weighting for ) equity risk each asset class will not be more than 10% above or ) small company risk below the amounts set out above. You’ll find more ) concentration risk information about investing in other mutual funds on page 2. ) emerging markets risk ) underlying fund risk. Although up to 100% of the fund’s assets may be invested in other mutual funds, the fund may hold a portion of its The fund also has class risk. assets in cash or money market instruments while seeking investment opportunities or for defensive purposes. BALANCED FUNDS

57 During the 12 months preceding October 29, 2004, up to Year-by-year returns 25.5% of the net assets of the fund were invested in This chart shows the fund’s annual performance, which Scotia Canadian Growth Fund, up to 18.0% of the net changes from year to year. assets of the fund were invested in Capital International – % Class A Units U.S. Equity, up to 17.7% of the net assets of the fund 35 32.09% were invested in Scotia International Stock Index Fund, 30 up to 13.6% of the net assets of the fund were invested in 25 Scotia Canadian Dividend Fund and up to 10.2% of the 20 net asset of the fund were invested in Scotia Canadian 15 Income Fund. 10 5 You’ll find details about each of these risks starting on 0 page 164. 2003

Who should invest in this fund? Overall past performance This chart shows how a $10,000 investment in the fund SCOTIA SELECTED AGGRESSIVE GROWTH RSP FUND This fund may be suitable for you if: would have changed in value, compared with a blended ) you want a core balanced holding, which is well index of 45% S&P/TSX Composite Index (Total Return), diversified by asset class, investment style, geography 10% Scotia Capital (SC) Universe Bond Index and 45% and market capitalization Morgan Stanley Capital International (MSCI) World Index. ) you can accept medium to higher risk $ 20,000 ) you’re investing for at least three years

) you hold your units in a registered plan other than an 15,000 $12,039 RESP and your plan holds the maximum allowable $11,920 amount of foreign property. 10,000

If you’re investing through a non-registered account or 5,000 RESP or your registered plan holds less than the 0 maximum allowable amount of foreign property, you Apr. 28 Dec. 2003 2003 should invest in the Scotia Selected Aggressive Growth Class A Units Fund because you’ll usually get a better return. A portion Scotia Selected Aggressive Growth RSP Fund of the fund’s distributions are primarily considered Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index income, which is taxed at a higher rate than capital gains The S&P/TSX Composite Index (Total Return) tracks the performance of some when received outside of a registered plan. This income is of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 generally realized more frequently than capital gains Composite Index and it tracked the 300 largest companies listed on the realized by the Scotia Selected Aggressive Growth Fund. Toronto Stock Exchange. The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- Past performance at December 31 mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the This section shows how the fund has performed in the average duration is 6.03 years. past and gives you an idea of the risk involved. These The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national figures don’t tell you how the fund will perform in the indexes. future. BALANCED FUNDS

58 Annual compound returns Fund expenses indirectly borne by investors

This table shows the fund’s annual compound returns, This example shows the fund’s expenses on a $1,000 compared with a blended index of 45% S&P/TSX Compos- investment with a 5% annual return. ite Index (Total Return), 10% SC Universe Bond Index Fees and expenses and 45% MSCI World Index. payable over 1 year 3 years 5 years 10 years Since inception Class A units $ 26.86 84.66 148.39 337.78 Scotia Selected Aggressive Growth RSP Fund Class A units % 32.09 Blended Index % 30.14

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are SCOTIA SELECTED AGGRESSIVE GROWTH RSP FUND always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 20031 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $––––12.04

Ratios and supplemental data

1999 2000 2001 2002 20031 Net assets (000’s)$––––2,974 Number of units outstanding (000’s) ––––247 MER2 %––––2.62 Portfolio turnover rate %––––45.76 1 These figures are for the period from April 22, 2003 to December 31, 2003. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 4.80% had we not absorbed some of these expenses. BALANCED FUNDS

59 Scotia Partners Income & Modest Growth Portfolio Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established December 9, 2002 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Income Fund Class I 29.43% registered plans? property. Trimark Canadian Bond Fund Series I 19.80% Portfolio advisor Scotia Capital Inc. Fidelity Canadian Bond Fund Series O 19.65% Mackenzie Ivy Canadian Fund Series O 9.01% What does the fund invest in? Templeton Growth Fund Class O 8.87% Investment objectives Mackenzie Universal Canadian Growth Fund Series O 6.16% Fidelity International Portfolio Fund Series O 5.82% The portfolio’s objective is to achieve a balance of current income and long term capital appreciation, with a bias You can get a copy of the simplified prospectus of the towards income. It invests primarily in a diversified mix of underlying funds by calling us at 1-800-268-9269 equity and income mutual funds managed by other mutual (416-750-3863 in Toronto) for English, or 1-800-387-5004 fund managers and by us. for French, by asking your mutual fund representative, or Any change to the fundamental investment objectives at www.sedar.com.

SCOTIA PARTNERS INCOME & MODEST GROWTH PORTFOLIO must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. What are the risks of investing in the fund? The portfolio indirectly has the same risks as the Investment strategies underlying funds it holds. The fund takes on the risks of The portfolio is an asset allocation fund that allocates an underlying fund in proportion to its investment in that your investment between three asset classes: fixed income, fund. The risks of the underlying funds include: Canadian equities and foreign equities. ) interest rate risk ) The table below outlines the target weighting for each credit risk asset class in which the fund invests. ) foreign investment risk Target ) currency risk Asset Class Weighting ) Fixed Income 70% derivative risk Canadian Equities 15% ) repurchase and reverse repurchase transaction risk Foreign Equities 15% ) securities lending risk ) The underlying funds in which the fund invests may liquidity risk change from time to time, but the target weighting for ) equity risk each asset class will not be more than 10% above or ) small company risk below the amounts set out above. You’ll find more ) concentration risk information about investing in other mutual funds on ) page 2. emerging markets risk ) asset-backed and mortgage-backed securities risk Although up to 100% of the fund’s assets may be invested ) in other mutual funds, the portfolio may hold a portion of underlying fund risk. its assets in cash or money market instruments while The portfolio also has class risk. seeking investment opportunities or for defensive purposes. BALANCED FUNDS

60 % Class F Units During the 12 months preceding October 29, 2004, up to 20 29.7% of the net assets of the fund were invested in 15 Scotia Canadian Income Fund, up to 19.9% of the net 13.31% assets of the fund were invested in Fidelity Canadian 10 Bond Fund Series O, up to 19.8% of the net assets of the fund were invested in Trimark Canadian Bond Fund 5 Series I and up to 10.2% of the net asset of the fund were invested in Templeton Growth Fund Class O. 0 2003* * Feb. 10, 2003 to Dec. 31, 2003 You’ll find details about each of these risks starting on page 164. Overall past performance This chart shows how a $10,000 investment in the fund Who should invest in this fund? would have changed in value, compared with a blended This portfolio may be suitable for you if: index of 15% S&P/TSX Composite Index (Total Return), 70% Scotia Capital (SC) Universe Bond Index and 15% ) you want a core balanced holding, which is well Morgan Stanley Capital International (MSCI) World Index. diversified by asset class, investment style, geography $ and market capitalization 15,000 $11,244(a) ) you can accept medium risk $11,163 SCOTIA PARTNERS INCOME & MODEST GROWTH PORTFOLIO ) 10,000 you’re investing for at least three years. $11,097(b) $10,800

Past performance at December 31 5,000

This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 0 Dec. Dec. figures don’t tell you how the fund will perform in the 2002 2003 Class A Units future. Scotia Partners Income & Modest Growth Portfolio Blend of S&P/TSX Composite Index (Total Return), Year-by-year returns SC Universe Bond Index and MSCI World Index Class F Units These charts show the fund’s annual performance, which (a) Blend of S&P/TSX Composite Index (Total Return), changes from year to year. SC Universe Bond Index and MSCI World Index (b) Scotia Partners Income & Modest Growth Portfolio % Class A Units 15 The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 11.04% Composite Index and it tracked the 300 largest companies listed on the 10 Toronto Stock Exchange. 7.32% The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- 5 mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the average duration is 6.03 years. 0 The MSCI World Index is an index of approximately 1,600 companies listed 2002 2003 on stock exchanges in the 22 countries that make up the MSCI national indexes. BALANCED FUNDS

61 Annual compound returns Financial highlights, Class F units at December 31 This table shows the fund’s annual compound returns, Distributions and net asset value per unit compared with a blended index of 15% S&P/TSX Compos- ite Index (Total Return), 70% SC Universe Bond Index 1999 2000 2001 2002 20032 and 15% MSCI World Index. Distributions Since from net income$––––0.09 1 year inception from realized gain $ ––––0.02 Scotia Partners Income & Modest Growth Portfolio return of capital$––––– Class A units % 7.32 7.53 Total annual distributions $––––0.11 Class F units % – 13.311 Net asset value per unit $––––10.78 Blended Index % 9.96 2 1 February 10, 2003 Ratios and supplemental data 2 Class A units 10.94% and Class F units 15.10% 1999 2000 2001 2002 20032 Distribution policy Net assets (000’s) $ ––––24 Number of units The portfolio distributes any income and capital gains in outstanding (000’s) ––––2 December of each calendar year. MER3 %––––1.32 Portfolio turnover Distributions on units held in Scotia registered plans are rate %––––0.29

SCOTIA PARTNERS INCOME & MODEST GROWTH PORTFOLIO always reinvested in additional units of the portfolio. 2 These figures are for the period from February 10, 2003 to Decem- ber 31, 2003. Distributions on units held in other registered plans and 3 We may from time to time absorb some of the operating expenses that non-registered accounts are reinvested in additional units the fund would otherwise pay. In 2003, the management expense ratio of the portfolio, unless you tell us in writing that you of the fund would have been 3.57% had we not absorbed some of these expenses. want to receive cash distributions by cheque or by deposit to your bank account. Fund expenses indirectly borne by investors

Financial highlights, Class A units This example shows the fund’s expenses on a $1,000 at December 31 investment with a 5% annual return. Distributions and net asset value per unit Fees and expenses payable over 1 year 3 years 5 years 10 years 1999 2000 2001 20021 2003 Class A units $ 24.09 75.94 133.10 302.97 Distributions Class F units $ 13.53 42.65 74.76 170.18 from net income $ – – – 0.01 0.09 from realized gain $ ––––0.02 return of capital$––––– Total annual distributions $ – – – 0.01 0.11 Net asset value per unit $ – – – 10.04 10.68

Ratios and supplemental data

1999 2000 2001 20021 2003 Net assets (000’s) $ – – – 1,176 38,489 Number of units outstanding (000’s) – – – 117 3,603 MER % – – – 2.46 2.35 Portfolio turnover rate %––––0.29 1 These figures are for the period from November 29, 2002 to Decem- ber 31, 2002. BALANCED FUNDS

62 Scotia Partners Balanced Income & Growth Portfolio Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established December 9, 2002 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Income Fund Class I 29.45% registered plans? property. Mackenzie Ivy Canadian Fund Series O 15.00% Portfolio advisor Scotia Capital Inc. Bissett Bond Fund Class O 14.70% AGF Canadian Stock Fund Series I 11.48% What does the fund invest in? Trimark Fund Series I 9.49% Investment objectives CI Global Fund Class I 7.83% Fidelity International Portfolio Fund Series O 5.80% The portfolio’s objective is to achieve a balance of current Templeton Global Smaller Companies Fund Class O 5.16% income and long term capital appreciation, with a small bias towards capital appreciation. It invests primarily in a You can get a copy of the simplified prospectus of the diversified mix of equity and income mutual funds underlying funds by calling us at 1-800-268-9269 managed by other mutual fund managers and by us. (416-750-3863 in Toronto) for English, or 1-800-387-5004 Any change to the fundamental investment objectives for French, by asking your mutual fund representative, or must be approved by a majority of votes cast at a meeting at www.sedar.com. of unitholders called for that purpose. SCOTIA PARTNERS BALANCED INCOME & GROWTH PORTFOLIO What are the risks of investing in the fund? Investment strategies The portfolio indirectly has the same risks as the The portfolio is an asset allocation fund that allocates underlying funds it holds. The fund takes on the risks of your investment between three asset classes: fixed income, an underlying fund in proportion to its investment in that Canadian equities and foreign equities. fund. The risks of the underlying funds include: ) interest rate risk The table below outlines the target weighting for each asset class in which the fund invests. ) credit risk Target ) foreign investment risk Asset Class Weighting ) currency risk Fixed Income 45% ) Canadian Equities 26% derivative risk Foreign Equities 29% ) repurchase and reverse repurchase transaction risk ) securities lending risk The underlying funds in which the fund invests may ) change from time to time but the target weighting for liquidity risk each asset class will not be more than 10% above or ) equity risk below the amounts set out above. You’ll find more ) small company risk information about investing in other mutual funds on ) concentration risk page 2. ) emerging markets risk Although up to 100% of the fund’s assets may be invested ) asset-backed and mortgage-backed securities risk in other mutual funds, the portfolio may hold a portion of its assets in cash or money market instruments while ) underlying fund risk. seeking investment opportunities or for defensive The portfolio also has class risk. purposes. BALANCED FUNDS

63 % Class F Units During the 12 months preceding October 29, 2004, up to 25 29.5% of the net assets of the fund were invested in 20 19.03% Scotia Canadian Income Fund, up to 15.1% of the net assets of the fund were invested in Mackenzie Ivy 15

Canadian Fund Series O, up to 14.7% of the net assets of 10 the fund were invested in Bissett Bond Fund Class O, up to 11.7% of the net assets of the fund were invested in 5 AGF Canadian Stock Fund Series I and up to 10.5% of the 0 2003* net asset of the fund were invested in Trimark Fund * Feb. 7, 2003 to Dec. 31, 2003 Series I. Overall past performance You’ll find details about each of these risks starting on page 164. This chart shows how a $10,000 investment in the fund would have changed in value, compared with a blended Who should invest in this fund? index of 26% S&P/TSX Composite Index (Total Return), 45% Scotia Capital (SC) Universe Bond Index and 29% This portfolio may be suitable for you if: Morgan Stanley Capital International (MSCI) World Index.

) you want a core balanced holding, which is well $ diversified by asset class, investment style, geography 20,000 and market capitalization 15,000 (b)

SCOTIA PARTNERS BALANCED INCOME & GROWTH PORTFOLIO $11,635 ) you can accept medium risk $11,563(a) 10,000 ) $11,367 you’re investing for at least three years. $11,096

5,000 Past performanceat December 31 0 This section shows how the fund has performed in the Dec. Dec. 2002 2003 past and gives you an idea of the risk involved. These Class A Units figures don’t tell you how the fund will perform in the Scotia Partners Balanced Income & Growth Portfolio future. Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index

Class F Units Year-by-year returns (a) Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index These charts show the fund’s annual performance, which (b) Scotia Partners Balanced Income & Growth Portfolio changes from year to year. The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock % Class A Units Exchange. Prior to May 1, 2002, this index was called the TSE 300 20 Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. 15 The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- 10.48% mately 900 Canadian federal, provincial, municipal and corporate bonds 10 rated BBB or higher. The average term to maturity is 9.51 years and the 7.47% average duration is 6.03 years. 5 The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national indexes. 0 2002 2003 BALANCED FUNDS

64 Annual compound returns of the fund would have been 2.38% had we not absorbed some of these expenses. This table shows the fund’s annual compound returns, compared with a blended index of 26% S&P/TSX Compos- Financial highlights, Class F units ite Index (Total Return), 45% SC Universe Bond Index at December 31 and 29% MSCI World Index. Distributions and net asset value per unit Since 1 year inception 1999 2000 2001 2002 20033 Scotia Partners Balanced Distributions Income & Growth Portfolio from net income$––––0.01 Class A units % 10.48 10.32 from realized gain $ ––––– 1 Class F units % – 19.03 return of capital$––––– 2 Blended Index % 12.44 Total annual distributions $––––0.01 1 February 7, 2003 Net asset value per unit $––––11.19 2 Class A units 12.86% and Class F units 19.92%

Distribution policy Ratios and supplemental data

3 The portfolio distributes any income and capital gains in 1999 2000 2001 2002 2003 December of each calendar year. Net assets (000’s) $ ––––310 Number of units Distributions on units held in Scotia registered plans are outstanding (000’s) ––––28 4 always reinvested in additional units of the portfolio. MER %––––1.28 Distributions on units held in other registered plans and Portfolio turnover SCOTIA PARTNERS BALANCED INCOME & GROWTH PORTFOLIO rate %––––– non-registered accounts are reinvested in additional units 3 These figures are for the period from February 7, 2003 to December 31, of the portfolio, unless you tell us in writing that you 2003. want to receive cash distributions by cheque or by deposit 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio to your bank account. of the fund would have been 1.65% had we not absorbed some of these expenses. Financial highlights, Class A units at December 31 Fund expenses indirectly borne by investors Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 1999 2000 2001 20021 2003 investment with a 5% annual return. Distributions from net income$––––0.01Fees and expenses from realized gain $ – – – 0.01 – payable over 1 year 3 years 5 years 10 years return of capital$–––––Class A units $ 24.29 76.58 134.23 305.55 Total annual distributions $ – – – 0.01 0.01 Class F units $ 13.12 41.36 72.50 165.02 Net asset value per unit $ – – – 10.03 11.09

Ratios and supplemental data 1999 2000 2001 20021 2003 Net assets (000’s) $ – – – 1,455 90,738 Number of units outstanding (000’s) – – – 145 8,180 MER2 % – – – 2.62 2.37 Portfolio turnover rate %––––– 1 These figures are for the period from November 29, 2002 to December 31, 2002. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio BALANCED FUNDS

65 Scotia Partners Conservative Growth Portfolio

PORTFOLIO Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established December 9, 2002 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign Scotia Canadian Income Fund Class I 14.51% registered plans? property. AGF RSP International Value Fund Series I 13.18% Portfolio advisor Scotia Capital Inc. AIM Canadian First Class of AIM Canada Fund Inc. Series I 10.68% What does the fund invest in? CI Global Fund Class I 10.63% Investment objectives Trimark Canadian Bond Fund Series I 9.76% Fidelity International Portfolio Fund Series O 9.53% The portfolio’s objective is to achieve a balance of current Fidelity True North Fund Series O 9.33% income and long term capital appreciation, with a bias AGF Canadian Stock Fund Series I 7.72% towards capital appreciation. It invests primarily in a Templeton Global Smaller Companies Fund Class O 7.14% diversified mix of equity and income mutual funds CI Harbour Fund Class I 6.74% managed by other mutual fund managers and by us. SCOTIA PARTNERS CONSERVATIVE GROWTH Any change to the fundamental investment objectives You can get a copy of the simplified prospectus of the must be approved by a majority of votes cast at a meeting underlying funds by calling us at 1-800-268-9269 of unitholders called for that purpose. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or Investment strategies at www.sedar.com.

The portfolio is an asset allocation fund that allocates What are the risks of investing in the fund? your investment between three asset classes: fixed income, The portfolio indirectly has the same risks as the Canadian equities and foreign equities. underlying funds it holds. The fund takes on the risks of The table below outlines the target weighting for each an underlying fund in proportion to its investment in that asset class in which the fund invests. fund. The risks of the underlying funds include: Target ) interest rate risk Asset Class Weighting ) Fixed Income 25% credit risk Canadian Equities 33% ) foreign investment risk Foreign Equities 42% ) currency risk ) derivative risk The underlying funds in which the fund invests may change from time to time but the target weighting for ) repurchase and reverse repurchase transaction risk each asset class will not be more than 10% above or ) securities lending risk below the amounts set out above. You’ll find more ) liquidity risk information about investing in other mutual funds on ) page 2. equity risk ) small company risk Although up to 100% of the fund’s assets may be invested ) in other mutual funds, the portfolio may hold a portion of concentration risk its assets in cash or money market instruments while ) emerging markets risk seeking investment opportunities or for defensive ) asset-backed and mortgage-backed securities risk purposes. ) BALANCED FUNDS share class risk

66 ) % Class F Units PORTFOLIO RSP Fund risk 35 ) counterparty risk 30 28.60% 25 ) underlying fund risk. 20 The portfolio also has class risk. 15 10 During the 12 months preceding October 29, 2004, up to 5 14.5% of the net assets of the fund were invested in 0 2003* Scotia Canadian Income Fund, up to 14.4% of the net * Sept. 16, 2003 to Dec. 31, 2003 assets of the fund were invested in AGF RSP International Overall past performance Value Fund Series I, up to 10.7% of the net assets of the fund were invested in AIM Canadian First Class of AIM This chart shows how a $10,000 investment in the fund Canada Fund Inc. Series I, up to 11.8% of the net assets would have changed in value, compared with a blended of the fund were invested in CI Global Fund Class I and index of 33% S&P/TSX Composite Index (Total Return), up to 10.3% of the net asset of the fund were invested in 25% Scotia Capital (SC) Universe Bond Index and 42% Fidelity International Portfolio Fund Series O. Morgan Stanley Capital International (MSCI) World Index. $

You’ll find details about each of these risks starting on 20,000 SCOTIA PARTNERS CONSERVATIVE GROWTH page 164. 15,000 $11,516 Who should invest in this fund? $11,502 10,000 $10,649(b) This portfolio may be suitable for you if: $10,605(a) ) you want a core balanced holding, which is well 5,000 diversified by asset class, investment style, geography 0 and market capitalization Dec. Dec. 2002 2003 ) you can accept medium risk Class A Units ) Scotia Partners Conservative Growth Portfolio you’re investing for at least three years. Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index Past performanceat December 31 Class F Units This section shows how the fund has performed in the (a) Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index past and gives you an idea of the risk involved. These (b) Scotia Partners Conservative Growth Portfolio figures don’t tell you how the fund will perform in the The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock future. Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the Year-by-year returns Toronto Stock Exchange. These charts show the fund’s annual performance, which The SC Universe Bond Index is a broad measure of the total return of Canadian bonds that mature in more than one year. It includes approxi- changes from year to year. mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the % Class A Units average duration is 6.03 years. 20 The MSCI World Index is an index of approximately 1,600 companies listed 15.08% on stock exchanges in the 22 countries that make up the MSCI national 15 indexes.

10

5

1.05% 0 2002 2003 BALANCED FUNDS

67 PORTFOLIO Annual compound returns Ratios and supplemental data

This table shows the fund’s annual compound returns, 1999 2000 2001 20021 2003 compared with a blended index of 33% S&P/TSX Compos- Net assets (000’s) $ – – – 2,066 75,479 ite Index (Total Return), 25% SC Universe Bond Index Number of units outstanding (000’s) – – – 206 6,555 and 42% MSCI World Index. 2 Since MER % – – – 2.78 2.53 1 year inception Portfolio turnover rate % ––––0.89 Scotia Partners Conservative Growth Portfolio 1 These figures are for the period from November 29, 2002 to Decem- ber 31, 2002. Class A units % 15.08 14.25 2 1 We may from time to time absorb some of the operating expenses that Class F units % – 28.60 the fund would otherwise pay. In 2003, the management expense ratio Blended Index % 14.13 2 of the fund would have been 2.55% had we not absorbed some of these expenses. 1 September 16, 2003 2 Class A units 14.12% and Class F units 26.50% Financial highlights, Class F units Distribution policy at December 31 Distributions and net asset value per unit The portfolio distributes any income and capital gains in 3 December of each calendar year. 1999 2000 2001 2002 2003 Distributions SCOTIA PARTNERS CONSERVATIVE GROWTH Distributions on units held in Scotia registered plans are from net income$––––– always reinvested in additional units of the portfolio. from realized gain $ ––––– Distributions on units held in other registered plans and return of capital$––––– non-registered accounts are reinvested in additional units Total annual distributions $––––– of the portfolio, unless you tell us in writing that you Net asset value per unit $––––11.55 want to receive cash distributions by cheque or by deposit to your bank account. Ratios and supplemental data

1999 2000 2001 2002 20033 Financial highlights, Class A units Net assets (000’s) $ ––––72 at December 31 Number of units Distributions and net asset value per unit outstanding (000’s) ––––6 MER4 %––––1.34 1999 2000 2001 20021 2003 Portfolio turnover rate % ––––0.89 Distributions 3 These figures are for the period from September 16, 2003 to from net income$––––– December 31, 2003. from realized gain $ –––––4 We may from time to time absorb some of the operating expenses that return of capital$––––– the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.27% had we not absorbed some of Total annual distributions $––––– these expenses. Net asset value per unit $ – – – 10.03 11.52 Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 25.93 81.75 143.29 326.18 Class F units $ 13.74 43.30 75.89 172.76 BALANCED FUNDS

68 Scotia Partners Aggressive Growth Portfolio Fund details Top 10 holdings at September 30, 2004

Fund type Strategic asset allocation fund The information contained in this list may change due to Date established December 9, 2002 ongoing portfolio transactions of the fund. Current hold- Type of securities Class A and Class F units of a mutual ings may be found at www.scotiabank.com/mutualfunds. fund trust Eligible for Yes. Units of the fund are not foreign AGF RSP International Value Fund Series I 18.77% registered plans? property. AIM Canadian First Class of AIM Canada Fund Inc. Portfolio advisor Scotia Capital Inc. Series I 12.86% CI Global Fund Class I 12.54% What does the fund invest in? Fidelity True North Fund Series O 12.42% Investment objectives Scotia Canadian Income Fund Class I 9.70% Fidelity International Portfolio Fund Series O 9.52% The portfolio’s objective is long term capital appreciation. AIM Canadian Premier Fund Series I 8.38% It invests primarily in a diversified mix of equity mutual CI Harbour Fund Class I 5.17% funds, with additional stability derived from investments Templeton Global Smaller Companies Fund Class O 5.12% in income mutual funds, managed by other mutual fund

Mackenzie Ivy Enterprises Fund Series O 5.08% SCOTIA PARTNERS AGGRESSIVE GROWTH PORTFOLIO managers and by us.

Any change to the fundamental investment objectives You can get a copy of the simplified prospectus of the must be approved by a majority of votes cast at a meeting underlying funds by calling us at 1-800-268-9269 of unitholders called for that purpose. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or Investment strategies at www.sedar.com.

The portfolio is an asset allocation fund that allocates What are the risks of investing in the fund? your investment between three asset classes: fixed income, Canadian equities and foreign equities. The portfolio indirectly has the same risks as the underlying funds it holds. The fund takes on the risks of The table below outlines the target weighting for each an underlying fund in proportion to its investment in that asset class in which the fund invests. fund. The risks of the underlying funds include: Target ) Asset Class Weighting interest rate risk Fixed Income 10% ) credit risk Canadian Equities 42% ) foreign investment risk Foreign Equities 48% ) currency risk The underlying funds in which the fund invests may ) derivative risk change from time to time, but the target weighting for ) repurchase and reverse repurchase transaction risk each asset class will not be more than 10% above or ) securities lending risk below the amounts set out above. You’ll find more ) information about investing in other mutual funds on liquidity risk page 2. ) equity risk ) Although up to 100% of the fund’s assets may be invested small company risk in other mutual funds, the portfolio may hold a portion of ) concentration risk its assets in cash or money market instruments while ) emerging markets risk seeking investment opportunities or for defensive ) asset-backed and mortgage-backed securities risk purposes. BALANCED FUNDS

69 ) share class risk Overall past performance ) RSP Fund risk This chart shows how a $10,000 investment in the fund ) underlying fund risk. would have changed in value, compared with a blended index of 42% S&P/TSX Composite Index (Total Return), The portfolio also has class risk. 10% Scotia Capital (SC) Universe Bond Index and 48% During the 12 months preceding October 29, 2004, up to Morgan Stanley Capital International (MSCI) World Index. 20.3% of the net assets of the fund were invested in AGF $ 15,000 RSP International Value Fund Series I, up to 12.9% of the $11,662 net assets of the fund were invested in AIM Canadian $11,559 First Class of AIM Canada Fund Inc. Series I, up to 13.7% 10,000 of the net assets of the fund were invested in CI Global Fund Class I, up to 12.4% of the net assets of the fund 5,000 were invested in Fidelity True North Fund Series O and up to 10.2% of the net asset of the fund were invested in 0 Dec. Dec. Fidelity International Portfolio Fund Series O. 2002 2003

SCOTIA PARTNERS AGGRESSIVE GROWTH PORTFOLIO Class A Units You’ll find details about each of these risks starting on Scotia Partners Aggressive Growth Portfolio page 164. Blend of S&P/TSX Composite Index (Total Return), SC Universe Bond Index and MSCI World Index Who should invest in this fund? The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock Exchange. Prior to May 1, 2002, this index was called the TSE 300 This portfolio may be suitable for you if: Composite Index and it tracked the 300 largest companies listed on the Toronto Stock Exchange. ) you want a core balanced holding, which is well The SC Universe Bond Index is a broad measure of the total return of diversified by asset class, investment style, geography Canadian bonds that mature in more than one year. It includes approxi- and market capitalization mately 900 Canadian federal, provincial, municipal and corporate bonds rated BBB or higher. The average term to maturity is 9.51 years and the ) you can accept medium to higher risk average duration is 6.03 years. The MSCI World Index is an index of approximately 1,600 companies listed ) you’re investing for at least three years. on stock exchanges in the 22 countries that make up the MSCI national indexes. Past performance at December 31 Annual compound returns This section shows how the fund has performed in the past and gives you an idea of the risk involved. These This table shows the fund’s annual compound returns, ’figures don’t tell you how the fund will perform in the compared with a blended index of 42% S&P/TSX Compos- future. ite Index (Total Return), 10% SC Universe Bond Index Year-by-year returns and 48% MSCI World Index. Since 1 year inception This chart shows the fund’s annual performance, which Scotia Partners Aggressive Growth Portfolio changes from year to year. Class A units % 15.56 14.66 % Class A Units Blended Index % 16.07 15.63 20

15.56% 15

10

5

0.37% 0 2002 2003 BALANCED FUNDS

70 Distribution policy

The portfolio distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the portfolio. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the portfolio, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31 Distributions and net asset value per unit 1999 2000 2001 20021 2003 Distributions SCOTIA PARTNERS AGGRESSIVE GROWTH PORTFOLIO from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – – 10.03 11.56

Ratios and supplemental data 1999 2000 2001 20021 2003 Net assets (000’s) $ – – – 549 20,662 Number of units outstanding (000’s) – – – 55 1,788 MER2 % – – – 2.94 2.93 Portfolio turnover rate % ––––3.16 1 These figures are for the period from November 29, 2002 to December 31, 2002. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.03% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 30.03 94.68 165.95 377.75 BALANCED FUNDS

71 Scotia Vision Conservative 2010 Fund Fund details Top 10 holdings

Fund type Strategic asset allocation fund Because the fund is new, top 10 holdings weren’t available Date established June 10, 2005 when this prospectus was printed. Type of securities Class A units of a mutual fund trust Eligible for Yes. Units of the fund are not foreign You can get a copy of the simplified prospectus of the registered plans? property. underlying funds by calling us at 1-800-268-9269 Portfolio advisor Scotia Capital Inc. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or What does the fund invest in? at www.sedar.com.

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to follow an asset allocation The fund indirectly has the same risks as the underlying SCOTIA VISION CONSERVATIVE 2010 FUND strategy that emphasizes a balanced total return. The funds it holds. The fund takes on the risks of an fund will gradually shift its asset mix from an emphasis underlying fund in proportion to its investment in that on equity funds to an emphasis on income and cash fund. The risks of the underlying funds include: equivalent funds as its target date (2010) approaches. ) class risk The fund invests primarily in a diversified mix of mutual ) concentration risk funds managed by us and by other mutual fund managers. ) credit risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) derivative risk of unitholders called for that purpose. ) equity risk Investment strategies ) emerging markets risk The fund is an asset allocation fund that allocates your ) foreign investment risk investment between four asset classes: cash equivalents, ) index risk fixed income, Canadian equities and foreign equities. The ) interest rate risk underlying funds in which the fund invests may change ) from time to time, based on the portfolio advisor’s liquidity risk assessment of the markets and the underlying funds’ ) real estate sector risk ability to help the fund achieve its investment objectives. ) repurchase and reverse repurchase transaction risk You’ll find more information about investing in other ) mutual funds on page 2. The fund’s asset allocation securities lending risk strategy becomes increasingly conservative as its target ) share class risk date approaches. ) small company risk Although up to 100% of the fund’s assets may be invested ) underlying fund risk. in other mutual funds, the fund may hold a portion of its You’ll find details about each of these risks starting on assets in cash or money market instruments while seeking page 164. investment opportunities or for defensive purposes.

In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Money Market Fund (or its successor), subject to the fund obtaining any required regulatory and unitholder approval. Alternatively, the fund may be wound up. BALANCED FUNDS

72 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium risk.

Past performance SCOTIA VISION CONSERVATIVE 2010 FUND Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

73 Scotia Vision Aggressive 2010 Fund

Fund details In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Fund type Strategic asset allocation fund Money Market Fund (or its successor), subject to the Date established June 10, 2005 Type of securities Class A units of a mutual fund trust fund obtaining any required regulatory and unitholder Eligible for Yes. Units of the fund are not foreign approval. Alternatively, the fund may be wound up. registered plans? property. Portfolio advisor Scotia Capital Inc. Top 10 holdings

Because the fund is new, top 10 holdings weren’t available What does the fund invest in? when this prospectus was printed. Investment objectives You can get a copy of the simplified prospectus of the

SCOTIA VISION AGGRESSIVE 2010 FUND The fund’s objective is to follow an asset allocation underlying funds by calling us at 1-800-268-9269 strategy that emphasizes a balanced total return. The (416-750-3863 in Toronto) for English, or 1-800-387-5004 fund will gradually shift its asset mix from an emphasis for French, by asking your mutual fund representative, or on equity funds to an emphasis on income and cash at www.sedar.com. equivalent funds as its target date (2010) approaches. What are the risks of investing in the fund? The fund invests primarily in a diversified mix of mutual funds managed by us and by other mutual fund managers. The fund indirectly has the same risks as the underlying funds it holds. The fund takes on the risks of an Any change to the fundamental investment objectives underlying fund in proportion to its investment in that must be approved by a majority of votes cast at a meeting fund. The risks of the underlying funds include: of unitholders called for that purpose. ) class risk Investment strategies ) concentration risk ) The fund is an asset allocation fund that allocates your credit risk investment between four asset classes: cash equivalents, ) currency risk fixed income, Canadian equities and foreign equities. ) derivative risk Compared to the Scotia Vision Conservative 2010 Fund, ) equity risk the fund will have greater exposure to equity investments ) in the initial period after it’s established. The underlying emerging markets risk funds in which the fund invests may change from time to ) foreign investment risk time, based on the portfolio advisor’s assessment of the ) index risk markets and the underlying funds’ ability to help the fund ) achieve its investment objectives. You’ll find more informa- interest rate risk tion about investing in other mutual funds on page 2. The ) liquidity risk fund’s asset allocation strategy becomes increasingly ) real estate sector risk conservative as its target date approaches. ) repurchase and reverse repurchase transaction risk Although up to 100% of the fund’s assets may be invested ) securities lending risk in other mutual funds, the fund may hold a portion of its ) share class risk assets in cash or money market instruments while seeking ) investment opportunities or for defensive purposes. small company risk ) underlying fund risk.

You’ll find details about each of these risks starting on page 164. BALANCED FUNDS

74 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium risk.

Past performance SCOTIA VISION AGGRESSIVE 2010 FUND

Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

75 Scotia Vision Conservative 2015 Fund Fund details Top 10 holdings

Fund type Strategic asset allocation fund Because the fund is new, top 10 holdings weren’t available Date established June 10, 2005 when this prospectus was printed. Type of securities Class A units of a mutual fund trust Eligible for Yes. Units of the fund are not foreign You can get a copy of the simplified prospectus of the registered plans? property. underlying funds by calling us at 1-800-268-9269 Portfolio advisor Scotia Capital Inc. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or What does the fund invest in? at www.sedar.com.

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to follow an asset allocation The fund indirectly has the same risks as the underlying SCOTIA VISION CONSERVATIVE 2015 FUND strategy that emphasizes a balanced total return. The funds it holds. The fund takes on the risks of an fund will gradually shift its asset mix from an emphasis underlying fund in proportion to its investment in that on equity funds to an emphasis on income and cash fund. The risks of the underlying funds include: equivalent funds as its target date (2015) approaches. ) class risk The fund invests primarily in a diversified mix of mutual ) concentration risk funds managed by us and by other mutual fund managers. ) credit risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) derivative risk of unitholders called for that purpose. ) equity risk Investment strategies ) emerging markets risk The fund is an asset allocation fund that allocates your ) foreign investment risk investment between four asset classes: cash equivalents, ) index risk fixed income, Canadian equities and foreign equities. The ) interest rate risk underlying funds in which the fund invests may change ) from time to time, based on the portfolio advisor’s liquidity risk assessment of the markets and the underlying funds’ ) real estate sector risk ability to help the fund achieve its investment objectives. ) repurchase and reverse repurchase transaction risk You’ll find more information about investing in other ) mutual funds on page 2. The fund’s asset allocation securities lending risk strategy becomes increasingly conservative as its target ) share class risk date approaches. ) small company risk Although up to 100% of the fund’s assets may be invested ) underlying fund risk. in other mutual funds, the fund may hold a portion of its You’ll find details about each of these risks starting on assets in cash or money market instruments while seeking page 164. investment opportunities or for defensive purposes.

In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Money Market Fund (or its successor), subject to the fund obtaining any required regulatory and unitholder approval. Alternatively, the fund may be wound up. BALANCED FUNDS

76 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium risk.

Past performance SCOTIA VISION CONSERVATIVE 2015 FUND Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

77 Scotia Vision Aggressive 2015 Fund

Fund details In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Fund type Strategic asset allocation fund Money Market Fund (or its successor), subject to the Date established June 10, 2005 Type of securities Class A units of a mutual fund trust fund obtaining any required regulatory and unitholder Eligible for Yes. Units of the fund are not foreign approval. Alternatively, the fund may be wound up. registered plans? property. Portfolio advisor Scotia Capital Inc. Top 10 holdings

Because the fund is new, top 10 holdings weren’t available What does the fund invest in? when this prospectus was printed. Investment objectives You can get a copy of the simplified prospectus of the

SCOTIA VISION AGGRESSIVE 2015 FUND The fund’s objective is to follow an asset allocation underlying funds by calling us at 1-800-268-9269 strategy that emphasizes a balanced total return. The (416-750-3863 in Toronto) for English, or 1-800-387-5004 fund will gradually shift its asset mix from an emphasis for French, by asking your mutual fund representative, or on equity funds to an emphasis on income and cash at www.sedar.com. equivalent funds as its target date (2015) approaches. What are the risks of investing in the fund? The fund invests primarily in a diversified mix of mutual funds managed by us and by other mutual fund managers. The fund indirectly has the same risks as the underlying funds it holds. The fund takes on the risks of an Any change to the fundamental investment objectives underlying fund in proportion to its investment in that must be approved by a majority of votes cast at a meeting fund. The risks of the underlying funds include: of unitholders called for that purpose. ) class risk

Investment strategies ) concentration risk ) The fund is an asset allocation fund that allocates your credit risk investment between four asset classes: cash equivalents, ) currency risk fixed income, Canadian equities and foreign equities. ) derivative risk Compared to the Scotia Vision Conservative 2015 Fund, ) equity risk the fund will have greater exposure to equity investments in the initial period after it’s established. The underlying ) emerging markets risk funds in which the fund invests may change from time to ) foreign investment risk time, based on the portfolio advisor’s assessment of the ) index risk markets and the underlying funds’ ability to help the fund ) achieve its investment objectives. You’ll find more informa- interest rate risk tion about investing in other mutual funds on page 2. The ) liquidity risk fund’s asset allocation strategy becomes increasingly ) real estate sector risk conservative as its target date approaches. ) repurchase and reverse repurchase transaction risk Although up to 100% of the fund’s assets may be invested ) securities lending risk in other mutual funds, the fund may hold a portion of its ) share class risk assets in cash or money market instruments while seeking investment opportunities or for defensive purposes. ) small company risk ) underlying fund risk.

You’ll find details about each of these risks starting on page 164. BALANCED FUNDS

78 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium risk.

Past performance SCOTIA VISION AGGRESSIVE 2015 FUND

Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

79 Scotia Vision Conservative 2020 Fund Fund details Top 10 holdings

Fund type Strategic asset allocation fund Because the fund is new, top 10 holdings weren’t available Date established June 10, 2005 when this prospectus was printed. Type of securities Class A units of a mutual fund trust Eligible for Yes. Units of the fund are not foreign You can get a copy of the simplified prospectus of the registered plans? property. underlying funds by calling us at 1-800-268-9269 Portfolio advisor Scotia Capital Inc. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or What does the fund invest in? at www.sedar.com.

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to follow an asset allocation The fund indirectly has the same risks as the underlying SCOTIA VISION CONSERVATIVE 2020 FUND strategy that emphasizes a balanced total return. The funds it holds. The fund takes on the risks of an fund will gradually shift its asset mix from an emphasis underlying fund in proportion to its investment in that on equity funds to an emphasis on income and cash fund. The risks of the underlying funds include: equivalent funds as its target date (2020) approaches. ) class risk The fund invests primarily in a diversified mix of mutual ) concentration risk funds managed by us and by other mutual fund managers. ) credit risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) derivative risk of unitholders called for that purpose. ) equity risk Investment strategies ) emerging markets risk The fund is an asset allocation fund that allocates your ) foreign investment risk investment between four asset classes: cash equivalents, ) index risk fixed income, Canadian equities and foreign equities. The ) interest rate risk underlying funds in which the fund invests may change from time to time, based on the portfolio advisor’s ) liquidity risk assessment of the markets and the underlying funds’ ) real estate sector risk ability to help the fund achieve its investment objectives. ) repurchase and reverse repurchase transaction risk You’ll find more information about investing in other ) mutual funds on page 2. The fund’s asset allocation securities lending risk strategy becomes increasingly conservative as its target ) share class risk date approaches. ) small company risk Although up to 100% of the fund’s assets may be invested ) underlying fund risk. in other mutual funds, the fund may hold a portion of its You’ll find details about each of these risks starting on assets in cash or money market instruments while seeking page 164. investment opportunities or for defensive purposes.

In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Money Market Fund (or its successor), subject to the fund obtaining any required regulatory and unitholder approval. Alternatively, the fund may be wound up. BALANCED FUNDS

80 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium to higher risk.

Past performance SCOTIA VISION CONSERVATIVE 2020 FUND Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

81 Scotia Vision Aggressive 2020 Fund

Fund details In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Fund type Strategic asset allocation fund Money Market Fund (or its successor), subject to the Date established June 10, 2005 Type of securities Class A units of a mutual fund trust fund obtaining any required regulatory and unitholder Eligible for Yes. Units of the fund are not foreign approval. Alternatively, the fund may be wound up. registered plans? property. Portfolio advisor Scotia Capital Inc. Top 10 holdings

Because the fund is new, top 10 holdings weren’t available What does the fund invest in? when this prospectus was printed. Investment objectives You can get a copy of the simplified prospectus of the

SCOTIA VISION AGGRESSIVE 2020 FUND The fund’s objective is to follow an asset allocation underlying funds by calling us at 1-800-268-9269 strategy that emphasizes a balanced total return. The (416-750-3863 in Toronto) for English, or 1-800-387-5004 fund will gradually shift its asset mix from an emphasis for French, by asking your mutual fund representative, or on equity funds to an emphasis on income and cash at www.sedar.com. equivalent funds as its target date (2020) approaches. What are the risks of investing in the fund? The fund invests primarily in a diversified mix of mutual funds managed by us and by other mutual fund managers. The fund indirectly has the same risks as the underlying funds it holds. The fund takes on the risks of an Any change to the fundamental investment objectives underlying fund in proportion to its investment in that must be approved by a majority of votes cast at a meeting fund. The risks of the underlying funds include: of unitholders called for that purpose. ) class risk

Investment strategies ) concentration risk ) The fund is an asset allocation fund that allocates your credit risk investment between four asset classes: cash equivalents, ) currency risk fixed income, Canadian equities and foreign equities. ) derivative risk Compared to the Scotia Vision Conservative 2020 Fund, ) equity risk the fund will have greater exposure to equity investments in the initial period after it’s established. The underlying ) emerging markets risk funds in which the fund invests may change from time to ) foreign investment risk time, based on the portfolio advisor’s assessment of the ) index risk markets and the underlying funds’ ability to help the fund ) achieve its investment objectives. You’ll find more informa- interest rate risk tion about investing in other mutual funds on page 2. The ) liquidity risk fund’s asset allocation strategy becomes increasingly ) real estate sector risk conservative as its target date approaches. ) repurchase and reverse repurchase transaction risk Although up to 100% of the fund’s assets may be invested ) securities lending risk in other mutual funds, the fund may hold a portion of its ) share class risk assets in cash or money market instruments while seeking investment opportunities or for defensive purposes. ) small company risk ) underlying fund risk.

You’ll find details about each of these risks starting on page 164. BALANCED FUNDS

82 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium to higher risk.

Past performance SCOTIA VISION AGGRESSIVE 2020 FUND

Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

83 Scotia Vision Conservative 2030 Fund Fund details Top 10 holdings

Fund type Strategic asset allocation fund Because the fund is new, top 10 holdings weren’t available Date established June 10, 2005 when this prospectus was printed. Type of securities Class A units of a mutual fund trust Eligible for Yes. Units of the fund are not foreign You can get a copy of the simplified prospectus of the registered plans? property. underlying funds by calling us at 1-800-268-9269 Portfolio advisor Scotia Capital Inc. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or What does the fund invest in? at www.sedar.com.

Investment objectives What are the risks of investing in the fund?

The fund’s objective is to follow an asset allocation The fund indirectly has the same risks as the underlying SCOTIA VISION CONSERVATIVE 2030 FUND strategy that emphasizes a balanced total return. The funds it holds. The fund takes on the risks of an fund will gradually shift its asset mix from an emphasis underlying fund in proportion to its investment in that on equity funds to an emphasis on income and cash fund. The risks of the underlying funds include: equivalent funds as its target date (2030) approaches. ) class risk The fund invests primarily in a diversified mix of mutual ) concentration risk funds managed by us and by other mutual fund managers. ) credit risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) derivative risk of unitholders called for that purpose. ) equity risk Investment strategies ) emerging markets risk The fund is an asset allocation fund that allocates your ) foreign investment risk investment between four asset classes: cash equivalents, ) index risk fixed income, Canadian equities and foreign equities. The ) interest rate risk underlying funds in which the fund invests may change from time to time, based on the portfolio advisor’s ) liquidity risk assessment of the markets and the underlying funds’ ) real estate sector risk ability to help the fund achieve its investment objectives. ) repurchase and reverse repurchase transaction risk You’ll find more information about investing in other ) mutual funds on page 2. The fund’s asset allocation securities lending risk strategy becomes increasingly conservative as its target ) share class risk date approaches. ) small company risk Although up to 100% of the fund’s assets may be invested ) underlying fund risk. in other mutual funds, the fund may hold a portion of its You’ll find details about each of these risks starting on assets in cash or money market instruments while seeking page 164. investment opportunities or for defensive purposes.

In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Money Market Fund (or its successor), subject to the fund obtaining any required regulatory and unitholder approval. Alternatively, the fund may be wound up. BALANCED FUNDS

84 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium to higher risk.

Past performance SCOTIA VISION CONSERVATIVE 2030 FUND Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

85 Scotia Vision Aggressive 2030 Fund

Fund details In the year after the target date of the fund is reached, it is expected that the fund will merge into the Scotia Fund type Strategic asset allocation fund Money Market Fund (or its successor), subject to the Date established June 10, 2005 Type of securities Class A units of a mutual fund trust fund obtaining any required regulatory and unitholder Eligible for Yes. Units of the fund are not foreign approval. Alternatively, the fund may be wound up. registered plans? property. Portfolio advisor Scotia Capital Inc. Top 10 holdings

Because the fund is new, top 10 holdings weren’t available What does the fund invest in? when this prospectus was printed. Investment objectives You can get a copy of the simplified prospectus of the

SCOTIA VISION AGGRESSIVE 2030 FUND The fund’s objective is to follow an asset allocation underlying funds by calling us at 1-800-268-9269 strategy that emphasizes a balanced total return. The (416-750-3863 in Toronto) for English, or 1-800-387-5004 fund will gradually shift its asset mix from an emphasis for French, by asking your mutual fund representative, or on equity funds to an emphasis on income and cash at www.sedar.com. equivalent funds as its target date (2030) approaches. What are the risks of investing in the fund? The fund invests primarily in a diversified mix of mutual funds managed by us and by other mutual fund managers. The fund indirectly has the same risks as the underlying funds it holds. The fund takes on the risks of an Any change to the fundamental investment objectives underlying fund in proportion to its investment in that must be approved by a majority of votes cast at a meeting fund. The risks of the underlying funds include: of unitholders called for that purpose. ) class risk

Investment strategies ) concentration risk ) The fund is an asset allocation fund that allocates your credit risk investment between four asset classes: cash equivalents, ) currency risk fixed income, Canadian equities and foreign equities. ) derivative risk Compared to the Scotia Vision Conservative 2030 Fund, ) equity risk the fund will have greater exposure to equity investments in the initial period after it’s established. The underlying ) emerging markets risk funds in which the fund invests may change from time to ) foreign investment risk time, based on the portfolio advisor’s assessment of the ) index risk markets and the underlying funds’ ability to help the fund ) achieve its investment objectives. You’ll find more informa- interest rate risk tion about investing in other mutual funds on page 2. The ) liquidity risk fund’s asset allocation strategy becomes increasingly ) real estate sector risk conservative as its target date approaches. ) repurchase and reverse repurchase transaction risk Although up to 100% of the fund’s assets may be invested ) securities lending risk in other mutual funds, the fund may hold a portion of its ) share class risk assets in cash or money market instruments while seeking investment opportunities or for defensive purposes. ) small company risk ) underlying fund risk.

You’ll find details about each of these risks starting on page 164. BALANCED FUNDS

86 Who should invest in this fund?

This fund may be suitable for you if: ) you’re planning to invest for a period of time consistent with the fund’s target date ) you want a core balanced holding that becomes more conservative as its target date approaches and is well diversified by asset class, investment style, geography and market capitalization ) you can accept medium to higher risk.

Past performance SCOTIA VISION AGGRESSIVE 2030 FUND

Past performance information is not available because the fund is new.

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans are always reinvested in additional units of the fund. Distribu- tions on units held in other registered plans and non- registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights

Historical financial information is not available because the fund is new.

Fund expenses indirectly borne by investors

Fund expense information is not available because the fund is new. BALANCED FUNDS

87

Equity Funds

Canadian Equity Funds Scotia Canadian Stock Index Fund Scotia Canadian Dividend Fund Scotia Canadian Blue Chip Fund Scotia Canadian Growth Fund Scotia Canadian Small Cap Fund Scotia Resource Fund

Foreign Equity Funds Scotia American Stock Index Fund Scotia American Growth Fund Scotia CanAm Stock Index Fund Scotia Nasdaq Index Fund Scotia Young Investors Fund Scotia International Stock Index Fund Scotia Global Growth Fund Scotia European Growth Fund Scotia Pacific Rim Growth Fund Scotia Latin American Growth Fund

Capital International Series Funds Equity Funds Capital U.S. Large Companies Fund Capital U.S. Large Companies RSP Fund Capital U.S. Small Companies Fund Capital U.S. Small Companies RSP Fund Capital International Large Companies Fund Capital International Large Companies RSP Fund Capital Global Discovery Fund Capital Global Discovery RSP Fund Capital Global Small Companies Fund Capital Global Small Companies RSP Fund

The equity funds offer the greatest potential for long-term growth. They invest mainly in common shares and other equity securities of companies in Canada and around the world. These funds also have higher risk because the prices of equity securities can change significantly in a short period of time. The amount of risk depends on the securities in which a fund invests. Funds that concentrate on a particular industry or geographic area usually have more risk than funds that are more broadly diversified.

Equity funds can add growth potential to your portfolio. They’re a good choice if you don’t need income and can accept possible declines in the value of your investment in the short term.

89 Scotia Canadian Stock Index Fund Fund details Top 10 holdings at September 30, 2004

Fund type Canadian equity fund Manulife Financial Corporation 5.20% Date established December 31, 1996 Royal Bank of Canada 4.49% Type of securities Class A, Class F and Class I units of a Bank of Nova Scotia 4.32% mutual fund trust Eligible for Yes. Units of the fund are not foreign Toronto-Dominion Bank 3.46% registered plans? property. Bank of Montreal 3.22% Portfolio advisor State Street Global Advisors, Ltd. EnCana Corporation 3.08% BCE Inc. 2.92% What does the fund invest in? Canadian Imperial Bank of Commerce 2.73%

Investment objectives Sun Life Financial Services of Canada Inc. 2.63% SCOTIA CANADIAN STOCK INDEX FUND Alcan Inc. 2.56% The fund’s objective is long-term capital growth by tracking the performance of a generally recognized What are the risks of investing in the fund? Canadian equity index, currently the S&P/TSX Composite Index1. It invests primarily in the stocks that are included The main risks of investing in this fund are: in the index. ) equity risk Any change to the fundamental investment objectives ) index risk must be approved by a majority of votes cast at a meeting ) concentration risk of unitholders called for that purpose. ) liquidity risk.

Investment strategies The fund may also have these additional risks: The portfolio advisor aims to track the performance of the ) derivative risk S&P/TSX Composite Index as closely as possible by: ) repurchase and reverse repurchase transaction risk ) investing in the stocks that are included in the S&P/ ) securities lending risk TSX Composite Index in substantially the same propor- ) underlying fund risk. tion as they’re weighted in the Index ) keeping the portfolio as fully invested as possible You’ll find details about each risk starting on page 164. ) minimizing transaction costs. Who should invest in this fund? The portfolio advisor may use derivatives such as options, This fund may be suitable for you if: futures and forward contracts to gain exposure to the ) S&P/TSX Composite Index. It will only use derivatives as you want the growth potential of Canadian equity permitted by securities regulations. securities while tracking the performance of a major market index The fund may participate in repurchase, reverse repur- ) you’re investing for at least three years chase and securities lending transactions to achieve the ) fund’s overall investment objectives and to enhance the you can accept medium risk. fund’s returns. You’ll find more information about repur- chase, reverse repurchase and securities lending transac- tions on page 3.

1 The S&P/TSX Composite Index is published by the Toronto Stock Exchange and Standard & Poor’s. Standard & Poor’s, a division of the McGraw-Hill Companies Inc., and the Toronto Stock Exchange have no connection with

EQUITY FUNDS Scotia Securities Inc. and have not passed upon the merits of investing in the fund.

90 Past performance at December 31 The S&P/TSX Composite Index (Total Return) tracks the performance of some of the largest and most widely held stocks listed on the Toronto Stock This section shows how the fund has performed in the Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the past and gives you an idea of the risk involved. These Toronto Stock Exchange. figures don’t tell you how the fund will perform in the future. Annual compound returns This table shows the fund’s annual compound returns, Year-by-year returns compared with the S&P/TSX Composite Index (Total These charts show the fund’s annual performance, which Return). changes from year to year. Since 1 year 3 years 5 years inception % Class A Units Scotia Canadian Stock Index Fund 40 Class A units % 25.39 -2.02 6.44 6.13

30.94% SCOTIA CANADIAN STOCK INDEX FUND 30 1 25.39% Class F units%–––58.15 20 S&P/TSX Composite Index 13.62% 10.93% (Total Return) % 26.72 -1.01 6.54 2 10 1 October 10, 2003 0 2 Class A units 6.49% and Class F units 59.93% -2.28% -10 -13.53% -13.26% Distribution policy -20 1997 1998 1999 2000 2001 2002 2003 The fund distributes any income and capital gains in % Class F Units December of each calendar year. 70 60 58.15% Distributions on units held in Scotia registered plans and 50 Copilot non-registered accounts are always reinvested in 40 additional units of the fund. Distributions on units held in 30 other registered plans and non-registered accounts are 20 reinvested in additional units of the fund, unless you tell 10 us in writing that you want to receive cash distributions 0 2003* by cheque or by deposit to your bank account. * Oct. 10, 2003 to Dec. 31, 2003 Financial highlights, Class A units Overall past performance at December 31 This chart shows how a $10,000 investment in the fund Distributions and net asset value per unit would have changed in value, compared with the S&P/TSX 1999 2000 2001 2002 2003 Composite Index (Total Return). Distributions

$ from net income $ 0.11 0.15 – 0.11 0.09 20,000 from realized gain $ – 0.88 – – – $15,530 $15,169 return of capital$––––– 15,000 Total annual distributions $ 0.11 1.03 – 0.11 0.09 Net asset value per unit $ 14.24 14.75 12.75 10.94 13.64 10,000 $10,814(a) $10,794(b) 5,000 Ratios and supplemental data 1999 2000 2001 2002 2003 0 Net assets (000’s) $ 153,606 312,880 292,607 227,186 280,941 Dec. 31 Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1996 1997 1998 1999 2000 2001 2002 2003 Number of units Class A Units outstanding (000’s) 10,784 21,219 22,948 20,758 20,603 Scotia Canadian Stock Index Fund MER1 %0.930.951.001.011.01 S&P/TSX Composite Index (Total Return) Portfolio turnover rate % 9.48 31.79 11.45 14.47 9.39 Class F Units 1 We may from time to time absorb some of the operating expenses that (a) S&P/TSX Composite Index (Total Return) the fund would otherwise pay. In 2003, the management expense ratio (b) Scotia Canadian Stock Index Fund of the fund would have been 1.14% had we not absorbed some of EQUITY FUNDS these expenses.

91 Financial highlights, Class F units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 2000 2001 2002 20032 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––0.19 Class A units $ 10.35 32.64 57.20 130.21 from realized gain $ ––––– Class F units $ 6.25 19.71 34.55 78.64 return of capital$––––– Total annual distributions $––––0.19 Net asset value per unit $––––13.54

SCOTIA CANADIAN STOCK INDEX FUND Ratios and supplemental data

1999 2000 2001 2002 20032 Net assets (000’s) $ ––––2 Number of units outstanding (000’s) ––––0.16 MER3 %––––0.61 Portfolio turnover rate % ––––9.39 2 These figures are for the period from October 10, 2003 to December 31, 2003. 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 18.19% had we not absorbed some of these expenses. EQUITY FUNDS

92 Scotia Canadian Dividend Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- equivalent securities to try to protect the fund during a Fund type Canadian dividend fund market downturn or for other reasons. Date established October 28, 1992 Type of securities Class A, Class F and Class I units of a The fund may participate in repurchase, reverse repur- mutual fund trust chase and securities lending transactions to achieve the Eligible for Yes. Units of the fund are not foreign registered plans? property. fund’s overall investment objectives and to enhance the Portfolio advisor Scotia Cassels Investment Counsel fund’s returns. You’ll find more information about repur- Limited chase, reverse repurchase and securities lending transac- tions on page 3.

What does the fund invest in? SCOTIA CANADIAN DIVIDEND FUND Investment objectives Top 10 holdings at September 30, 2004

The fund’s objective is to earn a high level of dividend Toronto-Dominion Bank 5.43% income with some potential for long-term capital growth. Royal Bank of Canada 5.15% It invests primarily in dividend-paying common shares and Bank of Montreal 4.85% in a broad range of preferred shares, such as floating rate, Manulife Financial Corporation 4.76% convertible and retractable preferred shares of Canadian Canadian Imperial Bank of Commerce 4.07% companies. Power Corporation of Canada 2.98%

Any change to the fundamental investment objectives Sun Life Financial Services of Canada Inc. 2.92% must be approved by a majority of votes cast at a meeting BCE Inc. 2.31% of unitholders called for that purpose. TransCanada Corporation 2.14% Barrick Gold Corporation 2.06% Investment strategies What are the risks of investing in the fund? The portfolio advisor uses fundamental analysis to identify The main risks of investing in this fund are: investments that pay dividends and have the potential for capital growth over the long term. This involves evaluat- ) equity risk ing the financial condition and management of each ) interest rate risk. company, as well as its industry and the economy. The fund’s assets are diversified by industry and company to The fund may have these additional risks: help reduce risk. ) foreign investment risk ) The fund can invest in foreign securities up to the foreign currency risk content limit. It will generally invest in U.S. securities for ) derivative risk the foreign portion of its portfolio. ) class risk The fund may invest in other mutual funds which are ) income trust unit risk managed by us or by other mutual fund managers. You’ll ) repurchase and reverse repurchase transaction risk find more information about investing in other mutual ) securities lending risk funds on page 2. ) underlying fund risk. The portfolio advisor may: You’ll find details about each risk starting on page 164. ) use derivatives such as options and forward contracts to hedge against losses from changes in stock prices, Who should invest in this fund? commodity prices, market indexes or currency exchange rates, and to gain exposure to financial markets. It will This fund may be suitable for you if: only use derivatives as permitted by securities ) you want to maximize after-tax income by taking regulations. EQUITY FUNDS advantage of the dividend tax credit. This only applies

93 to non-registered accounts because you generally don’t Overall past performance pay tax on distributions received from funds you hold This chart shows how a $10,000 Investment in the fund in registered plans. would have changed in value, compared with the S&P/TSX ) you’re investing for at least three years Composite Index (Total Return). ) you can accept medium risk. $ 35,000 $30,167 $22,788 30,000 Past performance at December 31 25,000 This section shows how the fund has performed in the 20,000 (c)

SCOTIA CANADIAN DIVIDEND FUND 15,000 $12,580(d) past and gives you an idea of the risk involved. These $12,290 figures don’t tell you how the fund will perform in the 10,000 $12,164(b) (a) future. 5,000 $11,133 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Year-by-year returns 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units These charts show the fund’s annual performance, which Scotia Canadian Dividend Fund changes from year to year. S&P/TSX Composite Index (Total Return) Class F Units % Class A Units 50 (a) S&P/TSX Composite Index (Total Return) (b) Scotia Canadian Dividend Fund 40 37.56% Class I Units 30.40% 30 26.82% (c) S&P/TSX Composite Index (Total Return) 22.56% (d) Scotia Canadian Dividend Fund 20 9.91% The S&P/TSX Composite Index (Total Return) tracks the performance of some 10 of the largest and most widely held stocks listed on the Toronto Stock 2.67% 3.00% 0 Exchange. Prior to May 1, 2002, this index was called the TSE 300 -0.08% Composite Index and it tracked the 300 largest companies listed on the -4.43% -2.51% -10 Toronto Stock Exchange. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

% Class F Units 30 Annual compound returns

25 23.26% This table shows the fund’s annual compound returns, 20 compared with the S&P/TSX Composite Index (Total 15 Return). 10 Since 5 1 year 3 years 5 years 10 years inception Scotia Canadian 0 -1.40% Dividend Fund -5 2002* 2003 Class A units % 22.56 6.08 9.90 11.67 – * Jan. 21, 2002 to Dec. 31, 2002 Class F units % 23.26 – – – 10.991 2 % Class I Units Class I units%––– –36.25 40 36.25% S&P/TSX Composite Index (Total 30 Return) % 26.72 -1.01 6.54 8.59 3 1 January 21, 2002 20 2 April 28, 2003 3 Class F units 10.76% and Class I Units 41.10%

10 Distribution policy 0 2003* * April 28, 2003 to Dec. 31, 2003 The fund distributes any income by the last business day of each calendar quarter. It distributes any capital gains

EQUITY FUNDS in December of each calendar year.

94 Distributions on units held in Scotia registered plans and Ratios and supplemental data

Copilot non-registered accounts are always reinvested in 1999 2000 2001 20022 2003 additional units of the fund. Distributions on units held in Net assets (000’s) $ – – – 163 192 other registered plans and non-registered accounts are Number of units reinvested in additional units of the fund, unless you tell outstanding (000’s) – – – 7 7 3 us in writing that you want to receive cash distributions MER % – – – 0.67 0.61 by cheque or by deposit to your bank account. Portfolio turnover rate % – – – 31.06 27.06 2 These figures are for the period from January 21, 2002 to December 31, 2002. Financial highlights, Class A units 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio at December 31 SCOTIA CANADIAN DIVIDEND FUND of the fund would have been 0.82% had we not absorbed some of Distributions and net asset value per unit these expenses.

1999 2000 2001 2002 2003 Distributions Financial highlights, Class I units at December 31 from net income $ 0.48 0.45 0.47 0.37 0.32 from realized gain $ – 0.21 – – – Distributions and net asset value per unit return of capital$––––– 1999 2000 2001 2002 20034 Total annual distributions $0.480.660.470.370.32 Distributions Net asset value per unit $ 18.54 23.45 22.95 22.01 26.60 from net income$––––0.34 from realized gain $ ––––– Ratios and supplemental data return of capital$––––– Total annual distributions $––––0.34 1999 2000 2001 2002 2003 Net asset value per unit $––––26.66 Net assets (000’s) $ 829,964 926,130 905,020 869,680 38,685 Number of units outstanding (000’s) 44,775 39,493 39,430 39,509 38,711 Ratios and supplemental data MER1 %1.191.211.211.211.18 1999 2000 2001 2002 20034 Portfolio turnover rate % 19.77 21.92 28.69 31.06 27.06 Net assets (000’s) $ ––––7,949 1 We may from time to time absorb some of the operating expenses that Number of units the fund would otherwise pay. In 2003, the management expense ratio outstanding (000’s) ––––298 of the fund would have been 1.19% had we not absorbed some of MER5 %––––– these expenses. Portfolio turnover rate % ––––27.06 4 These figures are for the period from April 28, 2003 to December 31, Financial highlights, Class F units 2003. at December 31 5 We may from time to time absorb some of the operating expenses that Distributions and net asset value per unit the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.01% had we not absorbed some of these expenses. 1999 2000 2001 20022 2003 Distributions Fund expenses indirectly borne by investors from net income $ – – – 0.53 0.42 from realized gain $ –––––This example shows the fund’s expenses on a $1,000 return of capital$–––––investment with a 5% annual return. Total annual distributions $ – – – 0.53 0.42 Net asset value per unit $ – – – 21.97 26.59 Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 12.10 38.13 66.83 152.13 Class F units $ 6.25 19.71 34.55 78.64 Class I units $–––– EQUITY FUNDS

95 Scotia Canadian Blue Chip Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- equivalent securities to try to protect the fund during a Fund type Canadian large-capitalization equity fund market downturn or for other reasons. Date established December 31, 1986 The fund may participate in repurchase, reverse repur- Type of securities Class A, Class F and Class I units of a mutual fund trust chase and securities lending transactions to achieve the Eligible for Yes. Units of the fund are not foreign fund’s overall investment objectives and to enhance the registered plans? property. fund’s returns. You’ll find more information about repur- Portfolio advisor Scotia Cassels Investment Counsel chase, reverse repurchase and securities lending transac- Limited tions on page 3. SCOTIA CANADIAN BLUE CHIP FUND What does the fund invest in? Top 10 holdings at September 30, 2004 Investment objectives Manulife Financial Corporation 4.72% The fund’s objective is long-term capital growth. It invests Toronto-Dominion Bank 4.20% primarily in a broad range of high quality equity securities Bank of Montreal 3.53% of large Canadian companies. Royal Bank of Canada 3.45% Canadian Imperial Bank of Commerce 2.79% Any change to the fundamental investment objectives EnCana Corporation 2.75% must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. Canadian National Railway Company 2.68% Power Corporation of Canada 2.39% Investment strategies Sun Life Financial Services of Canada Inc. 2.26% Barrick Gold Corporation 2.16% The fund emphasizes large, well-established companies that are leaders in their industry. What are the risks of investing in the fund? The portfolio advisor uses fundamental analysis to identify The main risk of investing in this fund is equity risk. investments that have the potential for above-average growth over the long term. This involves evaluating the The fund may have these additional risks: financial condition and management of each company, as ) concentration risk well as its industry and the economy. The fund’s assets are ) diversified by industry and company to help reduce risk. foreign investment risk ) currency risk The fund may invest in other mutual funds which are ) managed by us or by other mutual fund managers. You’ll derivative risk find more information about investing in other mutual ) liquidity risk funds on page 2. ) class risk The fund can invest in foreign securities up to the foreign ) repurchase and reverse repurchase transaction risk content limit. It can invest anywhere in the world, but ) securities lending risk generally won’t invest in emerging markets. ) underlying fund risk. The portfolio advisor may: You’ll find details about each risk starting on page 164. ) use derivatives such as options, futures and forward contracts to hedge against losses from changes in stock Who should invest in this fund? prices, commodity prices, market indexes or currency exchange rates and to gain exposure to financial This fund may be suitable for you if: markets. It will only use derivatives as permitted by ) you want the growth potential of investing in high EQUITY FUNDS securities regulations. quality equity securities of large Canadian companies

96 ) you’re investing for at least three years Overall past performance ) you can accept medium risk. This chart shows how a $10,000 investment in the fund would have changed in value, compared with the S&P/TSX Past performance at December 31 Composite Index (Total Return).

$ This section shows how the fund has performed in the 40,000 past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the 30,000 $22,788 future. $16,701 20,000

Year-by-year returns SCOTIA CANADIAN BLUE CHIP FUND 10,000 $11,132(a) These charts show the fund’s annual performance, which $10,170(b) 0 changes from year to year. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 % Class A Units Class A Units 40 Scotia Canadian Blue Chip Fund 30 27.14% 23.26% S&P/TSX Composite Index (Total Return) 20 18.06% 16.19% Class F Units 10 8.03% 6.33% (a) S&P/TSX Composite Index (Total Return) 0 (b) Scotia Canadian Blue Chip Fund -5.09% The S&P/TSX Composite Index (Total Return) tracks the performance of some -10 -7.07% -7.59% of the largest and most widely held stocks listed on the Toronto Stock -20 -17.02% Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the -30 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Toronto Stock Exchange.

% Class F Units 30 Annual compound returns 20 18.87% This table shows the fund’s annual compound returns, 10 compared with the S&P/TSX Composite Index (Total 0 Return). -10 Since 1 year 3 years 5 years 10 years inception1 -20 -20.90% Scotia Canadian -30 Blue Chip Fund 2002* 2003 * Apr. 25, 2002 to Dec. 31, 2002 Class A units % 18.06 -2.40 6.55 5.26 – Class F units % 18.87 – – – 1.01 S&P/TSX Composite Index (Total Return) % 26.72 -1.01 6.54 8.59 6.65 1 Class F units only: April 25, 2002

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell

us in writing that you want to receive cash distributions EQUITY FUNDS by cheque or by deposit to your bank account.

97 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 2000 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income $ – – 0.06 – 0.05 Class A units $ 21.12 66.57 116.67 265.58 from realized gain $ – 1.33 – – – Class F units $ 11.58 36.51 64.00 145.68 return of capital$––––– Total annual distributions $ – 1.33 0.06 – 0.05 Net asset value per unit $ 18.27 19.88 18.80 15.60 18.37 SCOTIA CANADIAN BLUE CHIP FUND

Ratios and supplemental data

1999 2000 2001 2002 2003 Net assets (000’s) $ 323,844 349,603 671,576 486,653 533,296 Number of units outstanding (000’s) 17,725 17,585 35,727 31,200 29,036 MER1 %2.042.052.062.112.06 Portfolio turnover rate % 40.22 37.64 30.32 43.02 128.08 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.07% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 2001 20022 2003 Distributions from net income$––––0.05 from realized gain $ ––––– return of capital$––––– Total annual distributions $––––0.05 Net asset value per unit $ – – – 15.72 18.63

Ratios and supplemental data

1999 2000 2001 20022 2003 Net assets (000’s) $ – – – 6 20 Number of units outstanding (000’s) – – – 0.4 1.1 MER3 % – – – 1.21 1.13 Portfolio turnover rate % – – – 43.02 128.08 2 These figures are for the period from April 25, 2002 to December 31, 2002. 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.04% had we not absorbed some of these expenses. EQUITY FUNDS

98 Scotia Canadian Growth Fund

Fund details The fund may participate in repurchase, reverse repur- chase and securities lending transactions to achieve the Fund type Canadian equity fund fund’s overall investment objectives and to enhance the Date established February 20, 1961 Type of securities Class A, Class F and Class I units of a fund’s returns. You’ll find more information about repur- mutual fund trust chase, reverse repurchase and securities lending transac- Eligible for Yes. Units of the fund are not foreign tions on page 3. registered plans? property. Portfolio advisor Scotia Cassels Investment Counsel Limited Top 10 holdings at September 30, 2004

Manulife Financial Corporation 6.50% SCOTIA CANADIAN GROWTH FUND What does the fund invest in? Toronto-Dominion Bank 4.78%

Investment objectives Bank of Montreal 4.27% Royal Bank of Canada 4.10% The fund’s objective is long-term capital growth. It invests Canadian Imperial Bank of Commerce 3.28% primarily in a broad range of Canadian equity securities. Canadian National Railway Company 3.03% Any change to the fundamental investment objectives EnCana Corporation 2.91% must be approved by a majority of votes cast at a meeting BCE Inc. 2.46% of unitholders called for that purpose. Alcan Inc. 2.43% Sun Life Financial Services of Canada Inc. 2.40% Investment strategies

The portfolio advisor uses fundamental analysis to identify What are the risks of investing in the fund? investments that have the potential for above-average The main risk of investing in this fund is equity risk. The growth over the long term. This involves evaluating the fund may have these additional risks: financial condition and management of each company, as ) foreign investment risk well as its industry and the economy. The fund’s assets are diversified by industry and company to help reduce ) currency risk risk. ) derivative risk The fund may invest in other mutual funds which are ) liquidity risk managed by us or by other mutual fund managers. You’ll ) class risk find more information about investing in other mutual ) repurchase and reverse repurchase transaction risk funds on page 2. ) securities lending risk The fund can invest in foreign securities up to the foreign ) underlying fund risk. content limit. It can invest anywhere in the world, but generally won’t invest in emerging markets. You’ll find details about each risk starting on page 164.

The portfolio advisor may: Who should invest in this fund? ) use derivatives such as options, futures and forward contracts to hedge against losses from changes in stock This fund may be suitable for you if: prices, commodity prices, market indexes or currency ) you want the growth potential of investing in a broad exchange rates and to gain exposure to financial range of Canadian equity securities markets. It will only use derivatives as permitted by ) you’re investing for at least three years securities regulations. ) you can accept medium risk. ) temporarily invest the fund’s assets in cash or cash- equivalent securities to try to protect the fund during a market downturn or for other reasons. EQUITY FUNDS

99 Past performance at December 31 Overall past performance

This section shows how the fund has performed in the This chart shows how a $10,000 investment in the fund past and gives you an idea of the risk involved. These would have changed in value, compared with the S&P/TSX figures don’t tell you how the fund will perform in the Composite Index (Total Return). future. $ Year-by-year returns 30,000 $22,788 These charts show the fund’s annual performance, which $20,240 changes from year to year. 20,000

SCOTIA CANADIAN GROWTH FUND % Class A Units $12,636(d) 40 34.59% 10,000 30 26.77% $12,580(c) (a) 21.86% $11,863 19.76% (b) 20 $11,235 9.67% 10 6.79% 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 -1.17% Class A Units -10 -8.01% -6.47% Scotia Canadian Growth Fund -20 -18.37% S&P/TSX Composite Index (Total Return) -30 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class F Units (a) S&P/TSX Composite Index (Total Return) % Class F Units (b) Scotia Canadian Growth Fund 30 23.09% Class I Units 20 (c) S&P/TSX Composite Index (Total Return) 10 (d) Scotia Canadian Growth Fund The S&P/TSX Composite Index (Total Return) tracks the performance of some 0 of the largest and most widely held stocks listed on the Toronto Stock -10 Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the -20 -16.70% Toronto Stock Exchange.

-30 2002* 2003 * Jun. 14, 2002 to Dec. 31, 2002 Annual compound returns

% Class I Units This table shows the fund’s annual compound returns, 50 42.04% compared with the S&P/TSX Composite Index (Total 40 Return). Since 30 1 year 3 years 5 years 10 years inception

20 Scotia Canadian Growth Fund Class A units % 21.86 -2.38 5.28 7.31 – 10 Class F units % 23.09 – – – 8.081 2 0 Class I units%––––42.04 2003* * April 28, 2003 to Dec. 31, 2003 S&P/TSX Composite Index (Total Return) % 26.72 -1.01 6.54 8.59 3 1 June 14, 2002 2 April 28, 2003 3 Class F units 8.08% and Class I units 41.10%

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in EQUITY FUNDS additional units of the fund. Distributions on units held in

100 other registered plans and non-registered accounts are Financial highlights, Class I units reinvested in additional units of the fund, unless you tell at December 31 us in writing that you want to receive cash distributions Distributions and net asset value per unit by cheque or by deposit to your bank account. 1999 2000 2001 2001 20033 Distributions Financial highlights, Class A units from net income$––––– at December 31 from realized gain $ ––––– Distributions and net asset value per unit return of capital$––––– Total annual distributions $––––– 1999 2000 2001 2002 2003 Net asset value per unit $––––47.01 SCOTIA CANADIAN GROWTH FUND Distributions from net income$––––– from realized gain $ –––––Ratios and supplemental data return of capital$––––– 1999 2000 2001 2002 20033 Total annual distributions $––––– Net assets (000’s) $ ––––9,789 Net asset value per unit $ 45.52 49.93 46.69 38.16 46.45 Number of units outstanding (000’s) ––––208 Ratios and supplemental data MER4 %––––– Portfolio turnover rate % ––––97.30 1999 2000 2001 2002 2003 3 These figures are for the period from April 28, 2003 to December 31, Net assets (000’s) $782,761 789,552 721,648 589,100 683,131 2003. 4 Number of units We may from time to time absorb some of the operating expenses that outstanding (000’s) 17,195 15,815 15,455 15,437 14,707 the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.01% had we not absorbed some of MER % 2.24 2.27 2.29 2.32 2.29 these expenses. Portfolio turnover rate % 34.48 25.03 61.51 53.81 97.30 Fund expenses indirectly borne by investors Financial highlights, Class F units at December 31 This example shows the fund’s expenses on a $1,000 Distributions and net asset value per unit investment with a 5% annual return.

1 Fees and expenses 1999 2000 2001 2002 2003 payable over 1 year 3 years 5 years 10 years Distributions Class A units $ 23.47 74.00 129.70 295.24 from net income$–––––Class F units $ 11.89 37.48 65.70 149.55 from realized gain $ –––––Class I units $–––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – – 38.42 47.21

Ratios and supplemental data

1999 2000 2001 20021 2003 Net assets (000’s) $ – – – 18 22 Number of units outstanding (000’s) – – – 0.5 0.5 MER2 % – – – 1.07 1.16 Portfolio turnover rate % – – – 53.81 97.30 1 These figures are for the period from June 14, 2002 to December 31, 2002. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.08% had we not absorbed some of

these expenses. EQUITY FUNDS

101 Scotia Canadian Small Cap Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- equivalent securities to try to protect the fund during a Fund type Canadian small and mid-capitalization equity fund market downturn or for other reasons. Date established October 28, 1992 The fund may participate in repurchase, reverse repur- Type of securities Class A, Class F and Class I units of a mutual fund trust chase and securities lending transactions to achieve the Eligible for Yes. Units of the fund are not foreign fund’s overall investment objectives and to enhance the registered plans? property. fund’s returns. You’ll find more information about repur- Portfolio advisor Scotia Cassels Investment Counsel chase, reverse repurchase and securities lending transac- Limited tions on page 3. SCOTIA CANADIAN SMALL CAP FUND What does the fund invest in? Top 10 holdings at September 30, 2004 Investment objectives PetroKazakhstan Inc. Class A 2.69% The fund’s objective is aggressive long-term capital AltaGas Income Trust – Units 2.36% growth. It invests primarily in equity securities of small Stratos Global Corporation 2.21% and medium Canadian companies listed on major Cana- Stantec Inc. 2.08% dian stock exchanges. Canfor Corporation 2.02% Home Capital Group Inc. 1.99% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting Newalta Income Fund – Units 1.95% of unitholders called for that purpose. First Quantum Minerals Ltd. 1.90% Inmet Mining Corporation 1.81% Investment strategies Crystallex International Corporation 1.76%

The portfolio advisor uses fundamental analysis to identify What are the risks of investing in the fund? investments that have the potential for above-average growth over the long term. This involves evaluating the The main risks of investing in this fund are: financial condition and management of each company, as ) equity risk well as its industry and the economy. The fund’s assets ) are diversified by industry and company to help reduce small company risk risk. ) liquidity risk.

The fund may invest in other mutual funds which are The fund may have these additional risks: managed by us or by other mutual fund managers. You’ll ) foreign investment risk find more information about investing in other mutual ) currency risk funds on page 2. ) derivative risk The fund can invest in foreign securities up to the foreign ) class risk content limit. It can invest anywhere in the world, but generally won’t invest in emerging markets. ) repurchase and reverse repurchase transaction risk ) securities lending risk The portfolio advisor may: ) underlying fund risk. ) use derivatives such as options, futures and forward contracts to hedge against losses from changes in stock You’ll find details about each risk starting on page 164. prices, commodity prices, market indexes or currency exchange rates and to gain exposure to financial markets. It will only use derivatives as permitted by securities regulations. EQUITY FUNDS

102 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want the growth potential of investing in equity would have changed in value, compared with the S&P/TSX securities of smaller Canadian companies Composite Index (Total Return) and the BMO Nesbitt Burns Small Cap Weighted Index. ) you’re investing for at least five years $ ) you can accept higher risk. 30,000 $22,788 25,000 $17,977 $17,373 Past performance at December 31 20,000

15,000 This section shows how the fund has performed in the SCOTIA CANADIAN SMALL CAP FUND

10,000 (c) past and gives you an idea of the risk involved. These $15,227 $14,849(a) (b) figures don’t tell you how the fund will perform in the 5,000 $12,580 future. 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Year-by-year returns Class A Units Scotia Canadian Small Cap Fund These charts show the fund’s annual performance, which S&P/TSX Composite Index (Total Return) changes from year to year. BMO Nesbitt Burns Small Cap Weighted Index Class I Units % Class A Units (a) Scotia Canadian Small Cap Fund 50 43.99% 40 (b) S&P/TSX Composite Index (Total Return) (c) BMO Nesbitt Burns Small Cap Weighted Index 30 27.12% 28.35% The S&P/TSX Composite Index (Total Return) tracks the performance of some 20 of the largest and most widely held stocks listed on the Toronto Stock 10.07% 12.05% 10 7.86% Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the 0 -0.05% Toronto Stock Exchange. -10 -14.86% -16.10% -20 -19.43% The BMO Nesbitt Burns Small Cap Weighted Index measures the perform- -30 ance of small to mid-sized Canadian companies. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

% Class I Units Annual compound returns 90 80.95% 80 70 This table shows the fund’s annual compound returns, 60 compared with the S&P/TSX Composite Index (Total Return) 50 and the BMO Nesbitt Burns Small Cap Weighted Index. 40 Since 1 30 1 year 3 years 5 years 10 years inception 20 Scotia Canadian 10 Small Cap Fund 0 Class A units % 43.99 6.49 10.82 6.04 – 2003* * April 28, 2003 to Dec. 31, 2003 Class I units%––– –80.95 S&P/TSX Composite Index (Total Return) % 26.72 -1.01 6.54 8.59 41.10 BMO Nesbitt Burns Small Cap Weighted Index % 46.30 14.10 10.60 5.68 87.90 1 Class I units only: April 28, 2003

Distribution policy The fund distributes any income and capital gains in December of each calendar year. EQUITY FUNDS

103 Distributions on units held in Scotia registered plans and Ratios and supplemental data Copilot non-registered accounts are always reinvested in 1999 2000 2001 2002 20032 additional units of the fund. Distributions on units held in Net assets (000’s) $ ––––1,550 other registered plans and non-registered accounts are Number of units outstanding (000’s) ––––76 reinvested in additional units of the fund, unless you tell MER3 %––––– us in writing that you want to receive cash distributions Portfolio turnover rate % ––––55.67 by cheque or by deposit to your bank account. 2 These figures are for the period from April 28, 2003 to December 31, 2003. 3 We may from time to time absorb some of the operating expenses that Financial highlights, Class A units the fund would otherwise pay. In 2003, the management expense ratio at December 31 of the fund would have been 0.03% had we not absorbed some of these expenses. SCOTIA CANADIAN SMALL CAP FUND Distributions and net asset value per unit 1999 2000 2001 2002 2003 Fund expenses indirectly borne by investors Distributions from net income$–––––This example shows the fund’s expenses on a $1,000 from realized gain $ – 5.06 – – – investment with a 5% annual return. return of capital$––––– Fees and expenses Total annual distributions $ – 5.06 – – – payable over 1 year 3 years 5 years 10 years Net asset value per unit $ 20.42 16.75 16.75 14.05 20.23 Class A units $ 25.93 81.75 143.29 326.18 Class I units $–––– Ratios and supplemental data

1999 2000 2001 2002 2003 Net assets (000’s) 92,260 137,070 145,336 119,835 166,465 Number of units outstanding (000’s) 4,518 8,182 8,678 8,530 8,229 MER1 %2.542.532.552.652.53 Portfolio turnover rate % 48.81 77.06 58.64 39.32 55.67 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.56% had we not absorbed some of these expenses.

Financial highlights, Class I units at December 31

Distributions and net asset value per unit

1999 2000 2001 2002 20032 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $––––20.50 EQUITY FUNDS

104 Scotia Resource Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- Fund type Canadian equity fund equivalent securities to try to protect the fund during a Date established July 6, 1993 market downturn or for other reasons. Type of securities Class A and Class F units of a mutual fund trust The fund may participate in repurchase, reverse repur- Eligible for Yes. Units of the fund are not foreign chase and securities lending transactions to achieve the SCOTIA RESOURCE FUND registered plans? property. fund’s overall investment objectives and to enhance the Portfolio advisor Scotia Cassels Investment Counsel fund’s returns. You’ll find more information about repur- Limited chase, reverse repurchase and securities lending transac- What does the fund invest in? tions on page 3.

Investment objectives Top 10 holdings at September 30, 2004 The fund’s objective is aggressive long-term capital Inco Ltd. 3.24% growth. It invests primarily in equity securities of Alcan Inc. 2.98% Canadian resource based companies, including companies Cameco Corporation 2.73% that operate in the oil and gas, gold and precious metals, EnCana Corporation 2.65% metals and minerals, and forest products industries. Western Oil Sands Inc. Class A 2.63% Any change to the fundamental investment objectives Petro-Canada 2.61% must be approved by a majority of votes cast at a meeting Penn West Petroleum Ltd. 2.61% of unitholders called for that purpose. Placer Dome Inc. 2.44% Talisman Energy Inc. 2.36% Investment strategies Canadian Natural Resources Ltd. 2.22% The portfolio advisor uses fundamental analysis to identify investments that have the potential for above-average What are the risks of investing in the fund? growth over the long term. This involves evaluating the financial condition and management of each company, as The main risks of investing in this fund are: well as its industry and the economy. The fund’s assets are ) equity risk diversified by industry and company to help reduce risk. ) concentration risk The fund may invest in other mutual funds which are ) currency risk managed by us or by other mutual fund managers. You’ll ) liquidity risk. find more information about investing in other mutual funds on page 2. The fund may have these additional risks: ) foreign investment risk The fund can invest in foreign securities up to the foreign content limit. It can invest anywhere in the world, but ) derivative risk generally won’t invest in emerging markets. ) class risk The portfolio advisor may: ) repurchase and reverse repurchase transaction risk ) use derivatives such as options, futures and forward ) securities lending risk contracts to hedge against losses from changes in stock ) underlying fund risk. prices, commodity prices, market indexes or currency exchange rates and to gain exposure to financial You’ll find details about each risk starting on page 164. markets. It will only use derivatives as permitted by securities regulations. EQUITY FUNDS

105 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want the growth potential of investing in the would have changed in value, compared with the S&P/TSX resource sector Composite Index (Total Return). $ SCOTIA RESOURCE FUND ) you’re investing for at least five years 40,000 ) You can accept higher risk. 30,000 $22,788 Past performance at December 31 20,000

This section shows how the fund has performed in the $10,989 10,000 past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. future. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units On October 1, 2001, unitholders of the fund approved Scotia Resource Fund changes in the investment objectives of the fund. The S&P/TSX Composite Index (Total Return) The S&P/TSX Composite Index (Total Return) tracks the performance of some fund’s investment objectives were restricted to invest- of the largest and most widely held stocks listed on the Toronto Stock ments in precious metals and equity securities of Exchange. Prior to May 1, 2002, this index was called the TSE 300 Composite Index and it tracked the 300 largest companies listed on the companies directly or indirectly involved in the develop- Toronto Stock Exchange. ment or distribution of precious metals. Effective Novem- ber 30, 2001, the fund’s investment objectives were Annual compound returns expanded to include all resource based companies. Had This table shows the fund’s annual compound returns, this change been in effect throughout the periods compared with the S&P/TSX Composite Index (Total reported below, the number of investment opportunities Return). for the fund may have increased, which may have reduced the fund’s portfolio volatility. 1 year 3 years 5 years 10 years Scotia Resource Fund Year-by-year returns Class A units % 42.26 28.07 10.85 0.95 S&P/TSX Composite Index This chart shows the fund’s annual performance, which (Total Return) % 26.72 -1.01 6.54 8.59 changes from year to year. Distribution policy % Class A Units 60 45.80% 50 42.26% The fund distributes any income and capital gains in 40 30 24.80% December of each calendar year. Gains realized from 20 18.33% 10 4.45% trading in precious metals will result in distributions of 0 income rather than capital gains. -10 -4.29% -11.70% -20 -19.38% -16.76% -30 Distributions on units held in Scotia registered plans and -40 -39.43% Copilot non-registered accounts are always reinvested in -50 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

106 Financial highlights, Class A units at December 31

Distributions and net asset value per unit

1999 2000 2001 2002 2003 Distributions from net income$––––– SCOTIA RESOURCE FUND from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ 5.12 4.90 6.12 7.24 10.29

Ratios and supplemental data

1999 2000 2001 2002 2003 Net assets (000’s) $ 36,407 30,633 32,888 36,813 51,962 Number of units outstanding (000’s) 7,111 6,251 5,378 5,087 5,048 MER % 2.34 2.34 2.38 2.27 2.24 Portfolio turnover rate % 32.22 13.45 79.42 46.59 44.55

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 22.96 72.38 126.87 288.79 EQUITY FUNDS

107 Scotia American Stock Index Fund Fund details Top 10 holdings at September 30, 2004

Fund type U.S. equity fund General Electric Company 3.36% Date established December 31, 1996 Exxon Mobil Corporation 2.97% Type of securities Class A, Class F and Class I units of a Microsoft Corporation 2.86% mutual fund trust Eligible for Yes. Units of the fund are foreign Citigroup Inc. 2.19% registered plans? property. Pfizer Inc. 2.18% Portfolio advisor State Street Global Advisors, Ltd. Wal-Mart Stores Inc. 2.13% Bank of America Corporation 1.69% What does the fund invest in? American International Group Inc. 1.67%

Investment objectives Johnson & Johnson 1.60% SCOTIA AMERICAN STOCK INDEX FUND JPMorgan Chase & Company 1.36% The fund’s objective is long-term capital growth by tracking the performance of a generally recognized U.S. What are the risks of investing in the fund? equity index, currently the Standard & Poor’s 500 (S&P 500) Index1. It invests primarily in the stocks that The main risks of investing in this fund are: are included in the index. ) equity risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) index risk of unitholders called for that purpose. ) concentration risk

Investment strategies ) liquidity risk.

The portfolio advisor aims to track the performance of the The fund may have these additional risks: S&P 500 Index (Total Return) as closely as possible by: ) derivative risk ) investing in the stocks that are included in the ) repurchase and reverse repurchase transaction risk S&P 500 Index (Total Return) in substantially the same ) proportion as they’re weighted in the Index securities lending risk ) ) keeping the portfolio as fully invested as possible underlying fund risk. ) minimizing transaction costs. You’ll find details about each risk starting on page 164.

The portfolio advisor may use derivatives such as options, Who should invest in this fund? futures and forward contracts to gain exposure to the S&P 500 Index. It will only use derivatives as permitted This fund may be suitable for you if: by securities regulations. ) you want the growth potential of U.S. equity securities The fund may participate in repurchase, reverse repur- while tracking the performance of a major market chase and securities lending transactions to achieve the index fund’s overall investment objectives and to enhance the ) you’re investing for at least three years fund’s returns. You’ll find more information about repur- ) you can accept higher risk. chase, reverse repurchase and securities lending transac- tions on page 3.

1 The Standard & Poor’s 500 Index is published by Standard & Poor’s, a division of the McGraw-Hill Companies Inc. Standard & Poor’s has no

EQUITY FUNDS connection with Scotia Securities Inc. and has not passed upon the merits of investing in the fund.

108 Past performance at December 31 Distribution policy

This section shows how the fund has performed in the The fund distributes any income and capital gains in past and gives you an idea of the risk involved. These December of each calendar year. figures don’t tell you how the fund will perform in the future. Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in Year-by-year returns additional units of the fund. Distributions on units held in This chart shows the fund’s annual performance, which other registered plans and non-registered accounts are changes from year to year. reinvested in additional units of the fund, unless you tell % Class A Units 40 us in writing that you want to receive cash distributions 33.72% 34.62% 30 by cheque or by deposit to your bank account. SCOTIA AMERICAN STOCK INDEX FUND 20 13.10% 10 Financial highlights, Class A units 3.91% 0 at December 31 -10 -6.87% -7.45% Distributions and net asset value per unit -20 1999 2000 2001 2002 2003 -23.65% -30 Distributions 1997 1998 1999 2000 2001 2002 2003 from net income $ 0.36 0.08 0.05 0.15 0.09 Overall past performance from realized gain $ ––––– This chart shows how a $10,000 investment in the fund return of capital$––––– would have changed in value, compared with the S&P 500 Total annual distributions $ 0.36 0.08 0.05 0.15 0.09 Index (Total Return). Net asset value per unit $ 19.85 18.41 16.98 12.82 13.23 $ 30,000 Ratios and supplemental data 25,000 1999 2000 2001 2002 2003 20,000 Net assets (000’s) $ 108,937 156,093 155,996 103,603 99,442 $15,711 15,000 Number of units $13,922 outstanding (000’s) 5,489 8,480 9,187 8,084 7,515 10,000 MER1 %0.950.950.990.991.00 5,000 Portfolio turnover rate % 3.41 7.16 5.63 12.04 1.45 0 1 We may from time to time absorb some of the operating expenses that Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. the fund would otherwise pay. In 2003, the management expense ratio 1996 1997 1998 1999 2000 2001 2002 2003 of the fund would have been 1.43% had we not absorbed some of Class A Units these expenses. Scotia American Stock Index Fund S&P 500 Index (Total Return) Fund expenses indirectly borne by investors The S&P 500 Index (Total Return) is an index of 500 stocks weighted by capitalization and representing all major U.S. industries. It’s a broad measure of the U.S. economy. This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. Annual compound returns Fees and expenses This table shows the fund’s annual compound returns, payable over 1 year 3 years 5 years 10 years compared with the S&P 500 Index (Total Return) Class A units $ 10.25 32.31 56.64 128.92 Since 1 year 3 years 5 years inception Scotia American Stock Index Fund Class A units % 3.91 -9.78 -5.01 4.84 S&P 500 Index (Total Return) % 5.24 -8.74 -3.94 6.67 EQUITY FUNDS

109 Scotia American Growth Fund

Fund details The portfolio advisor may actively trade the fund’s investments. This can increase trading costs, which may Fund type U.S. equity fund lower the fund’s returns. It also increases the chance that Date established December 31, 1986 Type of securities Class A, Class F and Class I units of a you’ll receive taxable capital gains if you hold the fund in mutual fund trust a non-registered account. Eligible for Yes. Units of the fund are foreign registered plans? property. The fund may participate in repurchase, reverse repur- Portfolio advisor Scotia Cassels Investment Counsel chase and securities lending transactions to achieve the Limited fund’s overall investment objectives and to enhance the

SCOTIA AMERICAN GROWTH FUND fund’s returns. You’ll find more information about repur- What does the fund invest in? chase, reverse repurchase and securities lending transac- Investment objectives tions on page 3.

The fund’s objective is long-term capital growth. It invests Top 10 holdings at September 30, 2004 primarily in a broad range of U.S. equity securities. General Electric Company 3.54% Any change to the fundamental investment objectives Pfizer Inc. 3.09% must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. Microsoft Corporation 2.23% Citigroup Inc. 2.21% Investment strategies Exxon Mobil Corporation 2.19% The portfolio advisor uses fundamental analysis to identify Johnson & Johnson 2.14% investments that have the potential for above-average ConocoPhillips 2.06% growth over the long term. This involves evaluating the JPMorgan Chase & Company 1.97% financial condition and management of each company, as Procter & Gamble Company 1.94% well as its industry and the economy. The fund’s assets Bank of America Corporation 1.91% are diversified by industry and company to help reduce risk. What are the risks of investing in the fund? The fund may invest a portion of its assets in securities of companies located outside the U.S. and Canada. It The main risks of investing in this fund are: generally won’t invest in emerging markets. ) equity risk The fund may invest in other mutual funds which are ) currency risk. managed by us or by other mutual fund managers. You’ll The fund may have these additional risks: find more information about investing in other mutual funds on page 2. ) foreign investment risk ) derivative risk The portfolio advisor may: ) class risk ) use derivatives such as options, futures and forward ) repurchase and reverse repurchase transaction risk contracts to hedge against losses from changes in stock prices, commodity prices, market indexes or currency ) securities lending risk exchange rates and to gain exposure to financial ) underlying fund risk. markets. It will only use derivatives as permitted by securities regulations. You’ll find details about each risk starting on page 164.

) temporarily invest the fund’s assets in cash or cash- equivalent securities to try to protect the fund during a market downturn or for other reasons. EQUITY FUNDS

110 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want the growth potential of investing in equity would have changed in value, compared with the Standard securities of U.S. companies and Poor’s 500 (S&P 500) Index (Total Return). $ ) you’re investing for at least three years 50,000 ) you can accept higher risk. 40,000

30,000 $27,865 Past performance at December 31

$14,451 SCOTIA AMERICAN GROWTH FUND 20,000 (c) $10,988(d) This section shows how the fund has performed in the $10,342 10,000 past and gives you an idea of the risk involved. These $9,791(a) $8,324(b) figures don’t tell you how the fund will perform in the 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. future. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units Year-by-year returns Scotia American Growth Fund These charts show the fund’s annual performance, which S&P 500 Index (Total Return) changes from year to year. Class F Units (a) S&P 500 Index (Total Return) % Class A Units 40 (b) Scotia American Growth Fund 30 28.07% 28.27% Class I Units 21.37% (c) S&P 500 Index (Total Return) 20 11.40% 10.79% (d) Scotia American Growth Fund 10 4.56% The S&P 500 Index (Total Return) is an index of 500 stocks weighted by 0 capitalization and representing all major U.S. industries. It’s a broad measure -4.27% of the U.S. economy. -10 -11.88% -12.69% -20 -23.75% Annual compound returns -30 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 This table shows the fund’s annual compound returns, % Class F Units 5 compared with the S&P 500 Index (Total Return). 0 Since 1 year 3 years 5 years 10 years inception -5 -3.36% -10 Scotia American Growth Fund -15 Class A units % -4.27 -13.94 -9.05 3.75 – -20 1 -25 Class F units % -3.36 – – – -11.51 -25.80% 2 -30 Class I units%––––5.17 -35 S&P 500 Index 2002* 2003 (Total Return) % 5.24 -8.74 -3.94 10.79 3 * June 14, 2002 to Dec. 31, 2002 1 June 14, 2002 2 % Class I Units April 28, 2003 10 3 Class F units -1.40% and Class I units 15.17%

8 Distribution policy 6 5.17% The fund distributes any income and capital gains in 4 December of each calendar year. 2 Distributions on units held in Scotia registered plans and 0 2003* Copilot non-registered accounts are always reinvested in * April 28, 2003 to Dec. 31, 2003 additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are EQUITY FUNDS reinvested in additional units of the fund, unless you tell

111 us in writing that you want to receive cash distributions Financial highlights, Class I units by cheque or by deposit to your bank account. at December 31 Distributions and net asset value per unit

Financial highlights, Class A units 1999 2000 2001 2002 20034 at December 31 Distributions Distributions and net asset value per unit from net income$––––– from realized gain $ ––––– 1999 2000 2001 2002 2003 return of capital$––––– Distributions Total annual distributions $–––––

SCOTIA AMERICAN GROWTH FUND from net income$–––––Net asset value per unit $––––9.22 from realized gain $ ––––– return of capital$––––– Ratios and supplemental data Total annual distributions $––––– Net asset value per unit $ 16.19 14.26 12.45 9.50 9.09 1999 2000 2001 2002 20034 Net assets (000’s) $ ––––2,111 Ratios and supplemental data Number of units outstanding (000’s) ––––229 1999 2000 2001 2002 2003 MER5 %––––– Net assets (000’s) $286,864 301,178 297,587 206,582 172,328 Portfolio turnover rate % ––––110.99 Number of units 4 These figures are for the period from April 28, 2003 to December 31, outstanding (000’s) 17,724 21,116 23,895 21,756 18,958 2003. 1 MER % 2.21 2.23 2.30 2.34 2.35 5 We may from time to time absorb some of the operating expenses that Portfolio turnover rate % 60.44 54.03 62.12 65.57 110.99 the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.02% had we not absorbed some of 1 We may from time to time absorb some of the operating expenses that these expenses. the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.37% had we not absorbed some of these expenses. Fund expenses indirectly borne by investors

Financial highlights, Class F units This example shows the fund’s expenses on a $1,000 at December 31 investment with a 5% annual return. Distributions and net asset value per unit Fees and expenses 1999 2000 2001 20022 2003 payable over 1 year 3 years 5 years 10 years Class A units $ 24.09 75.94 133.10 302.97 Distributions Class F units $ 14.35 45.24 79.29 180.49 from net income$––––– from realized gain $ –––––Class I units $–––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – – 9.56 9.24

Ratios and supplemental data

1999 2000 2001 20022 2003 Net assets (000’s) $ – – – 4 4 Number of units outstanding (000’s) – – – 0.4 0.4 MER3 % – – – 1.43 1.40 Portfolio turnover rate % – – – 65.57 110.99 2 These figures are for the period from June 14, 2002 to December 31, 2002. 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio

EQUITY FUNDS of the fund would have been 12.08% had we not absorbed some of these expenses.

112 Scotia CanAm Stock Index Fund

Fund details chase, reverse repurchase and securities lending transac- Fund type U.S. equity fund tions on page 3. Date established July 9, 1993 Type of securities Class A and Class F units of a mutual Top 10 holdings at September 30, 2004 fund trust Eligible for Yes. Units of the fund are not foreign General Electric Company 3.41% registered plans? property. Exxon Mobil Corporation 3.02% Portfolio advisor Scotia Cassels Investment Counsel Microsoft Corporation 2.89% Limited Pfizer Inc. 2.22% Citigroup Inc. 2.20%

What does the fund invest in? Wal-Mart Stores Inc. 2.17% SCOTIA CANAM STOCK INDEX FUND Investment objectives American International Group Inc. 1.70% Bank of America Corporation 1.70% The fund’s objective is long-term capital growth by Johnson & Johnson 1.61% tracking the performance of a generally recognized International Business Machines Corporation 1.38% U.S. equity index, while maintaining 100% eligibility for The fund has indirect exposure to these securities through its investments in registered plans. The fund currently tracks the Standard & derivatives and money market instruments. Poor’s 500 (S&P 500) Index1. It invests primarily in What are the risks of investing in the fund? futures contracts that are linked to the performance of the index and in cash, Government of Canada treasury The main risks of investing in this fund are: bills and other short-term debt instruments guaranteed by ) derivative risk the Government of Canada. ) equity risk Any change to the fundamental investment objectives ) currency risk must be approved by a majority of votes cast at a meeting ) index risk of unitholders called for that purpose. ) concentration risk

Investment strategies ) liquidity risk.

The portfolio advisor aims to track the performance of the The fund may have these additional risks: S&P 500 Index as closely as possible by using futures ) repurchase and reverse repurchase transaction risk contracts that are linked to the performance of the ) securities lending risk S&P 500 Index. It invests the balance of its assets in cash ) and Canadian treasury bills and other short-term debt underlying fund risk. instruments guaranteed by the Government of Canada. You’ll find details about each risk starting on page 164. This allows the fund to maintain 100% registered plan eligibility and to cover its positions in the futures Who should invest in this fund? contracts. The fund will only use derivatives as permitted This fund may be suitable for you if: by securities regulations. ) you hold your units in a registered plan other than an The fund may participate in repurchase, reverse repur- RESP chase and securities lending transactions to achieve the ) you want the growth potential of U.S. equity securities fund’s overall investment objectives and to enhance the while tracking the performance of a major market index fund’s returns. You’ll find more information about repur- ) you’re investing for at least three years ) you can accept higher risk.

1 The Standard & Poor’s 500 Index is published by Standard & Poor’s, a division of the McGraw-Hill Companies Inc. Standard & Poor’s has no

connection with Scotia Securities Inc. and has not passed upon the merits EQUITY FUNDS of investing in the fund.

113 This fund isn’t suitable for non-registered accounts or Annual compound returns RESPs because the foreign content limit doesn’t apply to This table shows the fund’s annual compound returns, these accounts. The fund’s distributions are primarily compared with the S&P 500 Index (Total Return). considered income, which is taxed at a higher rate than 1 year 3 years 5 years 10 years capital gains when received outside of a registered plan. Scotia CanAm Stock Index Fund Class A units % 3.55 -10.28 -5.92 6.77 Past performance at December 31 S&P 500 Index (Total Return) % 5.24 -8.74 -3.94 10.79 This section shows how the fund has performed in the past and gives you an idea of the risk involved. These Distribution policy figures don’t tell you how the fund will perform in the The fund distributes any income and capital gains in SCOTIA CANAM STOCK INDEX FUND future. December of each calendar year.

Year-by-year returns Distributions on units held in Scotia registered plans and This chart shows the fund’s annual performance, which Copilot non-registered accounts are always reinvested in changes from year to year. additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are % Class A Units 50 reinvested in additional units of the fund, unless you tell 40 35.77% us in writing that you want to receive cash distributions 30 27.95% 25.25% 20 19.49% 17.51% by cheque or by deposit to your bank account.

10 3.55% 0.51% 0 Financial highlights, Class A units -10 -8.02% at December 31 -13.17% -20 Distributions and net asset value per unit -30 -24.16% 1999 2000 2001 2002 2003 -40 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Distributions Overall past performance from net income$1.28–––– from realized gain $ ––––– This chart shows how a $10,000 investment in the fund return of capital$––––– would have changed in value, compared with the S&P 500 Total annual distributions $1.28–––– Index (Total Return). Net asset value per unit $ 13.36 11.60 10.67 8.10 8.38 $ 50,000 Ratios and supplemental data 40,000 1999 2000 2001 2002 2003

$27,865 Net assets (000’s) $ 598,266 593,377 508,419 355,581 316,650 30,000 Number of units 20,000 outstanding (000’s) 44,764 51,133 47,633 43,925 37,776 1 $19,258 MER %1.431.431.431.431.43 10,000 Portfolio turnover rate % ––––– 0 1 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. We may from time to time absorb some of the operating expenses that 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 the fund would otherwise pay. In 2003, the management expense ratio Class A Units of the fund would have been 1.63% had we not absorbed some of Scotia CanAm Stock Index Fund these expenses. S&P 500 Index (Total Return) The S&P 500 Index (Total Return) is an index of 500 stocks weighted by Fund expenses indirectly borne by investors capitalization and representing all major U.S. industries. It’s a broad measure of the U.S. economy. This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 14.66 46.21 80.99 184.36 EQUITY FUNDS

114 Scotia Nasdaq Index Fund Fund details Top 10 holdings at September 30, 2004

Fund type U.S. equity fund Microsoft Corporation 10.41% Date established December 15, 2000 Intel Corporation 4.46% Type of securities Class A and Class F units of a mutual fund trust Cisco Systems Inc. 4.24% Eligible for Yes. Units of the fund are not foreign Dell Inc. 3.08% registered plans? property. Amgen Inc. 2.48% Portfolio advisor Scotia Cassels Investment Counsel

Limited Qualcomm Inc. 2.20% SCOTIA NASDAQ INDEX FUND eBay Inc. 2.10% What does the fund invest in? Oracle Corporation 2.02% Investment objectives Yahoo Inc. 1.60% The fund’s objective is aggressive long-term capital growth Comcast Corporation 1.33% 1 The fund has indirect exposure to these securities through its investments in by tracking the performance of the Nasdaq 100 Index , derivatives and money market instruments. while maintaining 100% eligibility for registered plans. It invests primarily in derivatives that are linked to the What are the risks of investing in the fund? performance of the Nasdaq 100 Index, and in cash and money market instruments. The main risks of investing in this fund are: Any change to the fundamental investment objectives ) derivative risk must be approved by a majority of votes cast at a meeting ) equity risk of unitholders called for that purpose. ) currency risk Investment strategies ) index risk The fund aims to track the performance of the Nasdaq 100 Index as closely as possible by using derivatives such ) concentration risk as options, futures and forward contracts that are linked ) liquidity risk. to the performance of the Nasdaq 100 Index. The portfolio advisor may choose to invest directly in stocks that are The fund may have these additional risks: included in the Nasdaq 100 Index, up to the foreign ) repurchase and reverse repurchase transaction risk content limit. ) securities lending risk The fund invests the balance of its assets in cash and money market instruments. This allows the fund to ) underlying fund risk. maintain 100% registered plan eligibility and to cover its You’ll find details about each risk starting on page 164. positions in the derivatives. The fund will only use derivatives as permitted by securities regulations. Who should invest in this fund? The fund may participate in repurchase, reverse repur- chase and securities lending transactions to achieve the This fund may be suitable for you if: fund’s overall investment objectives and to enhance the ) you hold your units in a registered plan other than an fund’s returns. You’ll find more information about repur- RESP chase, reverse repurchase and securities lending transac- tions on page 3. ) you want the growth potential of investing in U.S. During the 12 month period immediately preceding equity securities while tracking the performance of a October 29, 2004, Microsoft Corporation represented a major market index maximum of approximately 11.1% of the Nasdaq 100 ) you’re investing for at least five years Index. ) you can accept higher risk.

1 The Nasdaq 100 Index is published by The Nasdaq Stock Market, Inc. The

Nasdaq Stock Market, Inc. has no connection with Scotia Securities Inc. EQUITY FUNDS and has not passed upon the merits of investing in the fund.

115 This fund isn’t suitable for non-registered accounts or Overall past performance RESPs because the foreign content limit doesn’t apply to This chart shows how a $10,000 investment in the fund these accounts. The fund’s distributions are primarily would have changed in value, compared with the Nasdaq considered income, which is taxed at a higher rate than 100 Index. capital gains when received outside of a registered plan. $ 14,000 Past performance at December 31 12,000

SCOTIA NASDAQ INDEX FUND 10,000 This section shows how the fund has performed in the $8,354(a) 8,000 past and gives you an idea of the risk involved. These $8,002(b) 6,000 figures don’t tell you how the fund will perform in the $4,902 4,000 $4,805 future. 2,000

Year-by-year returns 0 Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 These charts show the fund’s annual performance, which Class A Units changes from year to year. Scotia Nasdaq Index Fund Nasdaq 100 Index % Class A Units 30 Class F Units 25 21.21% (a) Nasdaq 100 Index 20 15 (b) Scotia Nasdaq Index Fund 10 5 The Nasdaq 100 Index is an index of the 100 largest non-financial 0 companies listed on Nasdaq. -5 -10 -9.50% -15 -20 -25 Annual compound returns -30 -28.71% -35 -40 -38.54% This table shows the fund’s annual compound returns, -45 2000 2001 2002 2003 compared with the Nasdaq 100 Index.

Since % Class F Units 30 1 year 3 years inception 22.67% 20 Scotia Nasdaq Index Fund 10 5.56% Class A units % 21.21 -19.02 -21.41 0 Class F units % 22.67 – -8.021 -10 Nasdaq 100 Index % 21.97 -18.60 2 -20 1 April 2, 2001 -30 2 Class A units -20.89% and Class F units -6.52% -40 -38.20% -50 2001* 2002 2003 Distribution policy * Apr. 2, 2001 to Dec. 31, 2001 The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

116 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 This example shows the fund’s expenses on a $1,000 Distributions and net asset value per unit investment with a 5% annual return. 1999 20001 2001 2002 2003 Fees and expenses Distributions payable over 1 year 3 years 5 years 10 years from net income$–––––Class A units $ 10.46 32.96 57.77 131.50 from realized gain $ –––––Class F units $ 5.95 18.74 32.85 74.78 SCOTIA NASDAQ INDEX FUND return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 8.41 6.00 3.68 4.47

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 6,682 17,814 16,249 20,732 Number of units outstanding (000’s) – 795 2,971 4,410 4,642 MER2 % – 0.86 0.95 0.98 1.02 1 These figures are for the period from November 30, 2000 to Decem- ber 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 1.39% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 20012 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – –6.033.734.57

Ratios and supplemental data

1999 2000 20012 2002 2003 Net assets (000’s) $ – – 12 10 14 Number of units outstanding (000’s) – – 2 3 3 MER3 %– –0.430.550.58 Portfolio turnover rate % ––––– 2 These figures are for the period from April 2, 2001 to December 31, 2001. 3 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 6.24% had we not absorbed some of these expenses. EQUITY FUNDS

117 Scotia Young Investors Fund

Fund details fund’s overall investment objectives and to enhance the fund’s returns. You’ll find more information about repur- Fund type Global equity fund chase, reverse repurchase and securities lending transac- Date established December 15, 2000 Type of securities Class A units of a mutual fund trust tions on page 3. Eligible for Yes. Units of the fund are foreign The fund educates children and young adults about registered plans? property. investing and personal finance through a variety of Portfolio advisor Scotia Cassels Investment Counsel Limited educational materials paid for by the fund. Top 10 holdings at September 30, 2004 SCOTIA YOUNG INVESTORS FUND What does the fund invest in? Procter & Gamble Company 2.59% Investment objectives Deutsche Boerse AG 2.48% The fund’s objective is long-term capital growth. It invests Bayerische Motoren Werke AG 2.24% primarily in equity securities of medium and large Groupe Danone 2.23% companies around the world that produce goods and Nike Inc. Class B 2.15% services that are directly or indirectly related to, and are PepsiCo Inc. 2.12% recognized by, children or teenagers. Microsoft Corporation 2.11% Any change to the fundamental investment objectives Siemens AG 2.08% must be approved by a majority of votes cast at a meeting Best Buy Company Inc. 2.07% of unitholders called for that purpose. Canon Inc. 2.05%

Investment strategies What are the risks of investing in the fund? The portfolio advisor uses fundamental analysis to identify The main risks of investing in this fund are: investments that have the potential for above-average ) equity risk growth over the long term. This involves evaluating the financial condition and management of each company, as ) foreign investment risk well as its industry and the economy. The fund’s assets are ) currency risk. diversified by industry and company to help reduce risk. The fund may also have these additional risks: The fund can invest anywhere in the world, but generally ) won’t invest in emerging markets. derivative risk ) The fund may invest in other mutual funds which are repurchase and reverse repurchase transaction risk managed by us or by other mutual fund managers. You’ll ) securities lending risk find more information about investing in other mutual ) underlying fund risk (as at October 1, 2004, Scotia funds on page 2. Securities Inc., Toronto, Ontario held approximately The portfolio advisor may: 49.6% of the outstanding units of the fund.) ) use derivatives such as options, futures and forward You’ll find details about each risk starting on page 164. contracts to hedge against losses from changes in stock Who should invest in this fund? prices, commodity prices, market indexes or currency exchange rates and to gain exposure to financial This fund may be suitable for you if: markets. It will only use derivatives as permitted by ) you want the growth potential of investing in equity securities regulations. securities of foreign companies ) temporarily invest the fund’s assets in cash or cash- ) you’re investing for at least three years equivalent securities to try to protect the fund during a ) you can accept medium-to-higher risk market downturn or for other reasons. ) you want to help educate children and young adults The fund may participate in repurchase, reverse repur- about investing and personal finance. EQUITY FUNDS chase and securities lending transactions to achieve the

118 Past performance at December 31 Distribution policy

This section shows how the fund has performed in the The fund distributes any income and capital gains in past and gives you an idea of the risk involved. These December of each calendar year. figures don’t tell you how the fund will perform in the future. Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in Year-by-year returns additional units of the fund. Distributions on units held in This chart shows the fund’s annual performance, which other registered plans and non-registered accounts are changes from year to year.

reinvested in additional units of the fund, unless you tell SCOTIA YOUNG INVESTORS FUND

% us in writing that you want to receive cash distributions 5 by cheque or by deposit to your bank account. 1.20% 0.72% 0 Financial highlights -5 at December 31 -6.77% -10 Distributions and net asset value per unit

-15 1999 20001 2001 2002 2003 -16.91% Distributions -20 2000 2001 2002 2003 from net income $ – 0.01 – – – Overall past performance from realized gain $ ––––– return of capital$––––– This chart shows how a $10,000 investment in the fund Total annual distributions $ – 0.01 – – – would have changed in value, compared with the Morgan Net asset value per unit $ – 9.90 9.23 7.67 7.73 Stanley Capital International (MSCI) World Index.

$ Ratios and supplemental data 15,000

1999 20001 2001 2002 2003

10,000 Net assets (000’s) $ – 7,730 9,760 10,337 11,355 $7,896 Number of units outstanding (000’s) – 781 1,057 1,347 1,470 $7,673 5,000 MER2 % – 2.14 2.56 2.69 2.61 Portfolio turnover rate % – – 14.31 6.19 9.88 0 1 Dec. 15 Dec. Dec. Dec. Dec. These figures are for the period from November 30, 2000 to 2000 2000 2001 2002 2003 December 31, 2000. Scotia Young Investors Fund 2 We may from time to time absorb some of the operating expenses that MSCI World Index the fund would otherwise pay. In 2003, the management expense ratio The MSCI World Index is an index of approximately 1,600 companies listed of the fund would have been 2.95% had we not absorbed some of on stock exchanges in the 22 countries that make up the MSCI national these expenses. indexes.

Annual compound returns Fund expenses indirectly borne by investors

This table shows the fund’s annual compound returns, This example shows the fund’s expenses on a $1,000 compared with the MSCI World Index. investment with a 5% annual return. Since 1 year 3 years inception Fees and expenses Scotia Young Investors Fund % 0.72 -7.94 -7.53 payable over 1 year 3 years 5 years 10 years MSCI World Index % 8.87 -8.62 -8.34 $ 26.75 84.34 147.82 336.49 EQUITY FUNDS

119 Scotia International Stock Index Fund Fund details Top 10 holdings at September 30, 2004

Fund type International equity fund Government of Canada Treasury Bills 16.64% Date established November 8, 1999 Province of Ontario Residual Bond 2.05% 030805 8.90% Type of securities Class A, Class F and Class I units of a Toronto-Dominion Bank Bankers’ Acceptances 8.76% mutual fund trust Royal Bank of Canada 2.11% 070605 7.83% Eligible for Yes. Units of the fund are not foreign registered plans? property. Bank of Montreal Bankers’ Acceptances 7.59% Portfolio advisor State Street Global Advisors, Ltd. Province of Quebec Promissory Notes 6.38% Canadian Imperial Bank of Commerce 2.45% 061305 5.87% What does the fund invest in? HSBC Bank of Canada Bearers’ Deposit Notes 4.67% Investment objectives Government of Canada Residual Bond 2.75% 100104 4.50% The fund’s objective is long-term capital growth by GE Capital Canada Funding Company 2.33% 042805 4.50% tracking the performance of generally recognized indexes

SCOTIA INTERNATIONAL STOCK INDEX FUND What are the risks of investing in the fund? of established international stock markets, while maintain- ing 100% eligibility for registered plans. It invests The main risks of investing in this fund are: primarily in futures contracts that are linked to the ) derivative risk performance of the indexes, and in cash and money ) equity risk market instruments. ) foreign investment risk Any change to the fundamental investment objectives ) concentration risk. must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. The fund may have these additional risks: ) Investment strategies currency risk ) The fund currently tracks the performance of indexes of emerging markets risk established stock markets in Europe, Australasia and the ) repurchase and reverse repurchase transaction risk Far East. The portfolio advisor aims to track the ) securities lending risk performance of the indexes as closely as possible by using ) underlying fund risk. futures contracts that are linked to the performance of these indexes. It invests the balance of its assets in cash You’ll find details about each risk starting on page 164. and money market instruments. This allows the fund to Who should invest in this fund? maintain 100% registered plan eligibility and to cover its positions in the futures contracts. The fund will only use This fund may be suitable for you if: derivatives as permitted by securities regulations. ) you hold your units in a registered plan other than an RESP The fund may participate in repurchase, reverse repur- chase and securities lending transactions to achieve the ) you want the growth potential of foreign equity fund’s overall investment objectives and to enhance the securities while tracking the performance of major fund’s returns. You’ll find more information about repur- market indexes chase, reverse repurchase and securities lending transac- ) you’re investing for at least three years tions on page 3. ) you can accept higher risk.

This fund isn’t suitable for non-registered accounts or RESPs because the foreign content limit doesn’t apply to these accounts. The fund’s distributions are primarily considered income, which is taxed at a higher rate than capital gains when received outside of a registered plan. EQUITY FUNDS

120 Past performance at December 31 Annual compound returns This section shows how the fund has performed in the past This table shows the fund’s annual compound returns, and gives you an idea of the risk involved. These figures compared with the MSCI EAFE Index. don’t tell you how the fund will perform in the future. Since 1 year 3 years inception Year-by-year returns Scotia International Stock Index Fund These charts show the fund’s annual performance, which Class A units % 13.33 -8.75 -7.55 changes from year to year. Class I units – – 37.771 MSCI EAFE Index % 13.35 -7.66 2 % Class A Units 20 1 April 28, 2003 15 13.33% 2 Class A units -5.70% and Class I units 38.03% 10 9.80% 5 0 Distribution policy -5 The fund distributes any income and capital gains in -10 SCOTIA INTERNATIONAL STOCK INDEX FUND -15 -13.61% December of each calendar year. -17.29% -20 -18.93% -25 Distributions on units held in Scotia registered plans and 1999 2000 2001 2002 2003 Copilot non-registered accounts are always reinvested in

% Class I Units additional units of the fund. Distributions on units held in 50 other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell 40 37.77% us in writing that you want to receive cash distributions 30 by cheque or by deposit to your bank account.

20 Financial highlights, Class A units 10 at December 31

0 2003* Distributions and net asset value per unit * April 28, 2003 to Dec. 31, 2003 19991 2000 2001 2002 2003 Overall past performance Distributions from net income$0.57–––– This chart shows how a $10,000 investment in the fund from realized gain $ ––––– would have changed in value, compared with the Morgan return of capital$––––– Stanley Capital International (MSCI) Europe Australasia Total annual distributions $0.57–––– and Far East (EAFE) Index. Net asset value per unit $ 10.44 9.02 7.31 6.05 6.85 $ 15,000 (a) $12,397(b) $12,381 Ratios and supplemental data

10,000 19991 2000 2001 2002 2003 $7,829 Net assets (000’s) $ 19,247 72,656 56,676 42,852 46,646

$7,209 Number of units 5,000 outstanding (000’s) 1,843 8,059 7,754 7,088 6,808 MER2 %0.860.931.001.021.08 Portfolio 0 turnover rate % ––––– Nov. 8 Dec. Dec. Dec. Dec. Dec. 1999 1999 2000 2001 2002 2003 1 These figures are for the period from September 20, 1999 to Class A Units December 31, 1999. Scotia International Stock Index Fund 2 We may from time to time absorb some of the operating expenses that MSCI EAFE Index the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 1.55% had we not absorbed some of Class I Units these expenses. (a) MSCI EAFE Index (b) Scotia International Stock Index Fund

The MSCI EAFE Index measures the performance of 60% of the companies listed in 20 countries in the region. Companies are weighted by their market capitalization. EQUITY FUNDS

121 Financial highlights, Class I units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 20033 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $––––6.89

Ratios and supplemental data

1999 2000 2001 2002 20033 SCOTIA INTERNATIONAL STOCK INDEX FUND Net assets (000’s) $ ––––1,662 Number of units outstanding (000’s) ––––241 MER4 %––––– Portfolio turnover rate %––––– 3 These figures are for the period from April 28, 2003 to December 31, 2003. 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 0.03% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 11.07 34.90 61.17 139.24 Class I units $–––– EQUITY FUNDS

122 Scotia Global Growth Fund

Fund details The fund may participate in repurchase, reverse repur- Fund type Global equity fund chase and securities lending transactions to achieve the Date established February 20, 1961 fund’s overall investment objectives and to enhance the Type of securities Class A, Class F and Class I units of a fund’s returns. You’ll find more information about repur- mutual fund trust chase, reverse repurchase and securities lending transac- Eligible for Yes. Units of the fund are foreign tions on page 3. registered plans? property. Portfolio advisor Capital International Asset Top 10 holdings at September 30, 2004 Management (Canada), Inc.

AstraZeneca PLC 3.55% SCOTIA GLOBAL GROWTH FUND What does the fund invest in? Royal Dutch Petroleum Company 2.66% Sanofi-Aventis SA 2.52% Investment objectives Vodafone Group PLC 2.50% The fund’s objective is long-term capital growth. It invests Sprint Corp (FON Group) 2.18% primarily in a broad range of equity securities of Novartis AG 1.53% companies around the world. Exxon Mobil Corporation 1.31% Any change to the fundamental investment objectives Fannie Mae 1.31% must be approved by a majority of votes cast at a meeting Forest Laboratories Inc. 1.31% of unitholders called for that purpose. Applied Materials Inc. 1.21% Investment strategies What are the risks of investing in the fund? The portfolio advisor uses fundamental analysis to identify The main risks of investing in this fund are: investments that have the potential for above-average ) growth over the long term. This involves evaluating the equity risk financial condition and management of each company, as ) foreign investment risk well as its industry and the economy. The fund’s assets ) currency risk. are diversified by industry and company to help reduce risk. The fund may have these additional risks: The fund can invest up to 70% of its assets in a single ) liquidity risk country. It generally won’t invest more than 10% of its ) derivative risk assets in emerging markets. ) emerging markets risk The fund may invest in other mutual funds which are ) class risk managed by us or by other mutual fund managers. You’ll ) find more information about investing in other mutual repurchase and reverse repurchase transaction risk funds on page 2. ) securities lending risk The portfolio advisor may: ) underlying fund risk. ) use derivatives such as options, futures and forward You’ll find details about each risk starting on page 164. contracts to hedge against losses from changes in stock prices, commodity prices, market indexes or currency Who should invest in this fund? exchange rates and to gain exposure to financial This fund may be suitable for you if: markets. It will only use derivatives as permitted by ) you want the growth potential of investing in equity securities regulations. securities of companies around the world ) temporarily invest the fund’s assets in cash or cash- ) you’re investing for at least three years equivalent securities to try to protect the fund during a ) market downturn or for other reasons. you can accept higher risk. EQUITY FUNDS

123 Past performance at December 31 Distribution policy This section shows how the fund has performed in the The fund distributes any income and capital gains in past and gives you an idea of the risk involved. These December of each calendar year. figures don’t tell you how the fund will perform in the Distributions on units held in Scotia registered plans and future. Copilot non-registered accounts are always reinvested in

Year-by-year returns additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are

SCOTIA GLOBAL GROWTH FUND This chart shows the fund’s annual performance, which reinvested in additional units of the fund, unless you tell changes from year to year. us in writing that you want to receive cash distributions % Class A Units by cheque or by deposit to your bank account. 30 21.32% 20 19.57% 13.92% Financial highlights, Class A units 8.87% 10 7.81% 6.01% at December 31 1.96% 0 Distributions and net asset value per unit

-10 -10.24% 1999 2000 2001 2002 2003 -20 Distributions -19.91% -21.58% -30 from net income$––––– 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 from realized gain $ 0.88 3.05 – – – return of capital$––––– Overall past performance Total annual distributions $ 0.88 3.05 – – – This chart shows how a $10,000 investment in the fund Net asset value per unit $ 54.08 45.46 36.41 28.55 30.27 would have changed in value, compared with the Morgan Stanley Capital International (MSCI) World Index. Ratios and supplemental data

$ 1999 2000 2001 2002 2003 40,000 Net assets (000’s) $ 284,678 290,066 237,593 153,917 151,493 Number of units 30,000 outstanding (000’s) 5,264 6,381 6,526 5,391 5,005 $19,456 MER % 2.39 2.41 2.55 2.57 2.54 20,000 Portfolio turnover rate % 79.94 63.08 112.01 56.07 35.86 $11,821 10,000 Fund expenses indirectly borne by investors 0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. This example shows the fund’s expenses on a $1,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units investment with a 5% annual return. Scotia Global Growth Fund Fees and expenses MSCI World Index payable over 1 year 3 years 5 years 10 years The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national Class A units $ 26.04 82.08 143.86 327.47 indexes.

Annual compound returns This table shows the fund’s annual compound returns, compared with the MSCI World Index.

1 year 3 years 5 years 10 years Scotia Global Growth Fund Class A units % 6.01 -12.68 -6.50 1.69 MSCI World Index % 8.87 -8.62 -4.14 6.88 EQUITY FUNDS

124 Scotia European Growth Fund

Fund details markets. It will only use derivatives as permitted by securities regulations. Fund type European equity fund Date established September 30, 1996 ) temporarily invest the fund’s assets in cash or cash- Type of securities Class A and Class F units of a mutual equivalent securities to try to protect the fund during a fund trust market downturn or for other reasons. Eligible for Yes. Units of the fund are foreign registered plans? property. The portfolio advisor may actively trade the fund’s Portfolio advisor Bank of Ireland Asset Management investments. This can increase trading costs, which may (U.S.) Limited Effective June 27, 2005, the portfolio lower the fund’s returns. It also increases the chance that

advisor will be Alliance Capital you’ll receive taxable capital gains if you hold the fund in SCOTIA EUROPEAN GROWTH FUND Management Canada, Inc. a non-registered account. The fund may participate in repurchase, reverse repur- What does the fund invest in? chase and securities lending transactions to achieve the Investment objectives fund’s overall investment objectives and to enhance the fund’s returns. You’ll find more information about repur- The fund’s objective is long-term capital growth. It invests chase, reverse repurchase and securities lending transac- primarily in a broad range of high quality equity securities tions on page 3. of companies in Europe. Top 10 holdings at September 30, 2004 Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting Total SA 4.64% of unitholders called for that purpose. Nestle SA 3.68% UBS AG 3.59% Investment strategies Novartis AG 3.47%

The portfolio advisor uses fundamental analysis to identify ING Groep NV 3.37% investments that have the potential for above-average Vodafone Group PLC 3.36% growth over the long term. This involves evaluating the E.ON AG 3.19% financial condition and management of each company, as Tesco PLC 3.11% well as its industry and the economy. The fund’s assets Barclays PLC 3.10% are diversified by industry and company to help reduce Eni SpA 3.09% risk. What are the risks of investing in the fund? The fund can invest up to 60% of its assets in a single The main risks of investing in this fund are: country. It generally won’t invest more than 15% of its assets in emerging European markets. It holds securities ) equity risk denominated in a variety of currencies to hedge against ) foreign investment risk volatility in foreign exchange markets. ) currency risk. The fund may invest in other mutual funds which are The fund may have these additional risks: managed by us or by other mutual fund managers. You’ll ) find more information about investing in other mutual derivative risk funds on page 2. ) liquidity risk ) The portfolio advisor may: emerging markets risk ) ) use derivatives such as options, futures and forward class risk contracts to hedge against losses from changes in stock ) repurchase and reverse repurchase transaction risk prices, commodity prices, market indexes or currency ) securities lending risk

exchange rates and to gain exposure to financial EQUITY FUNDS ) underlying fund risk.

125 You’ll find details about each risk starting on page 164. Overall past performance This chart shows how a $10,000 investment in the fund Who should invest in this fund? would have changed in value, compared with the Morgan Stanley Capital International (MSCI) Europe Australasia This fund may be suitable for you if: and Far East (EAFE) Index. ) you want the growth potential of investing in equity $ securities of European companies 20,000 ) you’re investing for at least three years 15,000 ) $11,958

SCOTIA EUROPEAN GROWTH FUND you can accept higher risk. 10,000 Past performance at December 31 $9,675 5,000 This section shows how the fund has performed in the past and gives you an idea of the risk involved. These 0 Sep. 30 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. figures don’t tell you how the fund will perform in the 1996 1996 1997 1998 1999 2000 2001 2002 2003 Class A Units future. Scotia European Growth Fund MSCI EAFE Index

Year-by-year returns The MSCI EAFE Index measures the performance of 60% of the companies listed in 20 countries in the region. Companies are weighted by their market This chart shows the fund’s annual performance, which capitalization. changes from year to year.

% Class A Units Annual compound returns 30 24.05% This table shows the fund’s annual compound returns, 20 14.42% 10.06% compared with the MSCI EAFE Index. 10 5.79% 3.30% Since 0 1 year 3 years 5 years inception Scotia European Growth Fund -10 -6.03% Class A units % 10.06 -12.77 -7.98 -0.45 -20 -21.20% -23.48% MSCI EAFE Index % 13.35 -7.66 -3.45 2.47 -30 1996 1997 1998 1999 2000 2001 2002 2003 EQUITY FUNDS

126 Distribution policy The fund distributes any income and capital gains in December of each calendar year. Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell

us in writing that you want to receive cash distributions SCOTIA EUROPEAN GROWTH FUND by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31

Distributions and net asset value per unit 1999 2000 2001 2002 2003 Distributions from net income $ – – 0.05 0.06 0.03 from realized gain $ 0.25 0.15 – – – return of capital$––––– Total annual distributions $0.250.150.050.060.03 Net asset value per unit $ 15.20 14.13 11.08 8.42 9.24

Ratios and supplemental data 1999 2000 2001 2002 2003 Net assets (000’s) $101,314 95,295 70,698 40,486 40,328 Number of units outstanding (000’s) 6,665 6,745 6,380 4,808 4,365 MER1 % 2.42 2.43 2.67 2.84 2.90 Portfolio turnover rate % 131.55 217.23 208.21 127.31 77.07 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.98% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 29.73 93.71 164.25 373.88 EQUITY FUNDS

127 Scotia Pacific Rim Growth Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- Fund type Asia/Pacific Rim equity fund equivalent securities to try to protect the fund during a Date established August 18, 1994 market downturn or for other reasons. Type of securities Class A, Class F and Class I units of a mutual fund trust The portfolio advisor may actively trade the fund’s Eligible for Yes. Units of the fund are foreign investments. This can increase trading costs, which may registered plans? property. lower the fund’s returns. It also increases the chance that Portfolio advisor TCW Investment Management you’ll receive taxable capital gains if you hold the fund in Company a non-registered account.

What does the fund invest in? The fund may participate in repurchase, reverse repur-

SCOTIA PACIFIC RIM GROWTH FUND chase and securities lending transactions to achieve the Investment objectives fund’s overall investment objectives and to enhance the The fund’s objective is long-term capital growth. It invests fund’s returns. You’ll find more information about repur- primarily in a broad range of equity securities of chase, reverse repurchase and securities lending transac- companies in the western portion of the Pacific Rim. tions on page 3. Any change to the fundamental investment objectives Top 10 holdings at September 30, 2004 must be approved by a majority of votes cast at a meeting Toyota Motor Corporation 4.79% of unitholders called for that purpose. Australia & New Zealand Banking Group Ltd. 3.48% Investment strategies Mitsubishi Tokyo Financial Group Inc. 2.87% The fund generally invests in the more developed markets Samsung Electronics Company GDR 2.48% of Australia, Hong Kong, Japan, New Zealand, Singapore Sumitomo Mitsui Financial Group Inc. 2.36% and Taiwan. It may invest up to 35% of its assets in Fujitsu Ltd. 2.35% emerging market countries, such as China, Korea, Malay- Yokogawa Electric Corporation 2.23% sia and Thailand. Nidec Corporation 2.20% The portfolio advisor uses fundamental analysis to identify Rio Tinto Ltd. 2.18% investments that have the potential for above-average Pioneer Corporation 2.15% growth over the long term. This involves evaluating the What are the risks of investing in the fund? financial condition and management of each company, as well as its industry and the economy. The fund’s assets are The main risks of investing in this fund are: diversified by industry and company to help reduce risk. ) equity risk The fund can invest up to 75% of its assets in a single ) concentration risk country. It holds securities denominated in a variety of ) foreign investment risk currencies to hedge against volatility in foreign exchange ) markets. emerging markets risk ) The fund may invest in other mutual funds which are currency risk managed by us or by other mutual fund managers. You’ll ) liquidity risk. find more information about investing in other mutual The fund may have these additional risks: funds on page 2. ) derivative risk The portfolio advisor may: ) class risk ) use derivatives such as options, futures and forward ) repurchase and reverse repurchase transaction risk contracts to hedge against losses from changes in stock prices, commodity prices, market indexes or currency ) securities lending risk exchange rates and to gain exposure to financial ) underlying fund risk. markets. It will only use derivatives as permitted by EQUITY FUNDS You’ll find details about each risk starting on page 164. securities regulations.

128 Who should invest in this fund? Annual compound returns This fund may be suitable for you if: This table shows the fund’s annual compound returns, ) you want the growth potential of investing in equity compared with the MSCI EAFE Index and the MSCI Pacific Index. securities of companies in the region of Australasia Since ) you’re investing for at least five years 1 year 3 years 5 years inception Scotia Pacific Rim Growth Fund ) you can accept higher risk. Class A units % 17.33 -5.04 2.17 0.67 MSCI EAFE Index % 13.35 -7.66 -3.45 3.39 Past performance at December 31 MSCI Pacific Index % 13.27 -6.93 -1.60 -3.59 This section shows how the fund has performed in the Distribution policy SCOTIA PACIFIC RIM GROWTH FUND past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the The fund distributes any income and capital gains in future. December of each calendar year. Distributions on units held in Scotia registered plans and Year-by-year returns Copilot non-registered accounts are always reinvested in This chart shows the fund’s annual performance, which additional units of the fund. Distributions on units held in changes from year to year. other registered plans and non-registered accounts are % Class A Units 100 reinvested in additional units of the fund, unless you tell 80.06% 80 us in writing that you want to receive cash distributions 60 by cheque or by deposit to your bank account. 40 17.33% Financial highlights, Class A units 20 10.02% 3.60% 5.53% at December 31 0 -5.52% Distributions and net asset value per unit -20 -15.97% -13.82% -15.31% -27.79% 1999 2000 2001 2002 2003 -40 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Distributions from net income$––––– Overall past performance from realized gain $ ––––– This chart shows how a $10,000 investment in the fund return of capital$––––– would have changed in value, compared with the Morgan Total annual distributions $––––– Stanley Capital International (MSCI) Europe Australasia Net asset value per unit $ 15.82 11.42 9.85 8.34 9.78 and Far East (EAFE) Index and the MSCI Pacific Index. Ratios and supplemental data $ 20,000 1999 2000 2001 2002 2003 Net assets (000’s) $ 53,320 38,750 28,793 21,042 23,563

15,000 $13,584 Number of units outstanding (000’s) 3,371 3,392 2,925 2,524 2,409 1 10,000 MER %2.602.602.772.832.88 $10,634 Portfolio turnover rate % 452.64 331.80 316.59 207.85 166.74 5,000 $7,141 1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio 0 of the fund would have been 3.13% had we not absorbed some of Oct. 13 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1994 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 these expenses. Class A Units Scotia Pacific Rim Growth Fund Fund expenses indirectly borne by investors MSCI EAFE Index This example shows the fund’s expenses on a $1,000 MSCI Pacific Index The MSCI EAFE Index measures the performance of 60% of the companies investment with a 5% annual return. listed in 20 countries in the region. Companies are weighted by their market Fees and expenses capitalization. payable over 1 year 3 years 5 years 10 years

The MSCI Pacific Index measures the total return of equity securities in Class A units $ 29.52 93.06 163.12 371.30 EQUITY FUNDS Australia, Japan, Singapore, Hong Kong and New Zealand.

129 Scotia Latin American Growth Fund

Fund details ) temporarily invest the fund’s assets in cash or cash- Fund type Latin American equity fund equivalent securities to try to protect the fund during a Date established August 18, 1994 market downturn or for other reasons. Type of securities Class A, Class F and Class I units of a mutual fund trust The fund may participate in repurchase, reverse repur- Eligible for Yes. Units of the fund are foreign chase and securities lending transactions to achieve the registered plans? property. Portfolio advisor TCW Investment Management fund’s overall investment objectives and to enhance the Company fund’s returns. You’ll find more information about repur- chase, reverse repurchase and securities lending transac- What does the fund invest in? tions on page 3.

Investment objectives Top 10 holdings at September 30, 2004

SCOTIA LATIN AMERICAN GROWTH FUND The fund’s objective is long-term capital growth. It invests America Movil SA de CV Series L ADR 7.34% primarily in a broad range of high quality equity securities Compania Vale do Rio Doce ADR 7.14% of companies in Latin America. Telefonos de Mexico SA ADR 7.00% Any change to the fundamental investment objectives Petroleo Brasileiro SA ADR 5.88% must be approved by a majority of votes cast at a meeting Companhia Siderurgica Nacional SA ADR 5.60% of unitholders called for that purpose. Usinas Sider de Minas Gerais SA 4.85% Companhia de Bebidas das Americas Pref. ADR 4.76% Investment strategies Banco Bradesco SA ADR 4.41% Companhia Vale do Rio Doce SA ADR 4.11% The portfolio advisor uses fundamental analysis to identify investments that have the potential for above-average Cemex SA de CV ADR 3.78% growth over the long term. This involves evaluating the What are the risks of investing in the fund? financial condition and management of each company, as well as its industry and the economy. The fund’s assets The main risks of investing in this fund are: are diversified by industry and company to help reduce ) equity risk risk. ) concentration risk The fund can invest up to 65% of its assets in a single ) foreign investment risk country. It holds securities denominated in a variety of ) currencies to hedge against volatility in foreign exchange emerging markets risk markets. ) currency risk ) The fund can invest up to 25% of its assets in any market liquidity risk. outside Latin America. During the 12 months preceding October 29, 2004, up to The fund may invest in other mutual funds which are 10.1% of the net assets of the fund were invested in managed by us or by other mutual fund managers. You’ll Telefonos de Mexico SA ADR and up to 10.6% of the net find more information about investing in other mutual assets of the fund were invested in America Movil SA de funds on page 2. CV Series L ADR.

The portfolio advisor may: The fund may have these additional risks: ) ) use derivatives such as options, futures and forward derivative risk contracts to hedge against losses from changes in stock ) class risk prices, commodity prices, market indexes or currency ) repurchase and reverse repurchase transaction risk exchange rates and to gain exposure to financial markets. It will only use derivatives as permitted by EQUITY FUNDS securities regulations.

130 ) securities lending risk Overall past performance ) underlying fund risk. This chart shows how a $10,000 investment in the fund would have changed in value, compared with the Morgan You’ll find details about each risk starting on page 164. Stanley Capital International (MSCI) World Index and the MSCI Emerging Markets (EM) Latin America Index. Who should invest in this fund? $ This fund may be suitable for you if: 40,000 ) you want the growth potential of investing in equity 30,000 securities of Latin American companies $20,506 $17,499 ) you’re investing for at least five years 20,000

) SCOTIA LATIN AMERICAN GROWTH FUND you can accept higher risk. 10,000 $16,222

0 Past performance at December 31 Aug. 18 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 1994 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 This section shows how the fund has performed in the past Class A Units and gives you an idea of the risk involved. These figures Scotia Latin American Growth Fund MSCI World Index don’t tell you how the fund will perform in the future. MSCI EM Latin America Index The MSCI World Index is an index of approximately 1,600 companies listed Year-by-year returns on stock exchanges in the 22 countries that make up the MSCI national indexes. This chart shows the fund’s annual performance, which The MSCI EM Latin America Index measures the total return of equity securities in the Latin American region. On November 1, 2002, the index changes from year to year. included Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.

% Class A Units 70 Annual compound returns 60 56.25% 50 40 31.34% This table shows the fund’s annual compound returns, 30 29.27% 26.24% 20 compared with the MSCI World Index and the MSCI EM 10 0.90% 3.71% 0.10% 0 Latin America Index. -10 -13.00% Since -20 -20.54% -30 1 year 3 years 5 years inception -33.14% -40 Scotia Latin American Growth Fund -50 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Class A units % 31.34 1.46 7.27 5.40 MSCI World Index % 8.87 -8.62 -4.14 6.27 MSCI EM Latin America Index % 17.09 -9.35 -4.61 8.12

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

131 Financial highlights, Class A units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 2003 Distributions from net income $ – – 0.91 – – from realized gain $ ––––– return of capital$––––– Total annual distributions $– –0.91– – Net asset value per unit $ 15.77 13.72 12.77 10.15 13.33

Ratios and supplemental data SCOTIA LATIN AMERICAN GROWTH FUND 1999 2000 2001 2002 2003 Net assets (000’s) $ 39,526 32,284 43,063 26,835 30,935 Number of units outstanding (000’s) 2,506 2,353 3,372 2,644 2,321 MER1 %2.562.572.832.962.93 Portfolio turnover rate % 114.82 61.38 92.13 48.62 34.06

1 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.95% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 30.03 94.68 165.95 377.75 EQUITY FUNDS

132 Capital U.S. Large Companies Fund Fund details Top 10 holdings at September 30, 2004

Fund type U.S. equity fund The following are the top 10 holdings of Capital Date established December 15, 2000 International-U.S. Equity, the underlying fund: Type of securities Class A and Class F units of a mutual fund trust AstraZeneca PLC 4.0% Eligible for Yes. Units of the fund are foreign Sprint Corp. 3.1% registered plans? property. J.P. Morgan Chase & Co. 2.7% Portfolio advisor Capital International Asset Management (Canada), Inc. Forest Laboratories, Inc. 2.6% SLM Corp. 2.6% Washington Mutual, Inc. 2.3% What does the fund invest in? General Electric Co. 2.1% Allergan, Inc. 2.1%

Investment objectives CAPITAL U.S. LARGE COMPANIES FUND Applied Materials, Inc. 1.8% The fund’s objective is to achieve long-term growth of Exxon Mobil Corp. 1.8% capital through exposure primarily to equity securities of large U.S. issuers and securities whose principal markets The information contained in this list may change due to are in the U.S. (including ADRs and other U.S. registered ongoing portfolio transactions of the underlying fund. Current foreign securities) by investing its assets in Class I units of holdings may be found at www.capitalinternationalfunds.ca. Capital International-U.S. Equity. You can get a copy of the simplified prospectus of the Any change to the fundamental investment objectives underlying fund by calling us at 1-800-268-9269 must be approved by a majority of votes cast at a meeting (416-750-3863 in Toronto) for English, or 1-800-387-5004 of unitholders called for that purpose. for French, by asking your mutual fund representative, or at www.sedar.com. Investment strategies

The fund has exposure to common stocks and preferred What are the risks of investing in the fund? stocks (or securities convertible or exchangeable into This fund indirectly has the same risks as Capital such securities) of companies with market capitalization International-U.S. Equity: greater than Cdn. $2.25 billion at the time of purchase. ) equity risk The fund will have exposure to cash, cash equivalents and ) foreign investment risk debt securities when prevailing market and economic ) currency risk conditions indicate that it is desirable to do so. ) derivative risk The fund may from time to time be exposed to ) repurchase and reverse repurchase transaction risk investments in forward currency contracts in order to manage risk and implement investment strategies in a ) securities lending risk more efficient manner. ) class risk The fund may enter into repurchase transactions, reverse ) underlying fund risk. repurchase transactions and securities lending agreements You’ll find details about each risk starting on page 164. to seek enhanced returns, but will only do so if there are suitable counterparties available, if the transactions are Who should invest in this fund? considered appropriate and after first giving its unitholders 60 days’ prior written notice. You’ll find more This fund may be suitable for you if: information about repurchase, reverse repurchase and ) you want the growth potential of having exposure to securities lending transactions on page 3. equity securities of large U.S. companies EQUITY FUNDS

133 ) you’re investing for at least three years Overall past performance ) you can accept higher risk. This chart shows how a $10,000 investment in the fund would have changed in value, compared with the Standard Past performance at December 31 & Poor’s 500 (S&P 500) Index (Total Return). This section shows how the fund performed in the past $ and gives you an idea of the risk involved. These figures 15,000 don’t tell you how the fund will perform in the future.

$8,209 10,000 Year-by-year returns $8,172(b)

These charts show the fund’s annual performance, which $7,823(a) changes from year to year. 5,000 $7,574 CAPITAL U.S. LARGE COMPANIES FUND

% Class A Units 15 9.82% 0 10 Dec. 15 Dec. Dec. Dec. Dec. 5 2.15% 2000 2000 2001 2002 2003 0.20% 0 Class A Units -5 Capital U.S. Large Companies Fund -10 S&P 500 Index (Total Return) -15 -20 Class F Units -25 (a) S&P 500 Index (Total Return) -30 -26.98% (b) Capital U.S. Large Companies Fund -35 2000 2001 2002 2003 The S&P 500 Index (Total Return) is an index of 500 stocks weighted by capitalization and representing all major U.S. industries. It’s a broad measure % Class F Units 20 of the U.S. economy. 15 11.05% 10 5 Annual compound returns 0 -0.50% -5 This table shows the fund’s annual compound returns, -10 -15 compared with the S&P 500 Index (Total Return). -20 Since -25 -26.05% 1 year 3 years inception -30 -35 Capital U.S. Large Companies Fund 2001* 2002 2003 * Apr. 18, 2001 to Dec. 31, 2001 Class A units % 9.82 -6.43 -6.28 Class F units % 11.05 – -7.191 S&P 500 Index (Total Return) % 5.24 -8.74 2 1 April 18, 2001 2 Class A units -8.73% and Class F units -8.68%

Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

134 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 20001 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––– Class A units $ 25.32 79.81 139.90 318.44 from realized gain $ ––––– Class F units $ 13.53 42.65 74.76 170.18 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.85 10.06 7.35 8.07

Ratios and supplemental data CAPITAL U.S. LARGE COMPANIES FUND

1999 20001 2001 2002 2003 Net assets (000’s) $ – 4,752 94,389 148,823 158,374 Number of units outstanding (000’s) – 483 9,383 20,261 19,634 MER2 % – 2.15 2.46 2.47 2.47 Portfolio turnover rate % – – 6.01 4.04 4.85 1 These figures are for the period from November 30, 2000 to Decem- ber 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.52% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31

Distributions and net asset value per unit

1999 2000 20013 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – 10.14 7.50 8.33

Ratios and supplemental data

1999 2000 20013 2002 2003 Net assets (000’s) % – – 53 36 20 Number of units outstanding (000’s) – – 5 5 2 MER4 % – –1.071.391.32 Portfolio turnover rate % – – 6.01 4.04 4.85 3 These figures are for the period from April 18, 2001 to December 31, 2001. 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.67% had we not absorbed some of these expenses. EQUITY FUNDS

135 Capital U.S. Large Companies RSP Fund

Fund details to seek enhanced returns, but will only do so if there are suitable counterparties available, if the transactions are Fund type U.S. equity fund considered appropriate and after first giving its Date established December 15, 2000 Type of securities Class A and Class F units of a mutual unitholders 60 days’ prior written notice. You’ll find more fund trust information about repurchase, reverse repurchase and Eligible for Yes. Units of the fund are not foreign securities lending transactions on page 3. registered plans? property. Portfolio advisor Capital International Asset Management (Canada), Inc. Top 10 holdings at September 30, 2004 The following are the top 10 holdings of Capital What does the fund invest in? International-U.S. Equity, the underlying fund: Investment objectives AstraZeneca PLC 4.0%

CAPITAL U.S. LARGE COMPANIES RSP FUND The fund’s objective is long-term growth of capital Sprint Corp. 3.1% through exposure primarily to equity securities of large J.P. Morgan Chase & Co. 2.7% U.S. issuers and securities whose principal markets are in Forest Laboratories, Inc. 2.6% the U.S. (including ADRs and other U.S. registered foreign SLM Corp. 2.6% securities), while maintaining 100% eligibility for regis- Washington Mutual, Inc. 2.3% tered plans. The fund currently uses derivatives that are General Electric Co. 2.1% linked to the performance of Capital International- Allergan, Inc. 2.1% U.S. Equity. It also invests directly in Class I units of Capital International-U.S. Equity. Applied Materials, Inc. 1.8% Exxon Mobil Corp. 1.8% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting The information contained in this list may change due to of unitholders called for that purpose. ongoing portfolio transactions of the underlying fund. Current holdings may be found at www.capitalinternationalfunds.ca. Investment strategies You can get a copy of the simplified prospectus of the This is an RSP Fund. It aims to track the performance of underlying fund by calling us at 1-800-268-9269 Capital International-U.S. Equity as closely as possible by: (416-750-3863 in Toronto) for English, or 1-800-387-5004 ) investing in Class I units of Capital International- for French, by asking your mutual fund representative, or U.S. Equity up to the foreign content limit at www.sedar.com. ) using forward contracts that are linked to the perform- ance of Capital International-U.S. Equity. The fund What are the risks of investing in the fund? enters into the forward contracts with a counterparty, This fund indirectly has the same risks as Capital which is usually a large financial institution. International-U.S. Equity: The fund may place the balance of its assets on deposit ) equity risk with a Canadian financial institution or may invest in ) foreign investment risk Canadian money market instruments. This allows the fund ) currency risk to maintain 100% registered plan eligibility and to cover its positions in the forward contracts. The fund will only ) derivative risk use derivatives as permitted by securities regulations. ) repurchase and reverse repurchase transaction risk You’ll find more information in About the RSP Funds on ) securities lending risk page 2. ) class risk The fund may enter into repurchase transactions, reverse ) EQUITY FUNDS underlying fund risk. repurchase transactions and securities lending agreements

136 % Class F Units The fund also has RSP Fund risk. 15 10.28% 10 You’ll find details about each risk starting on page 164. 5 0 -5 -4.40% Who should invest in this fund? -10 -15 This fund may be suitable for you if: -20 -25 -26.08% ) you hold your units in a registered plan other than an -30 -35 RESP and your plan holds the maximum allowable 2001* 2002 2003 * May 17, 2001 to Dec. 31, 2001 amount of foreign property

) you want the growth potential of having exposure to Overall past performance equity securities of large U.S. companies This chart shows how a $10,000 investment in the fund ) you’re investing for at least three years

would have changed in value, compared with the Standard CAPITAL U.S. LARGE COMPANIES RSP FUND ) you can accept higher risk. & Poor’s 500 (S&P 500) Index (Total Return). $ If you’re investing through a non-registered account or 20,000 RESP or your registered plan holds less than the maximum allowable amount of foreign property, you should invest in the Capital U.S. Large Companies Fund $7,954 10,000 (b) directly because you’ll usually get a better return. The $7,795 $7,576(a) fund’s distributions are primarily considered income, $7,574 which is taxed at a higher rate than capital gains when received outside of a registered plan. This income is 0 Dec. 15 Dec. Dec. Dec. Dec. generally realized more frequently than capital gains 2000 2000 2001 2002 2003 Class A Units realized by the Capital U.S. Large Companies Fund. Capital U.S. Large Companies RSP Fund S&P 500 Index (Total Return)

Past performance at December 31 Class F Units (a) S&P 500 Index (Total Return) This section shows how the fund has performed in the (b) Capital U.S. Large Companies RSP Fund past and gives you an idea of the risk involved. These The S&P 500 Index (Total Return) is an index of 500 stocks weighted by capitalization and representing all major U.S. industries. It’s a broad measure figures don’t tell you how the fund will perform in the of the U.S. economy. future. Annual compound returns Year-by-year returns This table shows the fund’s annual compound returns, These charts show the fund’s annual performance, which compared with the S&P 500 Index (Total Return). changes from year to year. Since 1 year 3 years inception % Class A Units 15 Capital U.S. Large Companies RSP Fund 9.19% 10 Class A units % 9.19 -6.42 -7.25 5 2.93% Class F units % 10.28 – -9.051 0 2 -5 -2.95% S&P 500 Index (Total Return) % 5.24 -8.74 -10 1 May 17, 2001 -15 2 Class A units -8.73% and Class F units -10.04% -20 -25 -30 -27.08% -35 2000 2001 2002 2003 EQUITY FUNDS

137 Distribution policy Ratios and supplemental data The fund distributes any income and capital gains in 1999 2000 20013 2002 2003 December of each calendar year. Net assets (000’s) $ – – 5 65 68 Number of units Distributions on units held in Scotia registered plans and outstanding (000’s) – – 0.5 9 8 MER4 %– –1.071.721.69 Copilot non-registered accounts are always reinvested in Portfolio turnover rate % – – 11.46 32.78 15.06 additional units of the fund. Distributions on units held in 3 These figures are for the period from May 17, 2001 to December 31, other registered plans and non-registered accounts are 2001. reinvested in additional units of the fund, unless you tell 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio us in writing that you want to receive cash distributions of the fund would have been 2.19% had we not absorbed some of by cheque or by deposit to your bank account. these expenses.

Financial highlights, Class A units Fund expenses indirectly borne by investors CAPITAL U.S. LARGE COMPANIES RSP FUND at December 31 This example shows the fund’s expenses on a $1,000 Distributions and net asset value per unit investment with a 5% annual return.

1999 20001 2001 2002 2003 Fees and expenses Distributions payable over 1 year 3 years 5 years 10 years from net income$–––––Class A units $ 28.70 90.48 158.59 360.99 from realized gain $ –––––Class F units 17.32 54.61 95.72 217.88 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.68 9.96 7.27 7.93

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 163 2,154 3,989 4,800 Number of units outstanding (000’s) – 17 216 549 605 MER2 % – 2.46 2.76 2.79 2.80 Portfolio turnover rate % – – 11.46 32.78 15.06 1 These figures are for the period from November 30, 2000 to December 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.75% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31

Distributions and net asset value per unit

1999 2000 20013 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – 10.04 7.42 8.18 EQUITY FUNDS

138 Capital U.S. Small Companies Fund

Fund details unitholders 60 days’ prior written notice. You’ll find more information about repurchase, reverse repurchase and Fund type U.S. small and mid-capitalization equity fund securities lending transactions on page 3. Date established December 15, 2000 Type of securities Class A and Class F units of a mutual Top 10 holdings at September 30, 2004 fund trust The following are the top 10 holdings of Capital Eligible for Yes. Units of the fund are foreign International-U.S. Small Cap, the underlying fund: registered plans? property. Portfolio advisor Capital International Asset Management (Canada), Inc. Methanex Corp. 2.3% Cymer, Inc. 1.7%

What does the fund invest in? Beazer Homes USA, Inc. 1.6% CAPITAL U.S. SMALL COMPANIES FUND W.R. Berkley Corp. 1.6% Investment objectives SL Green Realty Corp. 1.4% The fund’s objective is to achieve long-term growth of CMS Energy Corp. 1.3% capital through exposure to equity securities of smaller AptarGroup, Inc. 1.3% and medium-sized U.S. issuers and securities whose Furniture Brands International, Inc. 1.3% principal markets are in the U.S. (including ADRs and AmeriCredit Corp. 1.3% other U.S. registered foreign securities) by investing its BOK Financial Corp. 1.3% assets in Class I units of Capital International-U.S. Small Cap. The information contained in this list may change due to ongoing portfolio transactions of the underlying fund. Current Any change to the fundamental investment objectives holdings may be found at www.capitalinternationalfunds.ca. must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. You can get a copy of the simplified prospectus of the underlying fund by calling us at 1-800-268-9269 Investment strategies (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or The fund has exposure to common stocks and preferred at www.sedar.com. stocks (or securities convertible or exchangeable into such securities) of companies with market capitalization What are the risks of investing in the fund? of between Cdn $75 million and Cdn $2.25 billion at the time of purchase. In determining market capitalization, This fund indirectly has the same risks as Capital the fund may consider the value of shares which are International-U.S. Small Cap: publicly traded. ) equity risk ) The fund will have exposure to cash, cash equivalents and small company risk debt securities when prevailing market and economic ) foreign investment risk conditions indicate that it is desirable to do so. ) currency risk The fund may from time to time be exposed to ) liquidity risk investments in forward currency contracts in order to ) derivative risk manage risk and implement investment strategies in a ) repurchase and reverse repurchase transaction risk more efficient manner. ) securities lending risk The fund may enter into repurchase transactions, reverse ) underlying fund risk (as at October 1, 2004, Scotia repurchase transactions and securities lending agreements Securities Inc., Toronto, Ontario held approximately to seek enhanced returns, but will only do so if there are 77.3% of the outstanding units of the fund.) suitable counterparties available, if the transactions are EQUITY FUNDS considered appropriate and after first giving its The fund also has class risk.

139 You’ll find details about each risk starting on page 164. Overall past performance This chart shows how a $10,000 investment in the fund Who should invest in this fund? would have changed in value, compared with the Russell This fund may be suitable for you if: 2000 Index. ) you want the growth potential of having exposure to $ 20,000 equity securities of smaller and medium-sized U.S.

companies 15,000 $10,795 ) you’re investing for at least five years $9,448(a) 10,000 ) you can accept higher risk. $8,389 (b)

CAPITAL U.S. SMALL COMPANIES FUND 5,000 $8,263 Past performance at December 31 0 This section shows how the fund and the underlying fund Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 have performed in the past and gives you an idea of the Class A Units risk involved. These figures don’t tell you how the fund Capital U.S. Small Companies Fund Russell 2000 Index and the underlying fund will perform in the future. Class F Units (a) Russell 2000 Index Year-by-year returns (b) Capital U.S. Small Companies Fund

These charts show the fund’s annual performance, which The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of changes from year to year. the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based % Class A Units 20 on total market capitalization, which represents approximately 98% of the 15 14.64% investable U.S. equity market. 10 5 2.39% 0 Annual compound returns -0.30% -5 -10 This table shows the fund’s annual compound returns, -15 -20 compared with the Russell 2000 Index. -25 Since -30 -28.30% 1 year 3 years inception -35 2000 2001 2002 2003 Capital U.S. Small Companies Fund

% Class F Units Class A units % 14.64 -5.59 -5.61 25 Class F units % 15.70 – -9.271 20 15.70% 15 Russell 2000 Index % 20.44 1.07 2 10 5 1 January 8, 2002 0 2 Class A units 2.55% and Class F units -2.83% -5 -10 -15 -20 Distribution policy -25 -30 -28.58% The fund distributes any income and capital gains in -35 2002* 2003 December of each calendar year. * Jan. 8, 2002 to Dec. 31, 2002 Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions EQUITY FUNDS by cheque or by deposit to your bank account.

140 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 20001 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––– Class A units $ 27.16 85.63 150.09 341.65 from realized gain $ ––––– Class F units $ 16.30 51.38 90.05 204.99 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.57 9.80 7.03 8.05

Ratios and supplemental data CAPITAL U.S. SMALL COMPANIES FUND

1999 20001 2001 2002 2003 Net assets (000’s) $ – 4,577 5,393 4,281 5,010 Number of units outstanding (000’s) – 478 550 609 622 MER2 % – 2.31 2.60 2.65 2.65 Portfolio turnover rate % – – 12.23 7.89 4.79 1 These figures are for the period from November 30, 2000 to Decem- ber 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.35% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 2001 20023 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – – – 7.12 8.24

Ratios and supplemental data

1999 2000 2001 20023 2003 Net assets (000’s) $ – – – 15 4 Number of units outstanding (000’s) – – – 2 1 MER4 % – – – 1.43 1.59 Portfolio turnover rate % – – – 7.89 4.79 3 These figures are for the period from January 8, 2002 to December 31, 2002. 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 5.61% had we not absorbed some of these expenses. EQUITY FUNDS

141 Capital U.S. Small Companies RSP Fund

Fund details its positions in the forward contracts. The fund will only Fund type U.S. small and mid-capitalization use derivatives as permitted by securities regulations. equity fund You’ll find more information in About the RSP Funds on Date established December 15, 2000 page 2. Type of securities Class A and Class F units of a mutual fund trust The fund may enter into repurchase transactions, reverse Eligible for Yes. Units of the fund are not foreign repurchase transactions and securities lending agreements registered plans? property. to seek enhanced returns, but will only do so if there are Portfolio advisor Capital International Asset Management (Canada), Inc. suitable counterparties available, if the transactions are considered appropriate and after first giving its What does the fund invest in? unitholders 60 days’ prior written notice. You’ll find more information about repurchase, reverse repurchase and Investment objectives securities lending transactions on page 3.

CAPITAL U.S. SMALL COMPANIES RSP FUND The fund’s objective is long-term growth of capital through exposure to equity securities of smaller and Top 10 holdings at September 30, 2004 medium-sized U.S. issuers and securities whose principal The following are the top 10 holdings of Capital markets are in the U.S. (including ADRs and other International-U.S. Small Cap, the underlying fund: U.S. registered foreign securities), while maintaining 100% eligibility for registered plans. The fund currently uses Methanex Corp. 2.3% derivatives that are linked to the performance of Capital Cymer, Inc. 1.7% International-U.S. Small Cap. It also invests directly in Class I units of Capital International-U.S. Small Cap. Beazer Homes USA, Inc. 1.6% W.R. Berkley Corp. 1.6% Any change to the fundamental investment objectives SL Green Realty Corp. 1.4% must be approved by a majority of votes cast at a meeting CMS Energy Corp. 1.3% of unitholders called for that purpose. You generally won’t AptarGroup, Inc. 1.3% have ownership or other rights on units of the underlying Furniture Brands International, Inc. 1.3% fund. However, if unitholders of the underlying fund are AmeriCredit Corp. 1.3% asked to vote on an issue, you can direct how you would BOK Financial Corp. 1.3% like your proportionate share of the units of the underlying fund held directly by the fund to be voted. The information contained in this list may change due to Investment strategies ongoing portfolio transactions of the underlying fund. Current holdings may be found at www.capitalinternationalfunds.ca. This is an RSP Fund. It aims to track the performance of Capital International-U.S. Small Cap as closely as possible You can get a copy of the simplified prospectus of the by: underlying fund by calling us at 1-800-268-9269 (416-750-3863 in Toronto) for English, or 1-800-387-5004 ) investing in Class I units of Capital International- for French, by asking your mutual fund representative, or U.S. Small Cap up to the foreign content limit at www.sedar.com. ) using forward contracts that are linked to the perform- ance of Capital International-U.S. Small Cap. The fund What are the risks of investing in the fund? enters into the forward contracts with a counterparty, which is usually a large financial institution. This fund indirectly has the same risks as Capital International-U.S. Small Cap: The fund may place the balance of its assets on deposit ) equity risk with a Canadian financial institution or may invest in ) Canadian money market instruments. This allows the fund foreign investment risk

EQUITY FUNDS to maintain 100% registered plan eligibility and to cover ) small company risk

142 ) currency risk Year-by-year returns ) liquidity risk This chart shows the fund’s annual performance, which ) derivative risk changes from year to year.

) % Class A Units repurchase and reverse repurchase transaction risk 20 ) 15 13.15% securities lending risk 10 5 3.86% ) underlying fund risk. 0 -5 -3.60% The fund also has RSP Fund risk and class risk. -10 -15 -20 You’ll find details about each risk starting on page 164. -25 -30 -28.02% -35 Who should invest in this fund? 2000 2001 2002 2003 CAPITAL U.S. SMALL COMPANIES RSP FUND This fund may be suitable for you if: Overall past performance ) you hold your units in a registered plan other than an This chart shows how a $10,000 investment in the fund RESP and your plan holds the maximum allowable would have changed in value, compared with the Russell amount of foreign property 2000 Index.

) you want the growth potential of having exposure to $ equity securities of smaller and medium-sized U.S. 20,000 companies 15,000 ) you’re investing for at least five years $10,795 10,000 ) you can accept higher risk. $8,151 If you’re investing through a non-registered account or 5,000 RESP or your registered plan holds less than the 0 maximum allowable amount of foreign property, you Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 should invest in the Capital U.S. Small Companies Fund Class A Units directly because you’ll usually get a better return. The Capital U.S. Small Companies RSP Fund fund’s distributions are primarily considered income, Russell 2000 Index The Russell 2000 Index measures the performance of the 2,000 smallest which is taxed at a higher rate than capital gains when companies in the Russell 3000 Index, which represents approximately 8% of received outside of a registered plan. This income is the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based generally realized more frequently than capital gains on total market capitalization, which represents approximately 98% of the realized by the Capital U.S. Small Companies Fund. investable U.S. equity market.

Annual compound returns Past performance at December 31 This table shows the fund’s annual compound returns, This section shows how the fund has performed in the compared with the Russell 2000 Index. past and gives you an idea of the risk involved. These figures don’t tell you how the fund will perform in the Since 1 year 3 years Inception future. Capital U.S. Small Companies RSP Fund Class A units % 13.15 -5.43 -6.50 Russell 2000 Index % 20.44 1.07 2.55 EQUITY FUNDS

143 Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units CAPITAL U.S. SMALL COMPANIES RSP FUND at December 31 Distributions and net asset value per unit

1999 20001 2001 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.61 9.98 7.19 8.13

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 148 708 1,063 1,271 Number of units outstanding (000’s) – 15 71 148 156 MER2 % – 2.46 2.95 2.97 2.94 Portfolio turnover rate % – – 43.02 41.85 27.66 1 These figures are for the period from November 30, 2000 to December 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 6.82% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 30.14 95.00 166.52 379.04 EQUITY FUNDS

144 Capital International Large Companies Fund

Fund details suitable counterparties available, if the transactions are considered appropriate and after first giving its Fund type International equity fund unitholders 60 days’ prior written notice. You’ll find more Date established December 15, 2000 Type of securities Class A and Class F units of a mutual information about repurchase, reverse repurchase and fund trust securities lending transactions on page 3. Eligible for Yes. Units of the fund are foreign registered plans? property. Top 10 holdings at September 30, 2004 Portfolio advisor Capital International Asset Management (Canada), Inc. The following are the top 10 holdings of Capital International-International Equity, the underlying fund: What does the fund invest in? Vodafone Group PLC 3.8% Investment objectives Sanofi-Aventis 2.8% The fund’s objective is to achieve long-term growth of AstraZeneca PLC 2.7% capital through exposure to securities of large capitaliza- Royal Dutch Petroleum Co. 2.5% tion issuers located outside North America by investing its Novartis AG 2.1% CAPITAL INTERNATIONAL LARGE COMPANIES FUND assets in Class I units of Capital International-Interna- BNP Paribas 1.7% tional Equity. Sumitomo Mitsui Financial Group, Inc. 1.6% Any change to the fundamental investment objectives Royal Bank of Scotland Group PLC 1.4% must be approved by a majority of votes cast at a meeting Banco Bilbao Vizcaya Argentaria, SA 1.4% of unitholders called for that purpose. Samsung Electronics Co., Ltd. 1.4%

Investment strategies The information contained in this list may change due to ongoing portfolio transactions of the underlying fund. Current The fund has exposure to common stocks and ordinary holdings may be found at www.capitalinternationalfunds.ca. and preference shares (or securities convertible or exchangeable into such securities) of companies with You can get a copy of the simplified prospectus of the market capitalization greater than Cdn $2.25 billion at the underlying fund by calling us at 1-800-268-9269 time of purchase. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or The fund will have exposure to cash, cash equivalents and at www.sedar.com. debt securities when prevailing market and economic conditions indicate that it is desirable to do so. What are the risks of investing in the fund? While the assets of the fund can be exposed to This fund indirectly has the same risks as Capital investments around the world, the emphasis will be on International-International Equity: securities of companies located in Europe, Australia and ) the Far East, giving due consideration to economic, social equity risk and political developments, currency risks and the liquid- ) foreign investment risk ity of various national markets. ) emerging markets risk The fund may from time to time be exposed to ) currency risk investments in forward currency contracts to manage risk ) derivative risk and implement investment strategies in a more efficient ) repurchase and reverse repurchase transaction risk manner. ) securities lending risk The fund may enter into repurchase transactions, reverse ) class risk repurchase transactions and securities lending agreements to seek enhanced returns, but will only do so if there are ) underlying fund risk. EQUITY FUNDS

145 You’ll find details about each risk starting on page 164. Overall past performance This chart shows how a $10,000 investment in the fund Who should invest in this fund? would have changed in value, compared with the Morgan This fund may be suitable for you if: Stanley Capital International (MSCI) Europe Australasia and Far East (EAFE) Index. ) you want the growth potential of having exposure to $ equity securities of large foreign companies 15,000 ) you’re investing for at least three years $9,499(a) $9,092(b) ) you can accept higher risk. 10,000

$8,068 Past performance at December 31 5,000 $7,128 This section shows how the fund performed in the past and gives you an idea of the risk involved. These figures 0 Dec. 15 Dec. Dec. Dec. Dec. don’t tell you how the fund will perform in the future. 2000 2000 2001 2002 2003

CAPITAL INTERNATIONAL LARGE COMPANIES FUND Class A Units Capital International Large Companies Fund Year-by-year returns MSCI EAFE Index These charts show the fund’s annual performance, which Class F Units (a) MSCI EAFE Index changes from year to year. (b) Capital International Large Companies Fund

% Class A Units The MSCI EAFE Index measures the performance of 60% of the companies 15 listed in 20 countries in the region. Companies are weighted by their market 10 9.57% capitalization. 5 Annual compound returns 0 -1.90% -5 This table shows the fund’s annual compound returns, -10 compared with the MSCI EAFE Index. -15 Since -20 -18.14% -19.01% 1 year 3 years inception -25 Capital International Large 2000 2001 2002 2003 Companies Fund % Class F Units Class A units % 9.57 -10.11 -10.54 15 10.82% Class F units % 10.82 – -3.051 10 MSCI EAFE Index % 13.35 -7.66 2 5 0.10% 1 November 13, 2001 0 2 Class A units -6.81% and Class F units -2.36% -5 -10 -15 Distribution policy -20 -18.04% The fund distributes any income and capital gains in -25 2001* 2002 2003 * Nov. 13, 2001 to Dec. 31, 2001 December of each calendar year. Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

146 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 20001 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––– Class A units $ 27.27 85.95 150.66 342.94 from realized gain $ ––––– Class F units $ 15.17 47.82 83.82 190.81 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.48 7.76 6.29 6.89

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 7,600 35,047 52,265 58,341 Number of units outstanding (000’s) – 801 4,515 8,313 8,469 CAPITAL INTERNATIONAL LARGE COMPANIES FUND MER2 % – 2.15 2.64 2.66 2.66 Portfolio turnover rate % – – 2.47 11.36 9.89 1 These figures are for the period from November 30, 2000 to Decem- ber 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.97% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 20013 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – –7.776.377.06

Ratios and supplemental data

1999 2000 20013 2002 2003 Net assets (000’s) $ – – 42 88 19 Number of units outstanding (000’s) – – 5 14 3 MER4 %– –1.231.591.48 Portfolio turnover rate % – – 2.47 11.36 9.89 3 These figures are for the period from November 13, 2001 to December 31, 2001. 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 2.27% had we not absorbed some of these expenses. EQUITY FUNDS

147 Capital International Large Companies RSP Fund

Fund details The fund may enter into repurchase transactions, reverse repurchase transactions and securities lending agreements Fund type International equity fund to seek enhanced returns, but will only do so if there are Date established December 15, 2000 Type of securities Class A and Class F units of a mutual suitable counterparties available, if the transactions are fund trust considered appropriate and after first giving its Eligible for Yes. Units of the fund are not foreign unitholders 60 days’ prior written notice. You’ll find more registered plans? property. information about repurchase, reverse repurchase and Portfolio advisor Capital International Asset Management (Canada), Inc. securities lending transactions on page 3.

Top 10 holdings at September 30, 2004 What does the fund invest in? The following are the top 10 holdings of Capital Investment objectives International-International Equity, the underlying fund: The fund’s objective is long-term growth of capital through exposure to securities of large capitalization Vodafone Group PLC 3.8% issuers located outside North America, while maintaining Sanofi-Aventis 2.8% 100% eligibility for registered plans. The fund currently AstraZeneca PLC 2.7%

CAPITAL INTERNATIONAL LARGE COMPANIES RSP FUND uses derivatives that are linked to the performance of Royal Dutch Petroleum Co. 2.5% Capital International-International Equity. It also invests Novartis AG 2.1% directly in Class I units of Capital International-Interna- BNP Paribas 1.7% tional Equity. Sumitomo Mitsui Financial Group, Inc. 1.6% Any change to the fundamental investment objectives Royal Bank of Scotland Group PLC 1.4% must be approved by a majority of votes cast at a meeting Banco Bilbao Vizcaya Argentaria, SA 1.4% of unitholders called for that purpose. Samsung Electronics Co., Ltd. 1.4%

Investment strategies The information contained in this list may change due to ongoing portfolio transactions of the underlying fund. Current This is an RSP Fund. It aims to track the performance of holdings may be found at www.capitalinternationalfunds.ca. Capital International-International Equity as closely as possible by: You can get a copy of the simplified prospectus of the ) investing in Class I units of Capital International- underlying fund by calling us at 1-800-268-9269 International Equity up to the foreign content limit (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or ) using forward contracts that are linked to the perform- at www.sedar.com. ance of Capital International-International Equity. The fund enters into the forward contracts with a counterparty, which is usually a large financial What are the risks of investing in the fund? institution. This fund indirectly has the same risks as Capital The fund may place the balance of its assets on deposit International-International Equity: with a Canadian financial institution or may invest in ) equity risk Canadian money market instruments. This allows the fund ) foreign investment risk to maintain 100% registered plan eligibility and to cover ) emerging markets risk its positions in the forward contracts. The fund will only use derivatives as permitted by securities regulations. ) currency risk You’ll find more information in About the RSP Funds on ) derivative risk page 2. ) repurchase and reverse repurchase transaction risk EQUITY FUNDS

148 ) securities lending risk Year-by-year returns ) class risk These charts show the fund’s annual performance, which ) underlying fund risk. changes from year to year.

% Class A Units The fund also has RSP Fund risk. 15 10 9.08% You’ll find details about each risk starting on page 164. 5 0

Who should invest in this fund? -5 -5.00% -10 This fund may be suitable for you if: -15 -17.51% -20 -19.19% ) you hold your units in a registered plan other than an -25 RESP and your plan holds the maximum allowable 2000 2001 2002 2003 amount of foreign property % Class F Units 15 10.24% ) you want the growth potential of having exposure to 10 equity securities of large foreign companies 5 0 ) you’re investing for at least three years

-5 CAPITAL INTERNATIONAL LARGE COMPANIES RSP FUND ) you can accept higher risk. -10 -15 -12.80% -17.30% If you’re investing through a non-registered account or -20 -25 RESP or your registered plan holds less than the 2001* 2002 2003 maximum allowable amount of foreign property, you * May 16, 2001 to Dec. 31, 2001 should invest in the Capital International Large Compa- nies Fund directly because you’ll usually get a better Overall past performance return. The fund’s distributions are primarily considered This chart shows how a $10,000 investment in the fund income, which is taxed at a higher rate than capital gains would have changed in value, compared with the Morgan when received outside of a registered plan. This income is Stanley Capital International (MSCI) Europe Australasia generally realized more frequently than capital gains and Far East (EAFE) Index. realized by the Capital International Large Companies $ Fund. 30,000

Past performance at December 31 20,000

This section shows how the fund has performed in the $8,376(a) $8,068 past and gives you an idea of the risk involved. These 10,000

figures don’t tell you how the fund will perform in the $7,953(b) $6,906 future. 0 Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 Class A Units Capital International Large Companies RSP Fund MSCI EAFE Index Class F Units (a) MSCI EAFE Index (b) Capital International Large Companies RSP Fund The MSCI EAFE Index measures the performance of 60% of the companies listed in 20 countries in the region. Companies are weighted by their market capitalization. EQUITY FUNDS

149 Annual compound returns Financial highlights, Class F units at December 31 This table shows the fund’s annual compound returns, Distributions and net asset value per unit compared with the MSCI EAFE Index. 1999 2000 20013 2002 2003 Since Distributions 1 year 3 years inception from net income$––––– Capital International Large Companies RSP Fund from realized gain $ ––––– return of capital$––––– Class A units % 9.08 -10.08 -11.46 Total annual distributions $––––– Class F units % 10.24 – -8.361 Net asset value per unit $ – – 7.87 6.46 7.09 MSCI EAFE Index % 13.35 -7.66 2 1 May 16, 2001 2 Class A units -6.81% and Class F units -6.53% Ratios and supplemental data

1999 2000 20013 2002 2003 Distribution policy Net assets (000’s) $ – – 33 54 55 Number of units The fund distributes any income and capital gains in outstanding (000’s) – – 4 8 8 December of each calendar year. MER4 % – –1.231.921.91 Portfolio turnover Distributions on units held in Scotia registered plans and rate % – – 59.69 22.79 10.60 CAPITAL INTERNATIONAL LARGE COMPANIES RSP FUND Copilot non-registered accounts are always reinvested in 3 These figures are for the period from May 16, 2001 to December 31, additional units of the fund. Distributions on units held in 2001. 4 We may from time to time absorb some of the operating expenses that other registered plans and non-registered accounts are the fund would otherwise pay. In 2003, the management expense ratio reinvested in additional units of the fund, unless you tell of the fund would have been 3.25% had we not absorbed some of these expenses. us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. Fund expenses indirectly borne by investors

Financial highlights, Class A units This example shows the fund’s expenses on a $1,000 at December 31 investment with a 5% annual return. Distributions and net asset value per unit Fees and expenses 1999 20001 2001 2002 2003 payable over 1 year 3 years 5 years 10 years Distributions Class A units $ 30.55 96.29 168.78 384.19 from net income$–––––Class F units $ 19.58 61.72 108.18 246.25 from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.47 7.82 6.32 6.89

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 154 2,055 27,980 28,111 Number of units outstanding (000’s) – 16 263 4,431 4,081 MER2 % – 2.46 2.96 2.99 2.98 Portfolio turnover rate % – – 59.69 22.79 10.60 1 These figures are for the period from November 30, 2000 to December 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.27% had we not absorbed some of

EQUITY FUNDS these expenses.

150 Capital Global Discovery Fund Fund details Top 10 holdings at September 30, 2004

Fund type Global equity fund The following are the top 10 holdings of Capital Date established December 15, 2000 International-Global Discovery, the underlying fund: Type of securities Class A and Class F units of a mutual fund trust American International Group, Inc. 3.4% Eligible for Yes. Units of the fund are foreign registered plans? property. Time Warner Inc. 2.6% Portfolio advisor Capital International Asset Lowe’s Companies, Inc. 2.5% Management (Canada), Inc. NHN Corp. 2.1% Perusahaan Perseroan (Persero) CAPITAL GLOBAL DISCOVERY FUND What does the fund invest in? PT Telekomunikasi Indonesia Tbk 2.0% First Data Corp. 2.0% Investment objectives IAC/InterActiveCorp. 1.8% The fund’s objective is to achieve long-term growth of eBay Inc. 1.6% capital through exposure to stocks of companies in the Wells Fargo & Co. 1.6% services and information area of the global economy by Applied Materials, Inc. 1.6% investing its assets in Class I units of Capital Interna- tional-Global Discovery. The information contained in this list may change due to ongoing portfolio transactions of the underlying fund. Current Any change to the fundamental investment objectives holdings may be found at www.capitalinternationalfunds.ca. must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. You can get a copy of the simplified prospectus of the underlying fund by calling us at 1-800-268-9269 Investment strategies (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or The fund may have exposure to companies outside the at www.sedar.com. services and information area at the time of purchase. It may have exposure to securities on a global basis. What are the risks of investing in the fund? Currently, the portfolio advisor expects the majority of the fund’s assets to have U.S. exposure. This fund indirectly has the same risks as Capital International-Global Discovery: The fund will have exposure to cash, cash equivalents and ) equity risk debt securities when prevailing market and economic ) conditions indicate that it is desirable to do so. foreign investment risk ) emerging markets risk The fund may from time to time be exposed to ) investments in forward currency contracts to manage risk currency risk and implement investment strategies in a more efficient ) liquidity risk manner. ) derivative risk The fund may enter into repurchase transactions, reverse ) repurchase and reverse repurchase transaction risk repurchase transactions and securities lending agreements ) securities lending risk to seek enhanced returns, but will only do so if there are ) class risk suitable counterparties available, if the transactions are considered appropriate and after first giving its ) underlying fund risk (as at October 1, 2004, Scotia unitholders 60 days’ prior written notice. You’ll find more Securities Inc., Toronto, Ontario held approximately information about repurchase, reverse repurchase and 64.5% of the outstanding units of the fund.) securities lending transactions on page 3. You’ll find details about each risk starting on page 164. EQUITY FUNDS

151 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want the growth potential of having exposure to would have changed in value, compared with the Morgan equity securities of global information and services Stanley Capital International (MSCI) World Index and companies compared with a blended index of 50% Lipper Multi-Cap Growth Funds Index, 25% Russell 2500 Index and 25% ) you’re investing for at least three years MSCI Europe Australasia and Far East (EAFE) Index. ) you can accept higher risk. $ 20,000 CAPITAL GLOBAL DISCOVERY FUND Past performance at December 31 $7,956 $7,916(a) This section shows how the fund performed in the past (c) $7,858 and gives you an idea of the risk involved. These figures 10,000 $7,851(b) don’t tell you how the fund will perform in the future. $7,673

$7,514

Year-by-year returns 0 Dec. 15 Dec. Dec. Dec. Dec. These charts show the fund’s annual performance, which 2000 2000 2001 2002 2003 Class A Units changes from year to year. Capital Global Discovery Fund MSCI World Index % Class A Units 25 Blended Index 20 17.70% Class F Units 15 10 (a) Blended Index 5 (b) MSCI World Index 0 -0.60% (c) Capital Global Discovery Fund -5 -5.12% -10 -15 The MSCI World Index is an index of approximately 1,600 companies listed -20 on stock exchanges in the 22 countries that make up the MSCI national -25 indexes. -30 -28.34% -35 Russell 2500 Index measures the performance of the 2,500 smallest 2000 2001 2002 2003 companies in the Russell 3000 Index, which represents approximately 17% of the total market capitalization of the Russell 3000 Index. The Russell % Class F Units 25 3000 Index measures the performance of the 3,000 largest U.S. companies 20 18.63% based on total market capitalization, which represents approximately 98% 15 of the investable U.S. equity market. 10 MSCI EAFE Index measures the performance of 60% of the companies listed 5 0 in 20 countries in the region. Companies are weighted by their market -5 capitalization. -10 -9.20% The Lipper Multi-Cap Growth Funds Index measures the performance of -15 funds that, by portfolio practice, invest in a variety of market capitalization -20 -25 ranges without concentrating 75% of their equity assets in any one market -30 -27.07% capitalization range over an extended period of time. Multi-cap funds -35 typically have between 25% to 75% of their assets invested in companies 2001* 2002 2003 with market capitalizations (on a three-year weighted basis) above 300% of * May 16, 2001 to Dec. 31, 2001 the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Multi-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. EQUITY FUNDS

152 Annual compound returns of the fund would have been 3.34% had we not absorbed some of these expenses. This table shows the fund’s annual compound returns, compared with the MSCI World Index and compared with Financial highlights, Class F units a blended index of 50% Lipper Multi-Cap Growth Funds at December 31 Index, 25% Russell 2500 Index and 25% MSCI EAFE Distributions and net asset value per unit

Index. 3 Since 1999 2000 2001 2002 2003 1 year 3 years inception Distributions Capital Global Discovery Fund from net income $ ––––– Class A units % 17.70 -7.16 -7.24 from realized gain $ –––––

Class F units % 18.63 – -8.771 return of capital$––––– CAPITAL GLOBAL DISCOVERY FUND MSCI World Index % 8.87 -8.62 2 Total annual distributions $ ––––– Blended Index % 13.65 -9.09 3 Net asset value per unit $ – – 9.20 6.71 7.96 1 May 16, 2001 2 Class A units -8.34% and Class F units -8.80% 3 Class A units -8.97% and Class F units -25.98% Ratios and supplemental data

1999 2000 20013 2002 2003 Distribution policy Net assets (000’s) $ – – 17 12 10 The fund distributes any income and capital gains in Number of units December of each calendar year. outstanding (000’s) – – 2 2 1 MER4 % – –1.281.611.62 Distributions on units held in Scotia registered plans and Portfolio turnover Copilot non-registered accounts are always reinvested in rate % – – 2.38 5.86 5.28 3 These figures are for the period from May 16, 2001 to December 31, additional units of the fund. Distributions on units held in 2001. other registered plans and non-registered accounts are 4 We may from time to time absorb some of the operating expenses that reinvested in additional units of the fund, unless you tell the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 6.87% had we not absorbed some of us in writing that you want to receive cash distributions these expenses. by cheque or by deposit to your bank account. Fund expenses indirectly borne by investors Financial highlights, Class A units at December 31 This example shows the fund’s expenses on a $1,000 Distributions and net asset value per unit investment with a 5% annual return. 1999 20001 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––– Class A units $ 27.47 86.60 151.79 345.52 from realized gain $ ––––– Class F units $ 16.61 52.35 91.75 208.86 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.69 9.19 6.59 7.75

Ratios and supplemental data 1999 20001 2001 2002 2003 Net assets (000’s) $ – 4,711 6,107 4,643 5,682 Number of units outstanding (000’s) – 486 664 705 733 MER2 % – 2.36 2.65 2.69 2.68 Portfolio turnover rate % – – 2.38 5.86 5.28 1 These figures are for the period from November 30, 2000 to December 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio EQUITY FUNDS

153 Capital Global Discovery RSP Fund

Fund details to seek enhanced returns, but will only do so if there are Fund type Global equity fund suitable counterparties available, if the transactions are Date established December 15, 2000 considered appropriate and after first giving its Type of securities Class A and Class F units of a mutual unitholders 60 days’ prior written notice. You’ll find more fund trust information about repurchase, reverse repurchase and Eligible for Yes. Units of the fund are not foreign securities lending transactions on page 3. registered plans? property. Portfolio advisor Capital International Asset Management (Canada), Inc. Top 10 holdings at September 30, 2004

What does the fund invest in? The following are the top 10 holdings of Capital International-Global Discovery, the underlying fund: Investment objectives

CAPITAL GLOBAL DISCOVERY RSP FUND The fund’s objective is long-term growth of capital American International Group, Inc. 3.4% through exposure to stocks of companies in the services Time Warner Inc. 2.6% and information area of the global economy, while Lowe’s Companies, Inc. 2.5% NHN Corp. 2.1% maintaining 100% eligibility for registered plans. The fund Perusahaan Perseroan (Persero) currently uses derivatives that are linked to the perform- PT Telekomunikasi Indonesia Tbk 2.0% ance of Capital International-Global Discovery. It also First Data Corp. 2.0% invests directly in Class I units of Capital International- IAC/InterActiveCorp. 1.8% Global Discovery. eBay Inc. 1.6% Wells Fargo & Co. 1.6% Any change to the fundamental investment objectives Applied Materials, Inc. 1.6% must be approved by a majority of votes cast at a meeting of unitholders called for that purpose. The information contained in this list may change due to ongoing portfolio transactions of the underlying fund. Current Investment strategies holdings may be found at www.capitalinternationalfunds.ca. This is an RSP Fund. It aims to track the performance of You can get a copy of the simplified prospectus of the Capital International-Global Discovery as closely as possi- underlying fund by calling us at 1-800-268-9269 ble by: (416-750-3863 in Toronto) for English, or 1-800-387-5004 ) investing in Class I units of Capital International-Global for French, by asking your mutual fund representative, or Discovery up to the foreign content limit at www.sedar.com. ) using forward contracts that are linked to the perform- ance of Capital International-Global Discovery. The What are the risks of investing in the fund? fund enters into the forward contracts with a counterparty, which is usually a large financial This fund indirectly has the same risks as Capital institution. International-Global Discovery: ) equity risk The fund may place the balance of its assets on deposit ) with a Canadian financial institution or may invest in foreign investment risk Canadian money market instruments. This allows the fund ) emerging markets risk to maintain 100% registered plan eligibility and to cover ) currency risk its positions in the forward contracts. The fund will only ) liquidity risk use derivatives as permitted by securities regulations. You’ll find more information in About the RSP Funds on ) derivative risk page 2. ) repurchase and reverse repurchase transaction risk The fund may enter into repurchase transactions, reverse ) securities lending risk EQUITY FUNDS repurchase transactions and securities lending agreements

154 ) % Class F Units class risk 25 20 18.04% ) underlying fund risk. 15 10 5 The fund also has RSP Fund risk. 0 -5 -10 You’ll find details about each risk starting on page 164. -15 -20 Who should invest in this fund? -25 -30 -29.20% -35 This fund may be suitable for you if: 2002* 2003 * Jan. 8, 2002 to Dec. 31, 2002. ) you hold your units in a registered plan other than an RESP and your plan holds the maximum allowable Overall past performance

amount of foreign property CAPITAL GLOBAL DISCOVERY RSP FUND This chart shows how a $10,000 investment in the fund ) you want the growth potential of having exposure to would have changed in value, compared with the Morgan equity securities of global information and services Stanley Capital International (MSCI) World Index and companies compared with a blended index of 50% Lipper Multi-Cap ) you’re investing for at least three years Growth Funds Index, 25% Russell 2500 Index and 25% ) you can accept higher risk. MSCI Europe, Australasia and Far East (EAFE) Index. $ If you’re investing through a non-registered account or 20,000 RESP or your registered plan holds less than the $8,685(b) maximum allowable amount of foreign property, you $8,596(a) $8,435(c) should invest in the Capital Global Discovery Fund $7,722 10,000 $7,673 directly because you’ll usually get a better return. The fund’s distributions are primarily considered income, $7,514 which is taxed at a higher rate than capital gains when received outside of a registered plan. This income is 0 Dec. 15 Dec. Dec. Dec. Dec. generally realized more frequently than capital gains 2000 2000 2001 2002 2003 realized by the Capital Global Discovery Fund. Class A Units Capital Global Discovery RSP Fund MSCI World Index Past performance at December 31 Blended Index This section shows how the fund has performed in the Class F Units (a) Blended Index past and gives you an idea of the risk involved. These (b) MSCI World Index figures don’t tell you how the fund will perform in the (c) Capital Global Discovery RSP Fund future. The MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national indexes. Year-by-year returns Russell 2500 Index measures the performance of the 2,500 smallest These charts show the fund’s annual performance, which companies in the Russell 3000 Index, which represents approximately 17% of the total market capitalization of the Russell 3000 Index. The Russell changes from year to year. 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% % Class A Units of the investable U.S. equity market. 30 MSCI EAFE Index measures the performance of 60% of the companies listed 20 17.20% in 20 countries in the region. Companies are weighted by their market 10 capitalization. 0 The Lipper Multi-Cap Growth Funds Index measures the performance of -3.60% -4.38% funds that, by portfolio practice, invest in a variety of market capitalization -10 ranges without concentrating 75% of their equity assets in any one market -20 capitalization range over an extended period of time. Multi-cap funds typically have between 25% to 75% of their assets invested in companies -30 -28.53% with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 -40 EQUITY FUNDS 2000 2001 2002 2003 securities of the S&P SuperComposite 1500 Index. Multi-cap growth funds

155 typically have an above-average price-to-earnings ratio, price-to-book ratio, Ratios and supplemental data and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. 1999 20001 2001 2002 2003 Net assets (000’s) $ – 177 1,949 1,598 1,805 Annual compound returns Number of units outstanding (000’s) – 18 212 243 234 This table shows the fund’s annual compound returns, MER2 % – 2.51 2.99 3.01 3.00 compared with the MSCI World Index and compared with a Portfolio turnover rate % – – 5.08 84.10 11.87 blended index of 50% Lipper Multi-Cap Growth Funds Index, 1 These figures are for the period from November 30, 2000 to December 31, 2000. 25% Russell 2500 Index and 25% MSCI EAFE Index. 2 We may from time to time absorb some of the operating expenses that Since the fund would otherwise pay. In 2003, the management expense ratio 1 year 3 years inception of the fund would have been 5.67% had we not absorbed some of Capital Global Discovery RSP Fund these expenses.

CAPITAL GLOBAL DISCOVERY RSP FUND Class A units % 17.20 -7.13 -8.15 Class F units % 18.04 – -8.251 2 Financial highlights, Class F units MSCI World Index % 8.87 -8.62 at December 31 Blended Index % 13.65 -9.09 3 1 Distributions and net asset value per unit January 8, 2002 2 Class A units 8.34% and Class F units -6.88% 3 3 Class A units -8.97% and Class F units -7.37% 1999 2000 2001 2002 2003 Distributions Distribution policy from net income$––––– from realized gain $ ––––– The fund distributes any income and capital gains in return of capital$––––– December of each calendar year. Total annual distributions $––––– Distributions on units held in Scotia registered plans and Net asset value per unit $ – – – 6.65 7.85 Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in Ratios and supplemental data

other registered plans and non-registered accounts are 1999 2000 2001 20023 2003 reinvested in additional units of the fund, unless you tell Net assets (000’s) $ – – – 7 8 us in writing that you want to receive cash distributions Number of units by cheque or by deposit to your bank account. outstanding (000’s) – – – 1 1 MER4 % – – – 1.92 1.93 Financial highlights, Class A units Portfolio turnover rate % – – – 84.10 11.87 at December 31 3 These figures are for the period from January 8, 2002 to December 31, 2002. Distributions and net asset value per unit 4 We may from time to time absorb some of the operating expenses that 1999 20001 2001 2002 2003 the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 9.92% had we not absorbed some of Distributions these expenses. from net income$––––– from realized gain $ ––––– Fund expenses indirectly borne by investors return of capital$––––– Total annual distributions $–––––This example shows the fund’s expenses on a $1,000 Net asset value per unit $ – 9.62 9.20 6.57 7.70 investment with a 5% annual return.

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 30.75 96.94 169.91 386.77 Class F units $ 19.78 62.36 109.31 248.82 EQUITY FUNDS

156 Capital Global Small Companies Fund Fund details Top 10 holdings at September 30, 2004

Fund type Global small capitalization equity fund The following are the top 10 holdings of Capital Date established December 15, 2000 International-Global Small Cap, the underlying fund: Type of securities Class A and Class F units of a mutual fund trust Fuji Seal, Inc. 1.5% Eligible for Yes. Units of the fund are foreign registered plans? property. Advanced Energy Industries, Inc. 1.4% Portfolio advisor Capital International Asset Cymer, Inc. 1.4% Management (Canada), Inc. Veeco Instruments Inc. 1.4% ADVO, Inc. 1.4% What does the fund invest in? Pusan Bank 1.4%

Investment objectives EXEDY Corp. 1.4%

Aker Kvaerner ASA 1.3% CAPITAL GLOBAL SMALL COMPANIES FUND The fund’s objective is to achieve long-term growth of Arbitron Inc. 1.3% capital through exposure to equity securities of companies Tsubaki Nakashima Co., Ltd. 1.3% located around the world with relatively small market capitalizations of approximately $75 million to $2.25 bil- The information contained in this list may change due to lion at the time of investment by investing its assets in ongoing portfolio transactions of the underlying fund. Current Class I units of Capital International-Global Small Cap. holdings may be found at www.capitalinternationalfunds.ca.

Any change to the fundamental investment objectives You can get a copy of the simplified prospectus of the must be approved by a majority of votes cast at a meeting underlying fund by calling us at 1-800-268-9269 of unitholders called for that purpose. (416-750-3863 in Toronto) for English, or 1-800-387-5004 for French, by asking your mutual fund representative, or Investment strategies at www.sedar.com.

At least 65% of the funds’ assets will be exposed to equity What are the risks of investing in the fund? securities of small capitalization issuers, with investments outside the U.S. in at least three countries. This fund indirectly has the same risks as Capital International-Global Small Cap: Although the fund intends to have exposure to such ) equity risk issuers, it may be exposed to cash, cash equivalents and debt securities when prevailing market and economic ) small company risk conditions indicate that it is desirable to do so. ) foreign investment risk The fund may from time to time be exposed to ) emerging markets risk investments in forward currency contracts in order to ) currency risk manage risk and implement investment strategies in a ) liquidity risk more efficient manner. ) derivative risk The fund may enter into repurchase transactions, reverse ) repurchase and reverse repurchase transaction risk repurchase transactions and securities lending agreements ) to seek enhanced returns, but will only do so if there are securities lending risk suitable counterparties available, if the transactions are ) class risk considered appropriate and after first giving its ) underlying fund risk (as at October 1, 2004, Scotia unitholders 60 days’ prior written notice. You’ll find more Securities Inc., Toronto, Ontario held approximately information about repurchase, reverse repurchase and 89.0% of the outstanding units of the fund.) securities lending transactions on page 3. You’ll find details about each risk starting on page 164. EQUITY FUNDS

157 Who should invest in this fund? Overall past performance

This fund may be suitable for you if: This chart shows how a $10,000 investment in the fund ) you want the growth potential of having exposure to would have changed in value, compared with the Morgan equity securities of smaller global companies Stanley Capital International (MSCI) World Index. ) $ you’re investing for at least five years 20,000 ) you can accept higher risk. 15,000 $10,576(a) Past performance at December 31 $10,321(b) 10,000 $7,739 This section shows how the fund performed in the past $7,673 5,000 and gives you an idea of the risk involved. These figures

CAPITAL GLOBAL SMALL COMPANIES FUND don’t tell you how the fund will perform in the future. 0 Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 Year-by-year returns Class A Units Capital Global Small Companies Fund These charts show the fund’s annual performance, which MSCI World Index changes from year to year. Class F Units (a) MSCI World Index % Class A Units 20 (b) Capital Global Small Companies Fund 16.38% 15 MSCI World Index is an index of approximately 1,600 companies listed on 10 stock exchanges in the 22 countries that make up the MSCI national 5 indexes. 0 -5 -5.50% Annual compound returns -10 -15 -14.51% This table shows the fund’s annual compound returns, -20 -17.69% -25 compared with the MSCI World Index. 2000 2001 2002 2003 Since 1 year 3 years inception % Class F Units 25 Capital Global Small Companies Fund 20.88% Class A units % 16.38 -6.44 -8.08 20 Class F units % – – 20.881 15 MSCI World Index % 8.87 -8.62 2 1 October 29, 2003 10 2 Class A units -8.34% and Class F units 39.94%

5 Distribution policy 0 2003* * Oct. 29, 2003 to Dec. 31, 2003 The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account. EQUITY FUNDS

158 Financial highlights, Class A units Fund expenses indirectly borne by investors at December 31 Distributions and net asset value per unit This example shows the fund’s expenses on a $1,000 investment with a 5% annual return. 1999 20001 2001 2002 2003 Distributions Fees and expenses payable over 1 year 3 years 5 years 10 years from net income$––––– Class A units $ 29.32 92.42 161.98 368.72 from realized gain $ ––––– Class F units $ 18.14 57.19 100.25 228.20 return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.15 7.53 6.44 7.49

Ratios and supplemental data CAPITAL GLOBAL SMALL COMPANIES FUND 1999 20001 2001 2002 2003 Net assets (000’s) $ – 7,199 6,269 5,534 6,536 Number of units outstanding (000’s) – 787 833 860 872 MER2 % – 2.52 2.81 2.86 2.86 Portfolio turnover rate % – – 2.57 4.16 3.09 1 These figures are for the period from November 30, 2000 to December 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 3.32% had we not absorbed some of these expenses.

Financial highlights, Class F units at December 31 Distributions and net asset value per unit

1999 2000 2001 2002 20033 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $––––7.50

Ratios and supplemental data

1999 2000 2001 2002 20033 Net assets (000’s)$––––6 Number of units outstanding (000’s) ––––1 MER4 %––––1.77 Portfolio turnover rate % ––––3.09 3 These figures are for the period from October 29, 2003 to December 31, 2003. 4 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 7.55% had we not absorbed some of these expenses. EQUITY FUNDS

159 Capital Global Small Companies RSP Fund

Fund details The fund may enter into repurchase transactions, reverse repurchase transactions and securities lending agreements Fund type Global small capitalization equity fund to seek enhanced returns, but will only do so if there are Date established December 15, 2000 Type of securities Class A and Class F units of a mutual suitable counterparties available, if the transactions are fund trust considered appropriate and after first giving its Eligible for Yes. Units of the fund are not foreign unitholders 60 days’ prior written notice. You’ll find more registered plans? property. information about repurchase, reverse repurchase and Portfolio advisor Capital International Asset Management (Canada), Inc. securities lending transactions on page 3.

Top 10 holdings at September 30, 2004 What does the fund invest in? The following are the top 10 holdings of Capital Investment objectives International-Global Small Cap, the underlying fund: The fund’s objective is long-term growth of capital Fuji Seal, Inc. 1.5%

CAPITAL GLOBAL SMALL COMPANIES RSP FUND through exposure to equity securities of companies Advanced Energy Industries, Inc. 1.4% located around the world with relatively small market Cymer, Inc. 1.4% capitalizations of approximately $75 million to $2.25 bil- Veeco Instruments Inc. 1.4% lion at the time of investment, while maintaining 100% ADVO, Inc. 1.4% eligibility for registered plans. The fund currently uses Pusan Bank 1.4% derivatives that are linked to the performance of Capital EXEDY Corp. 1.4% International-Global Small Cap. It also invests directly in Aker Kvaerner ASA 1.3% Class I units of Capital International-Global Small Cap. Arbitron Inc. 1.3% Tsubaki Nakashima Co., Ltd. 1.3% Any change to the fundamental investment objectives must be approved by a majority of votes cast at a meeting The information contained in this list may change due to of unitholders called for that purpose. ongoing portfolio transactions of the underlying fund. Current holdings may be found at www.capitalinternationalfunds.ca. Investment strategies You can get a copy of the simplified prospectus of the This is an RSP Fund. It aims to track the performance of underlying fund by calling us at 1-800-268-9269 Capital International-Global Small Cap as closely as (416-750-3863 in Toronto) for English, or 1-800-387-5004 possible by: for French, by asking your mutual fund representative, or ) investing in Class I units of Capital International-Global at www.sedar.com. Small Cap up to the foreign content limit ) using forward contracts that are linked to the perform- What are the risks of investing in the fund? ance of Capital International-Global Small Cap. The This fund indirectly has the same risks as Capital fund enters into the forward contracts with a International-Global Small Cap: counterparty, which is usually a large financial institution. ) equity risk ) small company risk The fund may place the balance of its assets on deposit with a Canadian financial institution or may invest in ) foreign investment risk Canadian money market instruments. This allows the fund ) emerging markets risk to maintain 100% registered plan eligibility and to cover ) currency risk its positions in the forward contracts. The fund will only ) use derivatives as permitted by securities regulations. liquidity risk You’ll find more information in About the RSP Funds on ) derivative risk EQUITY FUNDS page 2. ) repurchase and reverse repurchase transaction risk

160 ) securities lending risk Year-by-year returns ) class risk This chart shows the fund’s annual performance, which ) underlying fund risk (as at October 1, 2004, Scotia changes from year to year.

Securities Inc., Toronto, Ontario held approximately % Class A Units 20 16.0% of the outstanding units of the fund.) 14.95% 15 The fund also has RSP Fund risk. 10 5 You’ll find details about each risk starting on page 164. 0 -5 -10 -8.90% Who should invest in this fund? -15 -14.83% -16.45% -20 This fund may be suitable for you if: 2000 2001 2002 2003 ) you hold your units in a registered plan other than an Overall past performance

RESP and your plan holds the maximum allowable CAPITAL GLOBAL SMALL COMPANIES RSP FUND amount of foreign property This chart shows how a $10,000 investment in the fund ) you want the growth potential of having exposure to would have changed in value, compared with the Morgan equity securities of smaller global companies Stanley Capital International (MSCI) World Index. ) you’re investing for at least five years $ 20,000 ) you can accept higher risk. 15,000 If you’re investing through a non-registered account or RESP or your registered plan holds less than the 10,000 $7,673 maximum allowable amount of foreign property, you $7,453 should invest in the Capital Global Small Companies Fund 5,000 directly because you’ll usually get a better return. The 0 fund’s distributions are primarily considered income, Dec. 15 Dec. Dec. Dec. Dec. 2000 2000 2001 2002 2003 which is taxed at a higher rate than capital gains when Class A Units received outside of a registered plan. This income is Capital Global Small Companies RSP Fund generally realized more frequently than capital gains MSCI World Index realized by the Capital Global Small Companies Fund. MSCI World Index is an index of approximately 1,600 companies listed on stock exchanges in the 22 countries that make up the MSCI national indexes. Past performance at December 31 Annual compound returns This section shows how the fund has performed in the past and gives you an idea of the risk involved. These This table shows the fund’s annual compound returns, figures don’t tell you how the fund will perform in the compared with the MSCI World Index. Since future. 1 year 3 years inception Capital Global Small Companies RSP Fund Class A units % 14.95 -6.48 -9.21 MSCI World Index % 8.87 -8.62 -8.34 EQUITY FUNDS

161 Distribution policy

The fund distributes any income and capital gains in December of each calendar year.

Distributions on units held in Scotia registered plans and Copilot non-registered accounts are always reinvested in additional units of the fund. Distributions on units held in other registered plans and non-registered accounts are reinvested in additional units of the fund, unless you tell us in writing that you want to receive cash distributions by cheque or by deposit to your bank account.

Financial highlights, Class A units at December 31

CAPITAL GLOBAL SMALL COMPANIES RSP FUND Distributions and net asset value per unit

1999 20001 2001 2002 2003 Distributions from net income$––––– from realized gain $ ––––– return of capital$––––– Total annual distributions $––––– Net asset value per unit $ – 9.09 7.59 6.47 7.43

Ratios and supplemental data

1999 20001 2001 2002 2003 Net assets (000’s) $ – 149 497 500 619 Number of units outstanding (000’s) – 16 65 77 83 MER2 % – 2.68 3.16 3.18 3.16 Portfolio turnover rate % – – 20.94 49.65 18.40 1 These figures are for the period from November 30, 2000 to Decem- ber 31, 2000. 2 We may from time to time absorb some of the operating expenses that the fund would otherwise pay. In 2003, the management expense ratio of the fund would have been 11.49% had we not absorbed some of these expenses.

Fund expenses indirectly borne by investors

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

Fees and expenses payable over 1 year 3 years 5 years 10 years Class A units $ 32.39 102.11 178.98 407.40 EQUITY FUNDS

162 What is a mutual fund and what are the risks of investing in a mutual fund?

For many Canadians, mutual funds represent a simple and What are the risks? affordable way to meet their financial goals. But what exactly While everyone wants to make money when they invest, you is a mutual fund, why invest in them, and what are the risks? could lose money, too. This is known as risk. Like other What is a mutual fund? investments, mutual funds involve some level of risk. The value of a fund’s securities can change from day to day for A mutual fund is an investment that pools your money with many reasons, including changes in the economy, interest the money of many other people. Professional portfolio rates, and market and company news. That means the value of advisors use that money to buy securities that they believe will mutual fund units can vary. When you sell your units in a help achieve the fund’s investment objectives. These securities fund, you could receive less money than you invested. could be stocks, bonds, mortgages, money market instruments, or a combination of these. The amount of risk depends on the fund’s investment objectives and the types of securities it invests in. A general When you invest in a mutual fund, you receive units of the rule of investing is that the higher the risk, the higher the fund. Each unit represents a proportionate share of all of the potential for gains as well as losses. Cash equivalent funds mutual fund’s assets. All of the investors in a mutual fund usually offer the least risk because they invest in highly liquid, share in the fund’s income, gains and losses. Investors also pay short-term investments such as treasury bills. Their potential their share of the fund’s expenses. returns are tied to short-term interest rates. Income funds Why invest in mutual funds? invest in bonds and other fixed income investments. These Mutual funds offer investors three key benefits: professional funds typically have higher long-term returns than cash money management, diversification and accessibility. equivalent funds, but they carry more risk because their prices can change when interest rates change. Equity funds expose ) Professional money management. Professional portfolio investors to the highest level of risk because they invest in advisors have the expertise to make the investment equity securities, such as common shares, whose prices can decisions. They also have access to up-to-the-minute infor- rise and fall significantly in a short period of time. mation on trends in the financial markets, and in-depth data and research on potential investments. Managing risk ) Diversification. Because your money is pooled with that of While risk is an important factor to consider when you’re other investors, a mutual fund offers diversification into choosing a mutual fund, you should also think about your many securities that may not have otherwise been available investment goals and when you’ll need your money. For to individual investors. example, if you’re saving for a large purchase in the next year or so, you might consider investing in a fund with low risk. If ) Accessibility. Mutual funds have low investment minimums, you want your retirement savings to grow over the next making them accessible to nearly everyone. 20 years, you can probably afford to put more of your money No guarantees in equity funds. While mutual funds have many benefits, it’s important to A carefully chosen mix of investments can help reduce risk as remember that an investment in a mutual fund isn’t you meet your investment goals. Your mutual fund representa- guaranteed. Unlike bank accounts or guaranteed investment tive can help you build a portfolio that’s suited to your goals certificates (GICs), mutual fund units aren’t covered by the and risk comfort level. If you don’t have a mutual fund Canada Deposit Insurance Corporation (CDIC) or any other representative, we recommend using the Scotia˛ Investment government deposit insurer, and your investment in the Scotia Selector tool to determine your goals and personal risk profile. Mutual Funds is not guaranteed by Scotiabank, Montreal Trust It’s available at Scotiabank branches, by calling 1-800-268-9269, or National Trust. or on the Internet at www.scotiabank.com. Under exceptional circumstances, a mutual fund may suspend If your investment goals or tolerance for risk changes, your right to sell your units. See Suspending your right to remember, you can and should change your investments to buy, switch and sell units on page 173 for details. match your new situation.

163 Specific risks of mutual funds highest among issuers that have a low credit rating or no The value of the investments a mutual fund holds can change credit rating. Issuers with a low credit rating usually offer for a number of reasons. You’ll find the specific risks of higher interest rates to make up for the higher risk. The investing in each of the Scotia Mutual Funds in the individual bonds of issuers with poor credit ratings generally have yields fund descriptions starting on page 6. This section tells you that are higher then bonds of issuers with superior credit more about each risk. ratings. Bonds of issuers that have poor credit ratings tend to be more volatile as there is a greater likelihood of bankruptcy Asset-backed and mortgage-backed securities risk or default. Asset-backed securities are debt obligations that are backed by Currency risk pools of consumer or business loans. Mortgage-backed securi- ties are debt obligations backed by pools of mortgages on When a mutual fund buys an investment that’s denominated in commercial or residential real estate. If there are changes in a foreign currency, changes in the exchange rate between that the market perception of the issuers of these types of currency and the Canadian dollar will affect the value of the securities, or in the creditworthiness of the parties involved, fund. then the value of the securities may be affected. In the use of Derivative risk mortgage-backed securities, there is also a risk that there may Derivatives can be useful for hedging against losses, gaining be a drop in the interest rates charged on mortgages, a exposure to financial markets and making indirect invest- mortgagor may default on its obligations under a mortgage or ments, but they involve certain risks: there may be a drop in the value of the property secured by the mortgage. ) Hedging with derivatives may not achieve the intended result. Hedging instruments rely on historical or anticipated Class risk correlations to predict the impact of certain events, which Some mutual funds offer two or more classes of units of the may or may not occur. If they occur, they may not have the same fund. Although the value of each class is calculated predicted effect. separately, there’s a risk that the expenses or liabilities of one ) It’s difficult to hedge against trends that the market has class of units may affect the value of the other classes. If one already anticipated. class is unable to cover its liabilities, the other classes are ) legally responsible for covering the difference. We believe that Costs relating to entering and maintaining derivatives this risk is very low. contracts may reduce the returns of a fund. ) A currency hedge will reduce the benefits of gains if the Concentration risk hedged currency increases in value. Some mutual funds concentrate their investments in a single ) Currency hedging can be difficult in smaller emerging industry, country or geographic area. This allows them to focus growth countries because of the limited size of those on the potential of that particular industry, country or area. markets. Other funds, such as index funds, may be permitted to concentrate more of their assets in one or more securities ) Currency hedging provides no protection against changes in than is usually permitted for mutual funds. This allows them the value of the underlying securities. to more accurately track the performance of their target ) There’s no guarantee that a liquid exchange or market for index. Mutual funds that concentrate their investments tend derivatives will exist. This could prevent a fund closing out to have greater fluctuations in price than funds with broader its positions to realize gains or limit losses. At worst, a fund diversification. This is because they invest in fewer securities, might face losses from having to exercise underlying futures and in the case of industry, country or geographically contracts. restricted funds, those securities may be affected by the same ) factors. The prices of derivatives can be distorted if trading in their underlying stocks is halted. Trading in the derivative might Credit risk be interrupted if trading is halted in a large number of the A fixed income security, such as a bond, is a promise to pay underlying stocks. This would make it difficult for a fund to interest and repay the principal on the maturity date. There’s close out its positions. always a risk that the issuer will fail to honour that promise. ) The other party in a derivatives contract might not be able This is called credit risk. Credit risk is lowest among issuers to meet its obligations. that have a high credit rating from a credit rating agency. It’s

164 ) Derivatives trading on foreign markets may take longer and by laws of a province of Canada or of a state of the United be more difficult to complete. Foreign derivatives are States which limits the liability of the unitholders of the subject to the foreign investment risks described below. income trust. A mutual fund may invest in income trusts, ) Investment dealers and futures brokers may hold a fund’s including REITs, in Canada or elsewhere that are not governed assets on deposit as collateral in a derivative contract. As a by similar laws. In such cases, to the extent that claims, result, someone other than the fund’s custodian is responsi- whether in contract, in tort or as a result of tax or statutory ble for the safekeeping of that part of the fund’s assets. liability against a trust are not satisfied by the trust, holders of units in the trusts, including a fund, could be held liable Equity risk for such obligations. Income trusts generally seek to make this Funds that invest in equities, such as common shares, are risk remote in the case of contract by including provisions in affected by changes in the general economy and financial their agreements that the obligations of the income trust will markets, as well as by the success or failure of the companies not be binding on unitholders personally. However, the income that issued the securities. When stock markets rise, the value trust would still have exposure to damage claims not arising of equity securities tends to rise. When stock markets fall, the from contract, such as personal injury and environmental value of equity securities tends to fall. Convertible securities claims. may also be subject to interest rate risk. Index risk Emerging markets risk Some mutual funds have an investment objective that requires Some mutual funds may invest in foreign companies or them to duplicate the investment portfolio of a particular governments (other than the U.S.) which may be located in, index. Depending on market conditions, one or more of the or operate, in developing countries. Companies in these securities listed in that index may account for more than 10% markets may have limited product lines, markets or resources, of the net assets of the mutual fund. As an index mutual fund making it difficult to measure the value of the company. and the index it tracks become less diversified, the index Political instability, possible corruption, as well as lower mutual fund is exposed to greater concentration and liquidity standards of business regulation increase the risk of fraud and risk and may become more volatile. other legal issues. In addition to foreign investment risk Interest rate risk described below, these mutual funds may be exposed to greater volatility as a result of such issues. Mutual funds that invest in fixed income securities, such as bonds and money market instruments, are sensitive to changes Foreign investment risk in interest rates. In general, when interest rates are rising, the Investments issued by foreign companies or governments other value of these investments tends to fall. When rates are than the U.S. can be riskier than investments in Canada and falling, fixed income securities tend to increase in value. Fixed the U.S. Foreign countries can be affected by political, social, income securities with longer terms to maturity are generally legal or diplomatic developments, including the imposition of more sensitive to changes in interest rates. Certain types of currency and exchange controls. Some foreign markets can be fixed income securities permit issuers to repay principal before less liquid, are less regulated, and are subject to different the security’s maturity date. There is a risk that an issuer will reporting practices and disclosure requirements than issuers in exercise this prepayment right after interest rates have fallen North American markets. It may be more difficult to enforce a and the funds that hold these fixed income securities will fund’s legal rights in jurisdictions outside of Canada. In receive payments of principal before the expected maturity general, securities issued in more developed markets, such as date of the security and may need to reinvest these proceeds Western Europe, have lower foreign investment risk. Securities in securities that have lower interest rates. issued in emerging or developing markets, such as Southeast Liquidity risk Asia or Latin America, have significant foreign investment risk and are exposed to the emerging markets risks described Liquidity is a measure of how quickly an investment can be above. sold for cash at a fair market price. If a fund can’t sell an investment quickly, it may lose money or make a lower profit, Income trust unit risk especially if it has to meet a large number of redemption requests. In general, investments in smaller companies, Some mutual funds invest in real estate, royalty, income and smaller markets or certain sectors of the economy tend to be other investment trusts which are investment vehicles in the less liquid than other types of investments. The less liquid an form of trusts rather than corporations. Many income trusts, investment, the more its value tends to fluctuate. including real estate investment trusts (REITs), are governed

165 Real estate sector risk the RSP Funds. If the fees increase in the future, the Some funds concentrate their investments in the real estate returns of the RSP Funds will be reduced even more. sector of the marketplace. These funds are better able to ) If a counterparty doesn’t meet its obligations, the RSP Fund focus on the real estate sector’s potential, however these funds will need to find another counterparty to replace existing are also riskier than funds with broader diversification. Sector forward contracts or to enter into new ones. If the RSP specific funds tend to experience greater fluctuations in price Fund can’t find a replacement counterparty, it may have to because securities in the same industry tend to be affected by suspend new purchases or it may have to be terminated. the same factors. These funds must continue to follow their ) If changes to the Tax Act prevent the RSP Funds from investment objectives by investing in their particular sector using this type of forward contract, the RSP Funds may even during periods when the sector is performing poorly. become foreign property, unless an alternative strategy Repurchase and reverse repurchase transaction risk using other derivatives can be used. Some mutual funds may enter into repurchase or reverse ) A large percentage of the RSP Fund’s assets may be placed repurchase agreements to generate additional income. When a on deposit with one or more counterparties, which expose mutual fund agrees to sell a security at one price and buy it the RSP Fund to the credit risk of those counterparties. back on a specified later date from the same party with the If an underlying fund suspends redemptions, the RSP Fund expectation of a profit, it is entering into a repurchase will be unable to value its portfolio and will automatically agreement. When a mutual fund agrees to buy a security at suspend the redemption of its units. one price and sell it back on a specified later date to the For more information about how these RSP Funds use same party with the expectation of a profit, it is entering into derivatives, see page 2. a reverse repurchase agreement. Mutual funds engaging in repurchase and reverse repurchase transactions are exposed to Securities lending risk the risk that the other party to the transaction may become Some mutual funds may enter into securities lending transac- insolvent and unable to complete the transaction. In those tions to generate additional income from securities held in a circumstances, there is a risk that the value of the securities mutual fund’s portfolio. A mutual fund may lend securities bought may drop or the value of the securities sold may rise held in its portfolio to qualified borrowers who provide between the time the other party becomes insolvent and the adequate collateral. In lending its securities, a mutual fund is time the fund recovers its investment. Mutual funds that exposed to the risk that the borrower may not be able to engage in these transactions reduce this risk by holding, as satisfy its obligations under the securities lending agreement collateral, enough of the other party’s cash or securities to and the lending mutual fund is forced to take possession of cover that party’s repurchase or reverse repurchase obligations. the collateral held. Losses could result if the collateral held by To limit the risks associated with repurchase and reverse the mutual fund is insufficient, at the time the remedy is repurchase transactions, the collateral held in respect of the exercised, to replace the securities borrowed. Mutual funds repurchase or reverse repurchase obligations must be marked must receive collateral worth no less than 102% of the value to market on each business day and be fully collateralized at of the loaned securities and borrowers must adjust that all times with acceptable collateral which has a value at least collateral daily to ensure this level is maintained. Prior to equal to 102% of the securities sold or cash paid for the entering into a securities lending agreement, a mutual fund securities by the mutual fund. Prior to entering into a must ensure that the aggregate value of the securities loaned repurchase agreement, a mutual fund must ensure that the together with those that have been sold pursuant to repur- aggregate value of the securities of a mutual fund that have chase transactions, does not exceed 50% of its total asset been sold pursuant to repurchase transactions, together with value. any securities loaned, does not exceed 50% of its total asset value at the time that the mutual fund enters into the Share class risk transaction. Most mutual funds are mutual fund trusts. In certain circumstances, mutual funds may choose to invest in mutual RSP Fund risk fund corporations. Many mutual fund corporations have The RSP Funds that use forward contracts that are linked to established separate classes of shares. In many cases each the performance of underlying funds are subject to certain class of shares represents a separate portfolio of securities risks: which is managed under distinct investment objectives which ) Counterparties charge these RSP Funds fees for entering are not shared with other classes of shares of the mutual fund into the forward contracts. These fees reduce the returns of corporation. The liabilities attributed to each class of shares of

166 a mutual fund corporation are liabilities of the corporation as a whole. If the assets attributed to one class of shares of a mutual fund corporation are insufficient, assets attributed to other classes of shares may have to be used to cover these debts. Although the portfolios are different, and the value of each class of shares is calculated separately, there is a risk that the expenses or liabilities of one class of shares may affect the value of the other classes. Small company risk The prices of shares issued by smaller companies tend to fluctuate more than those of larger corporations. Smaller companies may not have established markets for their products and may not have solid financing. These companies generally issue fewer shares, which increases their liquidity risk. Underlying fund risk Some mutual funds invest some or all of their assets in another mutual fund, called the underlying fund. If a mutual fund or counterparty to a RSP Fund buys or sells a large number of units of the underlying fund, the underlying fund may have to change its portfolio significantly to meet the purchase or redemption requests. This can affect the perform- ance of the underlying fund.

167 Organization and management of the Scotia Mutual Funds

Manager As manager, we are responsible for the overall business and operation of the funds. This includes: ) Scotia Securities Inc. arranging for portfolio advisory services 16th Floor ) providing or arranging for administrative services. 40 King Street West Scotia Securities Inc. is a wholly-owned subsidiary of The Bank of Nova Scotia. Toronto, Ontario M5H 1H1

Trustee As trustee, we control and have authority over each fund’s investments in trust for unitholders under the terms described in a declaration of trust. Scotia Securities Inc. Toronto, Ontario

Principal distributor As principal distributor, we market and sell the Scotia Mutual Funds where they qualify for sale in Canada. We may hire sub-distributors to assist in the sale of funds. Scotia Securities Inc. Toronto, Ontario

Custodian The custodian holds the investments of the funds and keeps them safe to ensure that they are used only for the benefit of investors. The Bank of Nova Scotia is the parent company of Scotia Securities Inc. The Bank of Nova Scotia Toronto, Ontario

Registrar As registrar, we keep a record of all unitholders of the funds, process orders and issue tax slips to unitholders.

Scotia Securities Inc. Toronto, Ontario

Auditors The auditors are independent chartered accounting firms. The firms audit the financial statements of the funds to make sure all reporting is accurate. Ernst & Young LLP Toronto, Ontario Gaviller is the auditor of the Scotia Canadian Income Fund, Scotia CanGlobal Income Fund, Scotia Canadian Dividend Fund, Scotia Canadian Balanced Fund, Scotia Canadian Stock Index Fund, Scotia Canadian Small Cap Fund and Scotia Gaviller & Company LLP American Stock Index Fund. Owen Sound, Ontario Ernst & Young is the auditor of all other Scotia Mutual Funds.

Portfolio advisors The portfolio advisors provide investment advice and make the investment decisions for the funds. You’ll find the portfolio advisor for each fund in the fund descriptions starting on page 6. Scotia Cassels Investment Counsel Limited Scotia Cassels Investment Counsel Limited and Scotia Capital Inc. are wholly-owned subsidiaries of The Bank of Nova Toronto, Ontario Scotia, which is the parent company of Scotia Securities Inc. Scotia Capital Inc. Toronto, Ontario Capital International Asset Capital International Asset Management (Canada), Inc. is independent of Scotia Securities Inc. Management (Canada), Inc. Toronto, Ontario State Street Global State Street Global Advisors, Ltd. is independent of Scotia Securities Inc. Advisors, Ltd. Montreal, Quebec Bank of Ireland Asset Bank of Ireland Asset Management (U.S.) Limited is independent of Scotia Securities Inc. Management (U.S.) Limited Greenwich, Connecticut Alliance Capital Management Alliance Capital Management Canada, Inc. is independent of Scotia Securities Inc. Canada, Inc. Toronto, Ontario TCW Investment TCW Investment Management Company is independent of Scotia Securities Inc. Management Company Los Angeles, California

168 Connor, Clark & Lunn Connor, Clark & Lunn Investment Management Ltd. is independent of Scotia Securities Inc. Investment Management Ltd. Vancouver, British Columbia The name and address of the agent for service of process of State Street Global Advisors, Ltd., Bank of Ireland Asset Management (U.S.) Limited and TCW Investment Management Company in Ontario is available from the Ontario Securities Commission. Notwithstanding registration in Ontario, TCW Investment Management Company is not fully subject to the requirements of the Securities Act (Ontario) and the regulations concerning proficiency, capital, insurance, record keeping, segregation of assets and statements. This portfolio advisor is located outside of Canada and all or a substantial portion of its assets may be situated outside of Canada, which may make it difficult for clients to enforce their legal rights against the portfolio advisor. Funds that invest in underlying funds that are managed by us or our associates or affiliates will not vote any of the securities of those underlying funds. However, we may arrange for you to vote your share of those securities.

169 Purchases, switches and redemptions

Scotia Mutual Funds are no-load. That means you don’t pay a offered for sale under this simplified prospectus. The classes sales commission when you buy, switch or sell units through have different fees and are intended for different investors: us or our affiliates. Selling your units is also known as ) Class A units are available to all investors. All of the Scotia redeeming. Mutual Funds offered for sale under this simplified prospec- tus offer Class A units. How to place orders ) Class F units are generally available only to investors who You can open an account and buy, switch or sell Scotia Mutual have fee-based accounts with ScotiaMcLeod. All of the Funds: Scotia Mutual Funds offered for sale under this simplified ) by calling or visiting any branch of the Scotiabank Group, or prospectus offer Class F units, except for the Scotia T-Bill office of ScotiaMcLeod. Fund, Scotia Premium T-Bill Fund, Scotia Money Market Fund, Scotia CanAm U.S. $ Money Market Fund, Scotia ) through Scotia OnLine at www.scotiabank.com, once you’ve Vision Funds and Scotia Young Investors Fund. signed up for this service. ScotiaMcLeod and we are responsible for deciding whether You can also open an account and place orders through other you’re eligible for Class F units. We may make Class F units registered brokers or dealers. They may charge you a sales available to other potential investors from time to time. If commission or other fee. Brokers and dealers must send you’re no longer eligible to hold your Class F units, we may orders to us on the same day that they receive completed change your units to Class A units or sell them. orders from investors. ) Scotia Private Client units are available to investors who have signed a discretionary investment management agree- All transactions are based on the price of the fund’s units – or ment with Scotia Cassels Investment Counsel Limited or its net asset value per unit (NAVPU). All orders are processed Scotiatrust. Of the mutual funds offered for sale under this using the next NAVPU calculated after the fund receives the simplified prospectus, Scotia Private Client units are offered order. by the Scotia Money Market Fund, Scotia Canadian Income Fund, Scotia Canadian Balanced Fund, Scotia Canadian How we calculate net asset value per unit Dividend Fund, Scotia Canadian Blue Chip Fund, Scotia We usually calculate the NAVPU of each class of each fund as Canadian Small Cap Fund and Scotia American Growth of the close of trading on the Toronto Stock Exchange (the Fund. TSX) on each day that the TSX is open for trading. In ) Class I units are available only to eligible institutional unusual circumstances, we may suspend the calculation of the investors and other qualified investors. Class I units are NAVPU. currently offered by Scotia Money Market Fund, Scotia The NAVPU of each class of a fund is the current market Canadian Bond Index Fund, Scotia Mortgage Income Fund, value of the proportionate share of the assets allocated to the Scotia Canadian Income Fund, Scotia CanGlobal Income class, less the liabilities of the class and the proportionate Fund, Scotia Canadian Stock Index Fund, Scotia Canadian share of the common expenses allocated to the class, divided Dividend Fund, Scotia Canadian Blue Chip Fund, Scotia by the total number of units investors in that class are Canadian Growth Fund, Scotia Canadian Small Cap Fund, holding. Scotia American Stock Index Fund, Scotia American Growth Fund, Scotia International Stock Index Fund, Scotia Global All of the funds are valued in Canadian dollars, except the Growth Fund, Scotia Pacific Rim Growth Fund and Scotia Scotia CanAm U.S. $ Money Market Fund and Scotia CanAm Latin American Growth Fund. No management fees are U.S. $ Income Fund. These funds are valued in U.S. dollars. charged on Class I units. Instead, Class I investors negotiate a separate fee that is paid directly to us. About the classes of units How to buy the funds Scotia Mutual Funds are available in up to four classes of Minimum investments units: Class A units, Class F units, Scotia Private Client units and Class I units. Only Class A, Class F and Class I units are The minimum amounts for the initial and each additional investment in Class A units of a fund are shown in the table

170 on the next page. See page 173 for details on Pre-Authorized additional investment is $50. The minimum initial investment Contributions. For Class F units of a fund (except Scotia for Class F units of the Scotia Partners Portfolios and Scotia Partners Portfolios and Scotia Selected Funds), the minimum Selected Funds is as set out in the table. For Class I units of initial investment is $2,500 and the minimum for each a fund, the minimum initial investment is $1,000,000.

Minimum additional investment (including Minimum Pre-Authorized initial investment Contributions3) All accounts All accounts, except except Scotia Asset Copilot and Allocation Services2 Destination Accounts2 and ican Invest TM Program4 accounts

All Scotia registered plans, Fund except Scotia RRIFs Scotia RRIFs Scotia Canadian Bond Index Fund Scotia Canadian Stock Index Fund Scotia American Stock Index Fund Scotia CanAm Stock Index Fund Scotia Nasdaq Index Fund Scotia International Stock Index Fund $1,000 $5,000 $50 Scotia T-Bill Fund Scotia Money Market Fund Scotia CanAm U.S. $ Money Market Fund1 $2,000 $10,000 $50 Scotia Premium T-Bill Fund5 $100,000 $250,000 $500 Scotia Young Investors Fund $100 $5,000 $25 Scotia CanAm U.S. $ Income Fund1 All other funds $500 $5,000 $50 Scotia Partners Portfolios Scotia Selected Funds Scotia Vision Funds $5,000 $5,000 $50 1 You can use Canadian or U.S. dollars to buy this fund. 2 You must make and maintain a total investment of a least $30,000 to have a Copilot˛ or Destination˛ Account offered under Scotia Asset Allocation Services. Each minimum additional investment (including Pre-Authorized Contributions) for the Copilot and Destination Accounts must be at least $100. The total investment you must make and maintain for a SoloTM Account is at least $30,000. In addition, your initial investment, the minimum balance you must keep and the minimum subsequent investment in each fund for the Solo Account must be at least the minimum shown here. See page 174 for details. 3 If you choose to invest less frequently than monthly using Pre-Authorized Contributions (i.e. bi-monthly, quarterly, semi-annually or annually), the minimum amount for each investment will be determined by multiplying the amounts shown here by twelve and then dividing the sum by the number of investments you make over the course of one calendar year. For example, for most funds, if you choose to invest quarterly, the minimum investment for each quarter will be $50×12÷4, or $150. 4 The minimum initial investment for the Scotia Diversified Monthly Income Fund, Scotia Canadian Balanced Fund, Scotia Total Return Fund and Scotia Young InvestorsTM Fund is waived when these funds are purchased through the ican Invest Program offered through Scotiabank. See page 173 for details. 5 We have the right, without notice, to switch your units of the Scotia Premium T-Bill Fund for units of the Scotia T-Bill Fund if you do not maintain the minimum investment shown here. You will be deemed not to have maintained the minimum investment if the current market value of your units on the last business day of any month is less than the minimum investment shown. You are responsible for switching your investment back to the Scotia Premium T-Bill Fund if you are subsequently able to meet the minimum investment shown.

We can change or waive these minimum investments at any More about buying time. We can close your account if the value of your ) We can reject all or part of your order within one business investment in a fund drops below the minimum initial day of the fund receiving it. If we reject your order, we’ll investment that applies to your account. immediately return any money received, without interest. We may reject your order if you’ve made several purchases and sales of a fund within a short period of time, usually 90 days.

171 ) You have to pay for your units when you buy them. If we Changing to another class don’t receive payment for your purchase within three You can change Class A units to Class F units of the same business days after the purchase price is determined, we’ll fund, if the fund is available in Class F units and you’re sell your units on the next business day. If the proceeds eligible to hold them. If you’re no longer eligible to hold your from the sale are more than the cost of buying the units, Class F units, you can change them to Class A units. Changing the fund will keep the difference. If the proceeds are less units from one class to another class of the same fund is not than the cost of buying the units, we must pay the shortfall. a disposition for tax purposes. We may collect the shortfall and any related costs from the dealer or broker who placed the order, or from you, if you How to sell your units placed the order directly with us. ) You can use Canadian or U.S. dollars to buy the Scotia In general, your instructions to sell must be in writing, and CanAm U.S. $ Money Market Fund and the Scotia CanAm your bank, trust company, broker or dealer must guarantee U.S. $ Income Fund. If you pay in Canadian dollars, we’ll your signature. We may also require other proof of signing convert your payment to U.S. dollars at the Scotiabank daily authority. ‘‘sell’’ exchange rate on the day the fund receives your We’ll send your payment to you by cheque or deposit it to your order. bank account or send it to your broker or dealer within three ) Your broker, dealer or we will send you a confirmation of business days of receiving your properly completed order. If your purchase once your order is processed. If you buy units you sell units within 90 days of buying them, you may have to through pre-authorized contributions, we’ll send you a pay a short-term trading fee. See Fees and expenses for confirmation only for the initial investment and when you details. change the amount of your regular investment. You can also sell units on a regular basis by setting up an automatic withdrawal plan. See Optional services for details. How to switch funds

You can switch from one Scotia Mutual Fund to another fund, More about selling unless you hold your funds in a Copilot or Destination ) You must provide all required documents within 10 business Account. See Optional services for details about these days of the day the redemption price is determined. If you accounts. When we receive your order, we’ll sell units of the don’t, we’ll buy back the units as of the close of business on first fund and then use the proceeds to buy units of the the 10th business day. If the cost of buying the units is less second fund. If you switch units within 90 days of buying than the sale proceeds, the fund will keep the difference. If them, you may have to pay a short-term trading fee. See Fees the cost of buying the units is more than the sale proceeds, and expenses for details. we must pay the shortfall. We can collect the shortfall and any related costs from the broker or dealer who placed the More about switching order, or from you, if you placed the order directly with us. ) The rules for buying and selling units also apply to ) Sell orders placed for a corporation, trust, partnership, switches. agent, fiduciary, surviving joint owner or estate must be ) You can switch between funds valued in different curren- accompanied by the required documents with proof of cies. If you’re switching from a fund valued in Canadian signing authority. The sell order will be effective only when dollars to a fund valued in U.S. dollars, we’ll convert your the fund receives all required documents, properly Canadian dollars to U.S. dollars at the Scotiabank daily completed. ‘‘sell’’ exchange rate on the day the fund receives your ) If you hold units of the Scotia CanAm U.S. $ Money Market order. If you’re switching from a fund valued in U.S. dollars Fund or the Scotia CanAm U.S. $ Income Fund in a non- to a fund valued in Canadian dollars, we’ll convert your U.S. registered account, we’ll send you the sale proceeds in U.S. dollars to Canadian dollars at the Scotiabank daily ‘‘buy’’ dollars, unless you tell us in writing that you want to rate on the day the fund receives your order. receive them in Canadian dollars. If you ask for payment in ) If you hold your units in a non-registered account, you may Canadian dollars, we’ll convert the sale proceeds to realize a capital gain or loss. Capital gains are taxable. Canadian dollars at the Scotiabank daily ‘‘buy’’ exchange ) Your broker, dealer or we will send you a confirmation once rate on the day the fund receives your order. your order is processed.

172 ) If you hold your units in non-registered account, you may Your right to sell your units of the Capital U.S. Large realize a capital gain or loss. Capital gains are taxable. Companies Fund, Capital U.S. Small Companies Fund, Capital ) Your broker, dealer or we will send you a confirmation once International Large Companies Fund, Capital Global Discovery your order is processed. If you sell units through the Fund, Capital Global Small Companies Fund and their automatic withdrawal plan, we’ll send you a confirmation corresponding RSP Funds will be automatically suspended only for the first withdrawal. during periods when the right to redeem one or more of their underlying funds is suspended. Suspending your right to buy, switch and sell units We will not accept orders to buy fund units during any period Securities regulations allow us to temporarily suspend your when we’ve suspended investors’ rights to sell their units. right to sell your fund units and postpone payment of your You may withdraw your sell order before the end of the sale proceeds: suspension period. Otherwise, we’ll sell your units at the ) during any period when normal trading is suspended on any NAVPU next calculated when the suspension period ends. exchange on which securities or derivatives that make up more than 50% of the fund’s value or its underlying market exposure are traded and there’s no other exchange where these securities or derivatives are traded, or ) with the approval of securities regulators.

Optional services

This section tells you about the accounts, plans and services simplified prospectus for the funds only if you request it. If that are available to Scotia Mutual Fund investors. Call us at you would like to receive a copy of a renewal prospectus 1-800-268-9269 (416-750-3863 in Toronto) or contact your along with any amendment, please contact us at branch of Scotiabank Group for full details and application 1-800-268-9269, or fax your request to or visit your nearest forms. Scotiabank branch. The current renewal prospectus and any amendments may be found at www.sedar.com or at Pre-Authorized Contributions www.scotiabank.com/mutual funds. Although you do not have a statutory right to withdraw from a purchase of Following your initial investment, you can make regular mutual fund units made under a pre-authorized contribu- purchases using automatic transfers from your bank account tion, you will continue to have a right of action for damages to the funds you choose. or rescission in the event a renewal prospectus contains a misrepresentation, whether or not you request a renewal More about Pre-Authorized Contributions prospectus. ) Pre-authorized contributions are available for non-registered accounts, RRSPs and RESPs. See page 171 for the minimum The ican InvestTM Program investment amounts. The ican Invest Program offered by Scotiabank is designed to ) You can choose to invest weekly, bi-weekly, semi-monthly, assess your current financial situation and recommend solu- monthly, bi-monthly, quarterly, semi-annually or annually. tions for each of your goals by suggesting investment options ) We’ll automatically transfer the money from your bank based on your particular needs. Through the Program, you account at Scotiabank or any other selected Canadian determine an amount you can contribute towards each goal on financial institution to the funds you choose. a regular basis. Pre-authorized contributions will be made from ) You can change how much you invest and how often you your bank account to the investments you select. The Scotia invest, or cancel the plan by telling us in writing. Diversified Monthly Income Fund, Scotia Canadian Balanced ) We can change or cancel the plan at any time. Fund, Scotia Total Return Fund, Scotia Young Investors Fund, Scotia Selected Funds and Scotia Partners Portfolios are ) Except for residents of Quebec, if you make purchases using eligible investments within the ican Invest Program. Minimum pre-authorized contributions, you will receive a renewal initial investments do not apply to

173 units of some of these funds when purchased through the Foreign content monitoring service Program. See page 171 for details. If your registered plan (other than an RESP) goes over the foreign content limit, a penalty tax may apply. The foreign Automatic Withdrawal Plan content limit is generally 30% of the cost of the investments in Our automatic withdrawal plan lets you receive regular cash your registered plan. The foreign content limit doesn’t apply to payments from your funds. The table below shows the RESPs. On February 23, 2005, the Minister of Finance minimum balance needed to start the plan and the minimum (Canada) announced as part of the Federal Budget that the for each withdrawal. foreign property limit in the Tax Act will be repealed effective as of 2005. As of the date of this simplified prospectus, this Minimum balance Minimum for measure has not been passed into law and there can be no Fund to start the plan each withdrawal assurance it will be passed into law. If the repeal of the Scotia T-Bill Fund Scotia Money Market Fund $10,000 $100 foreign content limit becomes law, we will cease to offer this Scotia CanAm U.S. $ service. Money Market Fund1 Scotia Premium T-Bill Fund $250,000 $500 Our foreign content monitoring service will automatically keep All other funds1 $5,000 $50 your Scotia registered plan within the foreign content limit. At 1 You can use Canadian or U.S. dollars for the Scotia CanAm U.S. $ Money the end of each month, our computer system checks the Market Fund and Scotia CanAm U.S. $ Income Fund. amount of foreign property in your account. If it’s more than

More about the automatic withdrawal plan the foreign content limit, the system will automatically sell a portion of your foreign property funds and buy units of a fund ) The automatic withdrawal plan is only available for non- that isn’t foreign property. If you don’t specify which fund you registered accounts. want the excess transferred to, we’ll transfer it to the Scotia ) You can choose to receive payments monthly, quarterly, T-Bill Fund. We don’t issue confirmations for these semi-annually or annually. transactions. ) We’ll automatically sell the necessary number of units to For Scotia Asset Allocation Services, the system will override make payments by cheque or by deposit to your bank the asset allocation if your plan exceeds the foreign content account. limit. The system will reallocate the excess amount proportion- ) If you sell units within 90 days of buying them, you may ately among the funds that aren’t foreign property. See below have to pay a short-term trading fee. See Fees and expenses for details about these accounts. for details. ) You may realize a capital gain or loss. Capital gains are Scotia Asset Allocation Services taxable. We offer the following accounts to help you maintain a ) You can change the funds and the amount or frequency of balanced portfolio of Scotia Mutual Funds. Whether you prefer your payments, or cancel the plan by telling us in writing. to choose the mix of funds yourself or let a portfolio manager ) We can change or cancel the plan, or waive the minimum make the decisions for you, we’ll automatically rebalance your amounts at any time. portfolio according to the targets set for each fund. These accounts are available only for Class A units of the funds. The If you withdraw more money than your fund units are accounts are not appropriate for short-term investing. earning, you’ll eventually use up your investment. SoloTM Account Registered plans When you open a Solo Account, you choose the funds and the We offer Scotia RRSPs, RRIFs, LIRAs, LRSPs and RESPs. You percentage invested in each fund. We’ll monitor your account can make lump-sum investments, or if you prefer, you can set and rebalance it on the last business day of each calendar up a regular investment plan using Pre-Authorized Contribu- quarter to maintain your investment mix. There’s no charge tions. You’ll find the minimum investment amounts on for this service. page 171. More about Solo Accounts You can also hold units of the funds in self-directed registered ) plans with other financial institutions. You may be charged a Solo Accounts are available for non-registered accounts and fee for these plans. registered plans.

174 ) Your initial investment must be at least $30,000. We may based on the portfolio’s objectives. The portfolios are close your account if the total value of your investments periodically rebalanced to maintain these targets. Scotia falls below $30,000. The value of each fund in your account Capital Inc. can change the asset mix, the funds and the must be at least the minimum initial investment amount for target ranges. that fund. See Minimum investments on page 171 for ) Switching between funds isn’t permitted. details. ) If you hold your funds in a non-registered account, you may ) All of the Scotia Mutual Funds are eligible for Solo realize a capital gain or loss when the portfolio is Accounts, except for the Scotia Premium T-Bill Fund, Scotia rebalanced. Capital gains are taxable. CanAm U.S. $ Money Market Fund and Scotia CanAm U.S. $ ) If you hold your funds in a registered plan, our foreign Income Fund. content monitoring service will override the asset allocation ) We’ll rebalance your portfolio on the last business day of the if it causes your registered plan to go over the foreign calendar quarter according to the instructions we have on content limit. See Foreign content monitoring service on file from you by the second last business day of that page 174 for details. quarter. ) We don’t issue a confirmation when your portfolio is ) We’ll allocate additional investments according to the most rebalanced. recent instructions you’ve given us. ) There is an annual fee for this service. See Fees and ) If you hold your funds in a non-registered account, you may expenses for details. realize a capital gain or loss when your account is ) We can change or cancel the service at any time. rebalanced. Capital gains are taxable. ) If you hold your funds in a registered plan, our foreign Copilot portfolios content monitoring service will override the asset allocation if it causes your registered plan to go over the foreign You can choose from the following Copilot portfolios:

content limit. See Foreign content monitoring service on Copilot page 174 for details. portfolio Portfolio objectives ) You can change the funds and the percentage invested in Conservative Primarily intended to provide modest income while each fund by visiting your branch of Scotiabank Group. Income protecting investment principal Income and Primarily intended to provide a high level of income and ) We don’t issue a confirmation when your portfolio is Modest Growth moderate growth with moderate risk to investment principal rebalanced. Balanced Income Primarily intended to provide a combination of growth and ) We can change the funds that are eligible for the account, and Growth income when the accounts are rebalanced and minimum balances. Conservative Primarily intended to provide growth over the long term ) We can change or cancel the service at any time. Growth Aggressive Primarily intended to provide above-average long-term Growth growth accompanied by a higher level of risk Copilot˛ Account

With the Copilot Account, you choose one of our professionally Destination˛ Account designed portfolios of Scotia Mutual Funds to suit your investment goals and risk comfort level. See the accompanying Our Destination portfolios are specially designed for RRSP table for details. Scotia Capital Inc. monitors, manages and accounts to help investors reach their retirement goals. The rebalances each portfolio to make sure it continues to meet its mix of Scotia Mutual Funds depends on the number of years objectives. until you plan to retire and your risk comfort level. As each portfolio nears its destination date, we gradually adjust the More about Copilot Accounts mix to reduce risk and increase the potential for income in the years ahead. See the accompanying table for details. ) Copilot Accounts are available for non-registered accounts Scotia Capital Inc. monitors, manages and rebalances each and registered plans. portfolio to make sure it continues to meet its objectives. ) The minimum initial investment is $30,000. ) Scotia Capital Inc. chooses the asset mix and the funds for each portfolio, and sets the target range for each fund

175 More about Destination Accounts ) The minimum initial investment is $30,000. ) Scotia Capital Inc. chooses the asset mix and the funds, and sets the target range for each fund based on the portfolio’s objectives. The portfolios are periodically rebalanced to maintain these targets. Scotia Capital Inc. can change the asset mix, the funds and the target ranges. ) Switching between funds isn’t permitted. ) Our foreign content monitoring service will override the asset allocation if an allocation causes your registered plan to go over the foreign content limit. See Foreign content monitoring service on page 174 for details. ) We don’t issue a confirmation when your portfolio is rebalanced. ) There is an annual fee for this service. See Fees and expenses for details. ) We can change or cancel the service at any time.

The Destination portfolios

You can choose from the following Destination portfolios:

Destination portfolio Who it’s suited for Destination 2005 and Suited for investors who are close to retirement. Destination 2010 The portion of equity funds will gradually shift to income funds as each portfolio nears its destination date. Destination 2015 and Suited for investors in their peak earning years Destination 2020 who plan to retire between 2013 and 2023. The objectives of the portfolios are reasonable growth from equity funds while shifting to income funds as each portfolio nears its destination date. Destination 2025 and Suited for investors in their mid-earning years who Destination 2030 can benefit from holding growth mutual funds in their portfolio, given the long period of time until retirement. Each portfolio will become more conservative as the destination date draws near. Destination 2035 and Suited for investors in their early earning years Destination 2040 who want maximum growth from their investments. Investors with approximately 40 years to retirement can benefit from having a large portion of their portfolio invested in equity funds. As time passes, each portfolio will gradually become more conservative.

176 Fees and expenses

This section describes the fees and expenses you may have to are no-load funds, a meeting of unitholders of the funds is not pay if you invest in the Scotia Mutual Funds. You may have to required to approve any increase in a fee or expense charged pay some of these fees and expenses directly. The funds may to the funds. Any such increase will only be made if have to pay some of these fees and expenses, which reduces unitholders are notified of the increase at least 60 days before the value of your investment. Because Scotia Mutual Funds the date on which the increase will take effect.

Fees and expenses payable by the funds

Management fees Each fund pays us a management fee with respect to each class of units for providing general management services. The fee is calculated and paid daily. The maximum annual rates of the management fee for Class A and Class F units of the funds are as follows:

Class A units

Maximum annual Fund management fee (%) Cash Equivalent Funds Scotia T-Bill Fund 1.00 Scotia Premium T-Bill Fund 0.501 Scotia Money Market Fund 1.00 Scotia CanAm˛ U.S. $ Money Market Fund 1.00 Income Funds Scotia Canadian Bond Index Fund 0.70 Scotia Mortgage Income Fund 1.25 Scotia Canadian Income Fund 1.25 Scotia CanAm U.S. $ Income Fund 1.50 Scotia CanGlobal Income Fund 1.50 Balanced Funds Scotia Diversified Monthly Income Fund 1.25 Scotia Canadian Balanced Fund 1.75 Scotia Total Return Fund 1.75 Scotia Selected Funds Scotia Selected Income & Modest Growth Fund 1.60 Scotia Selected Balanced Income & Growth Fund 1.75 Scotia Selected Conservative Growth Fund 1.90 Scotia Selected Conservative Growth RSP Fund 1.90 Scotia Selected Aggressive Growth Fund 2.10 Scotia Selected Aggressive Growth RSP Fund 2.10 Scotia Partners Portfolios Scotia Partners Income & Modest Growth Portfolio 1.85 Scotia Partners Balanced Income & Growth Portfolio 2.00 Scotia Partners Conservative Growth Portfolio 2.15 Scotia Partners Aggressive Growth Portfolio 2.35

177 Fees and expenses payable by the funds (cont’d)

Class A units (cont’d) Maximum annual Fund management fee (%)

Scotia Vision Funds Scotia Vision Conservative 2010 Fund 1.60 Scotia Vision Aggressive 2010 Fund 1.65 Scotia Vision Conservative 2015 Fund 1.70 Scotia Vision Aggressive 2015 Fund 1.75 Scotia Vision Conservative 2020 Fund 1.80 Scotia Vision Aggressive 2020 Fund 1.85 Scotia Vision Conservative 2030 Fund 2.00 Scotia Vision Aggressive 2030 Fund 2.05 Equity Funds Canadian Equity Funds Scotia Canadian Stock Index Fund 0.80 Scotia Canadian Dividend Fund 1.50 Scotia Canadian Blue Chip Fund 1.85 Scotia Canadian Growth Fund 1.85 Scotia Canadian Small Cap Fund 2.00 Scotia Resource Fund 2.00

Foreign Equity Funds Scotia American Stock Index Fund 0.80 Scotia American Growth Fund 2.00 Scotia CanAm Stock Index Fund 0.80 Scotia Nasdaq Index Fund 0.80 Scotia Young Investors Fund 2.00 Scotia International Stock Index Fund 0.80 Scotia Global Growth Fund 2.00 Scotia European Growth Fund 2.00 Scotia Pacific Rim Growth Fund 2.00 Scotia Latin American Growth Fund 2.50 Capital International Series Funds Capital U.S. Large Companies Fund 2.00 Capital U.S. Large Companies RSP Fund 2.00 Capital U.S. Small Companies Fund 2.15 Capital U.S. Small Companies RSP Fund 2.15 Capital International Large Companies Fund 2.15 Capital International Large Companies RSP Fund 2.15 Capital Global Discovery Fund 2.20 Capital Global Discovery RSP Fund 2.20 Capital Global Small Companies Fund 2.35 Capital Global Small Companies RSP Fund 2.35 1 The fund pays a management fee distribution of 0.20% when the value of the fund held within an account is $250,000 to $1,000,000. It pays a management fee distribution of 0.35% when the value of the fund held within an account is greater than $1,000,000.

Funds that invest in other funds An underlying fund pays its own fees and expenses, which are in addition to the fees and expenses payable by a fund that invests in the underlying fund.

No management or incentive fees are payable by a fund if the payment of those fees could reasonably be perceived as a duplication of fees payable by an underlying fund for the same services.

No sales or redemption fees are payable by a fund when it buys or sells securities of an underlying fund that is managed by us or one of our associates or affiliates or if the payment of those fees could reasonably be perceived as a duplication of fees paid by an investor in the fund.

178 Fees and expenses payable by the funds (cont’d) Class F units

Maximum annual Fund management fee (%) Income Funds Scotia Canadian Bond Index Fund 0.35 Scotia Mortgage Income Fund 0.625 Scotia Canadian Income Fund 0.625 Scotia CanAm U.S. $ Income Fund 0.75 Scotia CanGlobal Income Fund 0.75 Balanced Funds Scotia Diversified Monthly Income Fund 0.625 Scotia Canadian Balanced Fund 0.875 Scotia Total Return Fund 0.875 Scotia Selected Funds Scotia Selected Income & Modest Growth Fund 0.60 Scotia Selected Balanced Income & Growth Fund 0.75 Scotia Selected Conservative Growth Fund 0.90 Scotia Selected Conservative Growth RSP Fund 0.90 Scotia Selected Aggressive Growth Fund 1.10 Scotia Selected Aggressive Growth RSP Fund 1.10

Scotia Partners Portfolios Scotia Partners Income & Modest Growth Portfolio 0.85 Scotia Partners Balanced Income & Growth Portfolio 1.00 Scotia Partners Conservative Growth Portfolio 1.15 Scotia Partners Aggressive Growth Portfolio 1.35 Equity Funds Canadian Equity Funds Scotia Canadian Stock Index Fund 0.40 Scotia Canadian Dividend Fund 0.75 Scotia Canadian Blue Chip Fund 0.925 Scotia Canadian Growth Fund 0.925 Scotia Canadian Small Cap Fund 1.00 Scotia Resource Fund 1.00 Foreign Equity Funds Scotia American Stock Index Fund 0.40 Scotia American Growth Fund 1.00 Scotia CanAm Stock Index Fund 0.40 Scotia Nasdaq Index Fund 0.40 Scotia International Stock Index Fund 0.40 Scotia Global Growth Fund 1.00 Scotia European Growth Fund 1.00 Scotia Pacific Rim Growth Fund 1.00 Scotia Latin American Growth Fund 1.25

Capital International Series Funds Capital U.S. Large Companies Fund 1.00 Capital U.S. Large Companies RSP Fund 1.00 Capital U.S. Small Companies Fund 1.15 Capital U.S. Small Companies RSP Fund 1.15 Capital International Large Companies Fund 1.15 Capital International Large Companies RSP Fund 1.15 Capital Global Discovery Fund 1.20 Capital Global Discovery RSP Fund 1.20 Capital Global Small Companies Fund 1.35 Capital Global Small Companies RSP Fund 1.35

179 Fees and expenses payable by the funds (cont’d)

Class F units (cont’d) Funds that invest in other funds An underlying fund pays its own fees and expenses, which are in addition to the fees and expenses payable by a fund that invests in the underlying fund.

No management or incentive fees are payable by a fund if the payment of those fees could reasonably be perceived as a duplication of fees payable by an underlying fund for the same services.

No sales or redemption fees are payable by a fund when it buys or sells securities of an underlying fund that is managed by us or one of our associates or affiliates or if the payment of those fees could reasonably be perceived as a duplication of fees paid by an investor in the fund.

Management fee distributions In addition to the management fee distribution for the Scotia Premium T-Bill Fund, the funds may pay you a management fee distribution if you make a large investment. The distributions are negotiable and are reinvested in the fund. We may discontinue management fee distributions by giving written notice to you or to your broker or dealer.

Operating expenses Each class of a fund is allocated its own expenses and its proportionate share of the fund’s expenses that are common to all classes. Operating expenses may include legal fees, audit fees, custodial fees, taxes, brokerage commissions and unitholder communication costs. We may absorb any of these expenses. Scotia Mortgage Income Fund The Scotia Mortgage Income Fund pays Scotia Mortgage Corporation, a wholly-owned subsidiary of Scotiabank, a fee for administering all mortgages it holds. The fee is equal to an annualized rate of 3/8 of 1% of the average net asset value of the mortgages.

RSP Fund The RSP Funds, other than Scotia Selected Conservative Growth RSP Fund and Scotia Selected derivatives costs Aggressive Growth RSP Fund, currently use forward contracts that are linked to the performance of an underlying fund. These RSP Funds pay the costs of their forward contracts and other derivatives. These costs are expected to be approximately 0.50% to 0.70% each year, but may increase.

Fees and expenses payable directly by you Sales charges None

Redemption fee None

Switch fee None

Short-term Short-term trading by investors can increase the fund’s expenses, which affects all investors in the fund. trading fee To discourage short-term trading, a fund may charge a fee of 2% of the amount you sell or switch, if you: ) sell or switch your units within 90 days of buying them ) cancel a Scotia Asset Allocation Service within 90 days of starting it. The fee doesn’t apply to cash equivalent funds or rebalancing that’s part of a Scotia Asset Allocation Service. We may waive the fee.

180 Registered The trustee may charge a withdrawal fee of $25. plan fees

Other fees ) Pre-Authorized Contributions: None ) Automatic Withdrawal Plan: None ) Foreign content monitoring service: None Scotia Asset Allocation Services ) Solo Account: None ) Copilot Account: We deduct an annual fee of 0.10% of the total value of your account by the second last business day of each year. The fee is deducted from the fund with the highest balance in your account on that day. The minimum fee is $25 and the maximum fee is $100. For example, the fee is $25 on accounts with a value of $25,000 or less, and $100 on accounts with a value of $100,000 or more. This fee may be tax deductible. Please consult a tax expert for more information. ) Destination Account: We deduct an annual fee of 0.10% of the total value of your account by the second last business day of each year. The fee is deducted from the fund with the highest balance in your account on that day. The minimum fee is $25 and the maximum fee is $100. For example, the fee is $25 on accounts with a value of $25,000 or less, and $100 on accounts with a value of $100,000 or more. This fee may be tax deductible. Please consult a tax expert for more information.

Impact of sales charges

The Scotia Mutual Funds are no-load. That means you don’t ScotiaMcLeod and ScotiaMcLeod Direct Investing). You may pay a sales commission when you buy, switch or sell units pay a sales commission or other fee if you buy, switch or sell through Scotia Securities Inc. or Scotia Capital Inc. (including units through other registered brokers or dealers.

Dealer compensation

This section explains how we compensate employees, brokers Maximum annual and dealers when you invest in Class A units of the funds. Fund service fee rate Scotia T-Bill Fund Scotia Money Market Fund Sales commissions Scotia CanAm U.S. $ Money Market Fund Scotia Canadian Dividend Fund up to 0.50% We may pay our employees an up-front sales commission of up Scotia Canadian Income Fund up to 0.55% to 1% of the amount you invest. Scotia Mortgage Income Fund Scotia CanAm Stock Index Fund up to 0.625% Service fees Scotia CanAm U.S. $ Income Fund Scotia CanGlobal Income Fund We may pay employees, brokers and dealers a service fee on Scotia Diversified Monthly Income Fund Class A units. We don’t pay service fees on Class F units. The Scotia Canadian Balanced Fund up to 0.75% fee is calculated daily and is based on the value of Class A Scotia Canadian Blue Chip Fund units investors are holding of each fund sold by an employee, Scotia Canadian Growth Fund broker or dealer at the following annual rates: Scotia Canadian Small Cap Fund Scotia Resource Fund Maximum annual Scotia American Growth Fund Fund service fee rate Scotia Young Investors Fund Scotia Global Growth Fund Scotia Premium T-Bill Fund up to 0.10% Scotia European Growth Fund Scotia Canadian Bond Index Fund Scotia Pacific Rim Growth Fund Scotia Canadian Stock Index Fund Capital U.S. Large Companies Fund Scotia American Stock Index Fund Capital U.S. Large Companies RSP Fund Scotia Nasdaq Index Fund Capital U.S. Small Companies Fund Scotia International Stock Index Fund up to 0.40% Capital U.S. Small Companies RSP Fund

181 Maximum annual Fund service fee rate Capital International Large Companies Fund Capital International Large Companies RSP Fund Capital Global Discovery Fund Capital Global Discovery RSP Fund Capital Global Small Companies Fund Capital Global Small Companies RSP Fund Scotia Vision Conservative 2010 Fund Scotia Vision Aggressive 2010 Fund Scotia Vision Conservative 2015 Fund Scotia Vision Aggressive 2015 Fund Scotia Vision Conservative 2020 Fund Scotia Vision Aggressive 2020 Fund Scotia Vision Conservative 2030 Fund Scotia Vision Aggressive 2030 Fund up to 1.00% Scotia Total Return Fund up to 1.125% Scotia Partners Income & Modest Growth Portfolio Scotia Partners Balanced Income & Growth Portfolio Scotia Partners Conservative Growth Portfolio Scotia Partners Aggressive Growth Portfolio Scotia Selected Income & Modest Growth Fund Scotia Selected Balanced Income & Growth Fund Scotia Selected Conservative Growth Fund Scotia Selected Conservative Growth RSP Fund Scotia Selected Aggressive Growth Fund Scotia Selected Aggressive Growth RSP Fund Scotia Latin American Growth Fund up to 1.25%

Sales incentive programs We may award prizes, such as cash or merchandise, to employees or branches for sales of fund units. We estimate that the annual cost of these prizes will not be more than $1 for each $1,000 investment by a unitholder. The maximum value of any prize that may be awarded to an employee is $1,000 each year. Members of the Scotiabank Group may include sales of units of the funds in their general employee incentive programs. These programs involve many different Scotiabank Group products. We may offer other incentive programs, as long as Canadian securities regulators approve them.

The funds or their unitholders pay no charges for incentive programs.

182 Dealer compensation from management fees

The cost of the sales and service commissions and sales management fees we received from the Scotia Mutual Funds incentive programs was approximately 4.84% of the total during the financial year ended December 31, 2003.

Income tax considerations for investors

This section is a summary of how investing in the Scotia hold up to 30% of the cost of the investments in your plan in Mutual Funds can affect your taxes. It assumes that you’re an foreign property. Reinvested distributions and switches be- individual (other than a trust), a Canadian resident and you tween funds will affect the proportionate foreign property hold your units as capital property. Because tax laws vary by holdings in your registered plan. The foreign content limit province and every investor’s situation is different, we doesn’t apply to RESPs. If you hold your units in a Scotia recommend that you get advice from a tax expert. registered plan (other than a Scotia RESP), our foreign content monitoring service will automatically make sure that How your investment can earn money your plan doesn’t go over the foreign content limit. See Foreign content monitoring service on page 174 for details. On Funds earn money in the form of income and capital gains. February 23, 2005, the Minister of Finance (Canada) an- Income includes the interest and dividends a fund earns on its nounced as part of the Federal Budget that the foreign investments and gains on certain derivatives. Capital gains are property limit in the Tax Act will be repealed effective as earned when a fund sells investments for a profit. of 2005. As of the date of this simplified prospectus, this You earn money in the form of distributions when the fund measure has not been passed into law and there can be no pays you your share of the income and capital gains it has assurance it will be passed into law. earned. In general, each fund will distribute enough of its net income and net realized capital gains each year to unitholders Units held in a non-registered account so it won’t have to pay income tax. Distributions from the funds

You can also earn money on any capital gain you realize when If you hold units of a fund in a non-registered account, you you sell or switch your units for a profit. You can realize a must include your share of the fund’s distributions of net capital loss if you sell or switch your units at a loss. income and the taxable portion of its distributions of net capital gains (including any management fee distributions) in How earnings are taxed your income, whether you receive the distributions in cash or The tax you pay depends on whether you hold your units in a we reinvest them for you. In general, these distributions are registered plan or in a non-registered account. taxable to you as if you received the income or gain directly. The higher a fund’s portfolio turnover rate, the greater the Units held in a registered plan chance the fund will make distributions of capital gains.

If you hold units of a fund in an RRSP, RRIF, RESP or other Distributions, including management fee distributions, may registered plan, you pay no tax on distributions from the fund include a return of capital. When a fund earns less income on those units or on any capital gains that your registered and capital gains than the amount distributed, the difference plan receives from selling or switching units. When you is a return of capital. A return of capital is not taxable, but withdraw money from a registered plan, it will generally be will reduce the adjusted cost base of your units of the fund. If subject to tax at your marginal tax rate. You should consult the adjusted cost base of your units is reduced to less than with a tax expert about the special rules that apply to RESPs. zero, you will be deemed to realize a capital gain to the extent of the negative amount and the adjusted cost base of You can hold foreign investments in your registered plan your units will be increased to nil. (other than an RESP) up to the foreign content limit under the Tax Act. If your registered plan goes over the foreign The unit price of a fund may include income and/or capital content limit, a penalty tax may apply. In general, you can gains that the fund has accrued or realized, but not yet distributed. If you buy units of a fund just before it makes a

183 distribution, you’ll be taxed on that distribution, even though You may realize a foreign exchange gain or loss when you sell the fund earned the amount before you owned it. For example, your units of the Scotia CanAm U.S. $ Money Market Fund or many funds make their only, or most significant, distribution of the Scotia CanAm U.S. $ Income Fund. income and capital gains in December. If you buy units late in Changing units from one class of a fund to another class of the year, you may have to pay tax on the income and capital the same fund is not a disposition for tax purposes, so no gains the fund earned for the whole year. That means you’ll capital gain or loss will result. end up paying tax on fund earnings that you had little or no benefit from. Calculating adjusted cost base We’ll issue a tax slip to you each year that shows you how much of each type of income and return of capital the fund Your capital gain or loss for tax purposes is the difference distributed to you. You can claim any tax credits that apply to between the amount you receive when you sell or switch your those earnings. For example, if the fund’s distributions include units and the adjusted cost base of those units, less any costs Canadian dividend income, you’ll qualify for that tax credit as of the sale. provided by the Tax Act. In general, the aggregate adjusted cost base of your units equals: Capital gains (or losses) you realize ) your initial investment, plus In general, you must also include in computing your income ) additional investments, plus one half of any capital gains you realize from selling or ) reinvested distributions, minus switching your units. You will have a capital gain if your sale ) proceeds, less any costs of the sale, are more than the any return of capital distributions, minus adjusted cost base of your units. You will have a capital loss if ) the adjusted cost base of any previous redemptions. your sale proceeds, less any costs of the sale, are less than the You should keep detailed records of the purchase cost of your adjusted cost base of your units. You may use capital losses investments and distributions you receive on those units so you realize to offset capital gains. you can calculate their adjusted cost base. You may want to If you hold your units in a Scotia Asset Allocation Service, you get advice from a tax expert. may realize capital gains or losses when your portfolio is rebalanced for you.

What are your legal rights?

Securities legislation in some provinces gives you the right to and get your money back, or to make a claim for damages, if withdraw from an agreement to buy mutual funds within two the simplified prospectus, annual information form or financial business days of receiving the simplified prospectus, or to statements misrepresent any facts about the fund. These rights cancel your purchase within 48 hours of receiving confirmation must usually be exercised within certain time limits. of your order. For more information, refer to the securities legislation of your Securities legislation in some provinces and territories also province or territory or consult your lawyer. allows you to cancel an agreement to buy mutual fund units

Additional information

Certain funds obtained relief from the Canadian securities Advisors to review the funds’ purchases, sales and continued regulators to invest in common shares of The Bank of Nova holdings of common shares of The Bank of Nova Scotia. The Scotia. Eric F. Kirzner, Robert S. Bell and D. Murray Paton members of the Board of Advisors are independent from and have been appointed members of an Independent Board of not associates or affiliates of Scotia Securities Inc., The Bank

184 of Nova Scotia or any of the funds’ portfolio advisors. The Board of Advisors must act in the best interests of the funds’ unitholders. The Board of Advisors shall review, at least quarterly, a fund’s investments in common shares of The Bank of Nova Scotia and must be satisfied that a decision to buy, sell or hold common shares of The Bank of Nova Scotia is in the best interests of a fund, is made free from any influence of The Bank of Nova Scotia and without taking into account any consideration relevant to The Bank of Nova Scotia or its associates or affiliates, and that the fund’s holdings of The Bank of Nova Scotia common shares do not exceed the limitations of applicable legislation. The Board of Advisors must report the results of its reviews to us at least quarterly and must advise the securities regulators if it determines that a decision was not made in accordance with the foregoing requirements or if any condition of the regulatory relief has not been satisfied. Each member of the Board of Advisors receives, a fee for each meeting of the Board of Advisors attended by the member and is reimbursed for reasonable expenses incurred for the purposes of such meetings. These fees will be allocated among the funds in a manner considered fair and reasonable by the Board of Advisors.

The Board of Advisors may also review other matters when such review is required by the Canadian securities regulators as a condition to the funds obtaining relief from certain regulatory requirements.

185 Notes Notes You can find additional information about each fund in its 1 800 387-5004 for French, or by asking your mutual annual information form, its most recently filed annual or fund representative. You’ll also find this simplified interim financial statements and its most recently filed prospectus, the financial statements and, when available, annual or interim management reports of fund perform- the management reports of fund performance on the ance. These documents are incorporated by reference into Internet at www.scotiabank.com. this simplified prospectus. That means they legally form These documents and other information about the funds, part of this document just as if they were printed in it. such as information circulars and materials contracts, are You can get a copy of the funds’ annual information form, also available at www.sedar.com. financial statements, including a statement of portfolio SCOTIA SECURITIES INC. transactions, and, when available, management reports 16TH FLOOR 40 KING STREET WEST of fund performance at no charge, by calling TORONTO, ONTARIO 1 800 268-9269 (416 750-3863 in Toronto) for English, or M5H 1H1

Scotia Mutual Funds Scotia Vision™ Funds Simplified Prospectus Dated June 10, 2005 and Amended and Restated Scotia Vision Conservative 2010 Fund (Class A units only) Simplified Prospectus Dated June 10, 2005 Amending and Restating Scotia Vision Aggressive 2010 Fund (Class A units only) the Simplified Prospectus Dated October 29, 2004, as Amended on Scotia Vision Conservative 2015 Fund (Class A units only) December 17, 2004 and on May 27, 2005 Scotia Vision Aggressive 2015 Fund (Class A units only) Scotia Vision Conservative 2020 Fund (Class A units only) Class A and Class F units (unless otherwise noted) and Class I units Scotia Vision Aggressive 2020 Fund (Class A units only) where noted Scotia Vision Conservative 2030 Fund (Class A units only) Cash Equivalent Funds Scotia Vision Aggressive 2030 Fund (Class A units only) Scotia T-Bill Fund (Class A units only) Equity Funds Scotia Premium T-Bill Fund (Class A units only) Canadian Equity Funds Scotia Money Market Fund (Class A and Class I units only) Scotia Canadian Stock Index Fund (Class I units available) Scotia CanAm® U.S. $ Money Market Fund (Class A units only) Scotia Canadian Dividend Fund (Class I units available) Income Funds Scotia Canadian Blue Chip Fund (Class I units available) Scotia Canadian Bond Index Fund (Class I units available) Scotia Canadian Growth Fund (Class I units available) Scotia Mortgage Income Fund (Class I units available) Scotia Canadian Small Cap Fund (Class I units available) Scotia Canadian Income Fund (Class I units available) Scotia Resource Fund Scotia CanAm U.S. $ Income Fund Foreign Equity Funds Scotia CanGlobal Income Fund (Class I units available) Scotia American Stock Index Fund (Class I units available) Balanced Funds Scotia American Growth Fund (Class I units available) Scotia Diversified Monthly Income Fund Scotia CanAm Stock Index Fund Scotia Canadian Balanced Fund Scotia Nasdaq Index Fund Scotia Total Return Fund Scotia Young Investors® Fund (Class A units only) Scotia International Stock Index Fund (Class I units available) Scotia Selected™ Funds Scotia Global Growth Fund (Class I units available) Scotia Selected Income & Modest Growth Fund Scotia European Growth Fund Scotia Selected Balanced Income & Growth Fund Scotia Pacific Rim Growth Fund (Class I units available) Scotia Selected Conservative Growth Fund Scotia Latin American Growth Fund (Class I units available) Scotia Selected Conservative Growth RSP Fund Scotia Selected Aggressive Growth Fund Capital International Series Funds Scotia Selected Aggressive Growth RSP Fund Capital U.S. Large Companies Fund Scotia Partners Portfolios® Capital U.S. Large Companies RSP Fund Scotia Partners™ Income & Modest Growth Portfolio Capital U.S. Small Companies Fund Scotia Partners Balanced Income & Growth Portfolio Capital U.S. Small Companies RSP Fund Scotia Partners Conservative Growth Portfolio Capital International Large Companies Fund Scotia Partners Aggressive Growth Portfolio Capital International Large Companies RSP Fund Capital Global Discovery Fund Capital Global Discovery RSP Fund Capital Global Small Companies Fund Capital Global Small Companies RSP Fund

® Registered trademarks of The Bank of Nova Scotia. Scotia Securities Inc. is an authorized user of the trademarks. Cert no. SW-COC-1161 TM Trademarks of The Bank of Nova Scotia. Scotia Securities Inc. is an authorized user of the trademarks. Scotia Securities Inc. and Scotia Capital Inc. are corporate entities separate from, although wholly-owned by, The Bank of Nova Scotia. ScotiaMcLeod and ScotiaMcLeod Direct Investing are divisions of Scotia Capital Inc.

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