prospectus - scotiabankdr.scotiabank.com/images/ky/en/files_aboutscotiabank/6938.pdf · his...

PROSPECTUS

Scotiabank Mutual Funds

This Prospectus includes information given in

compliance with the Listing Rules of the Cayman

Islands Stock Exchange. The Directors of Scotiabank

Canadian Growth Fund, Scotiabank Global Growth Fund,

Scotiabank Money Market Fund, Scotiabank US Dollar Bond Fund

and Scotiabank US Growth Fund collectively and individually accept

full responsibility for the accuracy of the information contained in

this Prospectus and confirm, having made reasonable enquiry, that

to the best of their knowledge and belief there are no facts the

omission of which would make any statement within this

document misleading. The Cayman Islands Stock Exchange takes

no responsibility for the contents of this Prospectus, makes no

representations as to its accuracy or completeness, and expressly

disclaims any liability whatsoever for any loss arising from or in

reliance upon any part of this document.

May 2009

Relating to the continuous offering of Shares in the following mutual fundson the terms described in this Prospectus

Redeemable Preferred Shares of US$0.0I par value of

SCOTIABANK GLOBAL GROWTH FUND

SCOTIABANK MONEY MARKET FUND

SCOTIABANK US DOLLAR BOND FUND

SCOTIABANK US GROWTH FUND

Redeemable Preferred Shares of CDN$0.01 par value of

SCOTIABANK CANADIAN GROWTH FUND

(collectively referred to as “Shares”)

(Each an exempted company established under the laws of the Cayman Islands)

LISTING AGENTCampbells AttorneysScotia Centre, 4th FloorP.O. Box 884Grand Cayman KY1-1103Cayman Islands, BWI

DISTRIBUTORScotiabank & Trust (Cayman) Ltd.Scotia Centre6 Cardinal AvenueP.O. Box 501Grand Cayman KY1-1106Cayman Islands, BWI

i

PROSPECTUS

NOTICE TO INVESTORS

If you are in any doubt about the contents of thisProspectus, you should consult your stockbroker, bankmanager, attorney, accountant or other financial advisor.

No sales agent or other person has been authorized togive any information or to make any representations,whether orally or in writing, other than those describedin this Prospectus. Decisions to subscribe for Sharesshould be made on the basis of the informationcontained in this Prospectus and the documents availablefor inspection specified herein, copies of which may beobtained from the Manager in the Cayman Islands.Neither the delivery of this Prospectus nor the issue ofShares shall imply that there has been no change in theaffairs of the Funds since the date of this Prospectus.

The value of Shares are subject to the performance ofthe investments of the Funds and as these investmentsare subject to prevailing and anticipated economic,political and social conditions, the value of such Sharesmay fall as well as rise. Past performance of the Shares isnot necessarily a guide to how such Shares will performin the future, as economic conditions do not remainconstant and are subject to change. The nature of theseFunds is such that the Shares should be regarded aslonger-term investments (see “Risk Factors”).

Shares which are issued and to be issued as describedherein by Scotiabank Canadian Growth Fund, ScotiabankGlobal Growth Fund, Scotiabank Money Market Fund,Scotiabank US Dollar Bond Fund and Scotiabank USGrowth Fund were admitted to the official list of theCayman Islands Stock Exchange with effect fromNovember 12, 1999. No application has been made forsuch Shares to be listed on any other stock exchange. It isnot anticipated that an active secondary market in theShares will develop.

Statements in this Prospectus are based on the law andpractice at the date hereof and are subject to change.

DISTRIBUTION

This Prospectus does not constitute an offer orsolicitation in any jurisdiction in which such offer orsolicitation would be unlawful.

The Shares have not been and will not be registeredunder the United States Securities Act of 1933, asamended, or under the securities laws of any State ofthe United States, and, except in a transaction whichdoes not violate such Act or laws, may not be directly orindirectly offered, sold, transferred or delivered directlyor indirectly to any person in the United States or to orfor the benefit of a United States person. The Fundshave not been and will not be registered under theUnited States Investment Company Act of 1940.

Applicants for Shares will be required to declare thatthey are not a United States person and are notapplying for Shares on behalf of any United Statesperson. A US person is defined as:

"Any citizen, national or resident of the United States(including any corporation, partnership or other entityorganized or created under the laws of the UnitedStates or any political subdivision thereof and anyagency or branch of a foreign entity located in theUnited States) or any estate or trust the income ofwhich is subject to United States Federal incometaxation regardless of its source or any entity organizedor incorporated under the laws of a jurisdiction otherthan the United States if formed by a US Personprincipally to invest in securities not registered under USsecurities laws (but no entity organized by a US personwhich has been organized as an agency or branch for avalid business purpose and is engaged in the banking orinsurance business and is subject to substantive localregulation will be deemed to be a US Person)."

The Shares may not be offered, sold, or delivered,directly or indirectly, in Canada, or to, or for the benefitof, any resident thereof, in contravention of thesecurities laws of Canada or any Province or Territorythereof. Applicants for Shares will be required todeclare that they are not a resident of Canada and arenot applying for such Shares on behalf of any residentof Canada. Applicants will also be required to declarethat they are of legal age (as a matter of the law oftheir domicile and residence).

The distribution of this Prospectus and the offering ofShares of the Funds may be restricted in certain otherjurisdictions and it is the responsibility of any person inpossession of this Prospectus to inform himself of, andto observe, all applicable laws and regulations.Prospective applicants for Shares should informthemselves of the legal requirements of so applying andany applicable exchange control regulations andapplicable taxes in the countries of their citizenship,residence or domicile.

ENQUIRIES

Copies of this Prospectus, Transaction Forms and thedocuments specified herein may be obtained from theManager,

Scotiabank & Trust (Cayman) Ltd.6 Cardinal Avenue PO Box 501Grand Cayman KY1-1106Cayman Islands, BWI

Telephone (345) 949-2001Facsimile: (345) 949-7097Email: [email protected]

ii

SCOTIABANK & TRUST (CAYMAN) LTD.

Supplement to the Prospectus for Investors in Jamaica






Dated May 2009

The Scotiabank Canadian Growth Fund, the Scotiabank Global Growth Fund, the Scotiabank Money MarketFund, the Scotiabank US Dollar Bond Fund and the Scotiabank US Growth Fund (hereinafter referred to as"the Funds", have all been registered in Jamaica by the Financial Services Commission as overseas mutualfunds pursuant to the Securities (Mutual Fund) Regulations.

The principal place of business of the Funds in Jamaica is Scotia Centre, the corner of Duke and Port RoyalStreets in the City and Parish of Kingston. Copies of the Register of holders, the Memorandum and Articles ofAssociation, the most recent annual and half-yearly reports, the most recent Prospectus and the most recentaudited financial statements shall be available for inspection there during normal business hours on anybusiness day.

Shares in the Funds shall be available for purchase in Jamaica exclusively through a Sub-DistributorshipAgreement with Scotia DBG Investments Limited (formerly Dehring Bunting & Golding Limited), a dealerregistered under the Securities Act.

The Manager and Investment Advisor are all part of the Scotiabank Group and are all subsidiaries (eitherdirectly or indirectly) of The Bank of Nova Scotia in Canada. The Bank of Nova Scotia Jamaica Limited and itssubsidiaries are also a part of the Scotiabank Group. The Custodian is not registered as a licensed bank orfinancial institution in Jamaica.

Income earned by Jamaican investors in the Funds will be subject to income tax in accordance with theJamaican income tax laws applicable from time to time.

Warning:Approvals received from the Financial Services Commission do not constitute a guarantee by the Commissionas to the performance of the Funds or their creditworthiness. Furthermore, in giving such approvals theCommission shall not be liable for the performance or default of the Funds or for the correctness of anyopinions or statements expressed.

Investments in the Funds are not insured by the Jamaica Deposit Insurance Corporation.


ADDENDUM TO THE PROSPECTUS for Investors in the Netherlands Antilles

Dated May 2009






Changes to the constituting documents that lessen the rights and securities of the participants will be ineffect only three months after the Bank’s approval of the proposed modifications. During this 3-monthperiod, the participants should be allowed to cancel their participating interests under the usual terms andconditions.

iii


ADDENDUM to the Prospectus for Investors in Trinidad and Tobago






Dated May 2009

1

I. This distribution is being made by foreign mutual funds pursuant to disclosure documents preparedin accordance with foreign securities laws. Purchasers should be aware that these requirements maydiffer from those of Trinidad and Tobago.

II. All of the directors and officers of the foreign mutual funds, and all of the experts named in thisprospectus reside outside of Trinidad and Tobago. All of the assets of these persons and of theforeign mutual funds may be located outside of Trinidad and Tobago. The Foreign mutual fundshave appointed Scotiabank Trinidad & Tobago Limited, Scotia Centre, Port of Spain, Trinidad as itsagent for Service of Process in Trinidad and Tobago. It may not be possible for Investors to effectservice of process within Trinidad and Tobago upon the directors and officers referred to above. Itmay also not be possible to enforce against the foreign mutual funds, their directors and officers,named in this prospectus judgments obtained in Trinidad and Tobago.

III. Purchasers should be aware that the expert(s) responsible for any expertise statement, report oropinion in the prospectus (has/have) not submitted to the jurisdiction of Trinidad and Tobago andtherefore it may not be possible for an Investor to take legal proceedings against, the expert(s) inTrinidad and Tobago.

IV. The foreign mutual funds are incorporated or organized under the laws of a foreign jurisdiction andthe rights and remedies available under Trinidad and Tobago law may not be available.

Changes to the constituting documents that lessen the rights and securities of the participants will be ineffect only three months after the Bank’s approval of the proposed modifications. During this 3-monthperiod, the participants should be allowed to cancel their participating interests under the usual terms andconditions.

2 The foregoing together with the following documents incorporated herein by reference:

A. Certificate regarding use of the prospectus in Trinidad and Tobago

B. Form of Submission to Jurisdiction and Appointment of Agent for Service of process for ForeignMutual Funds

C. Certificate regarding Appointment of Agent to distribute securities in Trinidad and Tobago

D. Certificate of Compliance with securities legislation in the home jurisdiction

Which are filed with the Trinidad and Tobago Securities and Exchange Commission, constitutes full, true andplain disclosure of all material facts relating to the securities being distributed by the prospectus.

iv

TABLE OF CONTENTS PAGE

Management and Administration Directory ............................................................................................. 1

The Funds...................................................................................................................................................... 2

Investment Policy, Objectives and Restrictions ......................................................................................... 2

Dividend Policy ............................................................................................................................................. 4

Risk Factors ................................................................................................................................................... 4

Subscription, Registration, Redemption, Transfer and Conversion......................................................... 5

Valuations ..................................................................................................................................................... 7

Suspension and Compulsory Redemption ................................................................................................. 7

Management and Service Providers .......................................................................................................... 8

Fees and Charges ....................................................................................................................................... 10

Financial Information about the Funds.................................................................................................... 11

Taxation and Exchange Controls ............................................................................................................. 11

Regulation of the Funds in the Cayman Islands ..................................................................................... 12

Cayman Islands anti-money laundering regulations .............................................................................. 12

General Information ................................................................................................................................. 13

Material Contracts...................................................................................................................................... 14

Documents for Inspection ......................................................................................................................... 14

Appendices:

I Directors................................................................................................................................................. 15

II Summary of Offering Memorandum of Close Brothers Funds SPC relating

to the Global Diversified Value Fund Segregated Portfolio ............................................................ 17

III Summary of Simplified Prospectus of Scotia U.S. Index Fund .......................................................... 21

IV Transaction Forms ................................................................................................................................. 24

v

Registered and Principal Office of the FundsThe offices of Scotiabank & Trust (Cayman) Ltd.6 Cardinal Avenue, P.O. Box 501Grand Cayman KY1-1106,Cayman Islands, BWI

Manager and DistributorScotiabank & Trust (Cayman) Ltd.6 Cardinal Avenue, P.O. Box 501Grand Cayman KY1-1106,Cayman Islands, BWI

Investment AdvisorsScotia Cassels Investment Counsel LimitedOne Queen Street East, Suite 1200Toronto, OntarioCanada M5C 2W5

CustodianState Street Bank and Trust Company225 Franklin Street, Boston, Massachusetts 02110,United States of America

Sub-AdministratorState Street Cayman Trust Company, Ltd.Safe Haven Corporate Center, Leeward 2, West BayRoad,P. O. Box 31113Grand Cayman KY1-1205 Cayman Islands

AuditorsPricewaterhouseCoopersStrathvale HouseNorth Church Street, P.O. Box 258Grand Cayman KY1-1104, Cayman Islands, BWII

Legal Advisors (as to Cayman Islands law) andListing AgentCampbells Attorneys4th Floor, Scotia CentreP.O. Box 884Grand Cayman KY1-1103, Cayman Islands, BWI

1

Management andAdministration Directory

Scotiabank Money Market Fund – an open-endedmulti-class investment company which wasincorporated in the Cayman Islands as an exemptedcompany with limited liability on October 27, 1999.The initial class is denominated in US dollars (the “USDollar Class”) and the Directors have power to createfurther classes in the future each of which may bedenominated in a different currency and may haveinvestment policies that differ from those of the USDollar Class. The terms of each subsequent class willbe specified in a class profile (the “Class Profile”)..

Scotiabank US Dollar Bond Fund – a US dollardenominated open-ended investment company,which was incorporated in the Cayman Islands as anexempted company with limited liability onDecember 21, 1992.

Scotiabank Global Growth Fund – a US dollardenominated open-ended investment company, whichwas incorporated in the Cayman Islands as an exemptedcompany with limited liability on June 23, 1994.

Scotiabank US Growth Fund – a US dollardenominated open-ended investment company,which was incorporated in the Cayman Islands as anexempted company on October 27, 1999.

Scotiabank Canadian Growth Fund – a US dollardenominated open-ended investment company, whichwas incorporated in the Cayman Islands as an exemptedcompany with limited liability on June 23, 1994.

(Each of the above is described in this Prospectusindividually as “a Fund” and collectively as "theFunds”.)

Each of the Funds will offer Shares to subscribers onthe terms set out in this Prospectus, as supplemented,in the case of the Scotiabank Money Market Fund, byany subsequent Class Profiles.

IINNVVEESSTTMMEENNTT PPOOLLIICCIIEESS AANNDD OOBBJJEECCTTIIVVEESS

• Scotiabank Money Market Fund (US DollarClass) is designed to provide investors withprofessional management in a pooled investmentfund with an investment portfolio of short-termdebt securities providing safety and liquidity ofcapital. The US Dollar Class will invest in highquality debt securities and obligations issued bygovernments and corporations. The InvestmentPolicies and Objectives of other Classes createdsubsequent to the date hereof will be specified inthe relevant Class Profile.

• Scotiabank US Dollar Bond Fund is designed asa broad market investment grade U.S. Dollardenominated Bond Fund. It is intended forconservative investors seeking to improve thereturns over 3 to 5 years above what could beexpected from money market rates or US TreasuryBills. To achieve this result, the Manager seeks toobtain a total return, over the medium term, equalto, or greater than, a comparable-term US Dollardenominated bond fund and shall use as itsperformance benchmark the Merrill Lynch U.S.Corporate & Government Bond Index. The Fundwill invest primarily in US Dollar denominatedsecurities and obligations issued or guaranteed byForeign Governments and/or their agencies (ownedor sponsored) and investment grade corporations.These securities are to be rated A or better by S&Por Moody’s (or equivalent), though up to 25% ofthe Fund may be in securities rated BBB.

• Scotiabank Global Growth Fund is designed toprovide investors with an opportunity to achievelong-term capital growth through investing in highquality securities. The Fund may invest all orsubstantially all of its assets in Global DiversifiedValue Fund Segregated Portfolio, a segregatedportfolio of Close Brothers Funds SPC. (formerlyknown as the Scotiabank Global Diversified ValueEquity Fund, a segregated portfolio of ScotiabankMutual Funds SPC), being an actively managedequity portfolio seeking to provide long termgrowth by investing in a diversified portfolio ofglobal equity securities that are determined by theinvestment advisor, Alliance Capital Management L.P.,to be undervalued. Information relating to GlobalDiversified Value Fund Segregated Portfolio andClose Brothers Funds SPC is contained in AppendixII, which forms part of this Prospectus.

• Scotiabank US Growth Fund is designed toachieve long term growth through capitalappreciation by tracking the performance of the

2

Investment Policy, Objectives & RestrictionsThe Funds

500 stocks which make up the Standard & Poor’s500 (S&P 500) Total Return Index. The Fund mayuse derivative instruments subject to therestrictions listed below. The Fund may invest allor substantially all its assets in Scotia U.S. IndexFund (formerly known Scotia American StockIndex Fund) (provided it holds no more than 25per cent of the units in issue), an open-endedmutual fund trust established under the laws ofOntario, Canada by a Declaration of Trust datedDecember 13, 1996, as amended and restated,made by Scotia Securities Inc. of 40 King StreetWest, Toronto, Ontario M5H 1H1. Informationrelating to Scotia U.S. Index Fund is contained inAppendix III, which forms part of this Prospectus.Under current Canadian tax regulations,distributions by the Scotia U.S. Index Fund to theScotiabank US Growth Fund in respect of anyrealized gains from taxable Canadian propertywill be subject to fifteen per cent withholding tax

• Scotiabank Canadian Growth Fund is designedto achieve long-term capital growth throughinvesting in high quality equity securities listed onCanadian stock exchanges that are likely tobenefit from prevailing and anticipated economicconditions. Some high quality Canadian dollardenominated corporate paper and money marketinstruments may also be purchased. The Fund mayuse derivative instruments subject to therestrictions listed below.

IINNVVEESSTTMMEENNTT RREESSTTRRIICCTTIIOONNSS

The investment policies of each Fund include thefollowing restrictions on the investments that theManager is permitted to make:

Scotiabank Money Market Fund and Scotiabank USDollar Bond Fund are not permitted to:

(a) purchase securities on margin;

(b) sell securities short;

(c) purchase securities other than through normalmarket facilities unless the purchase priceapproximates the prevailing market price or isnegotiated on an arm's length basis;

(d) purchase or write options;

(e) enter into convertible hedge or any arbitrage transaction; or

(f) borrow money save for temporary borrowingsnot exceeding 5% of the Net Asset Value of each Fund.

Scotiabank Global Growth Fund, Scotiabank USGrowth Fund and Scotiabank Canadian Growth Fundare not permitted to:

(a) purchase securities on margin;

(b) purchase securities other than through normalmarket facilities unless the purchase priceapproximates the prevailing market price or isnegotiated on an arm’s length basis;

(c) use derivatives unless sufficient cash or securities are available to cover positions;

(d) invest more than 10% of its assets (less any borrowings) in derivatives acquired for non-hedging purposes; or

(e) borrow money save for temporary borrowings not exceeding 5% of the Net Asset Value of each Fund.

No change will be made in the investment policiesand restrictions described above without givingShareholders at least 30 days prior notice in the formof a modification of, supplement to, or restatementof, this Prospectus. Although no specific restriction isincluded in the investment policies of the Funds, it isnot the intention of the Directors of any of theFunds to take management control of any issuer ofsecurities in which the Funds invest.

3

It is not the present intention that the Funds willmake any distributions of income or capital gains byway of dividends. Income and net realized capitalgains will be reinvested and reflected in the NetAsset Value of the Shares of each Fund.Shareholders wishing to receive periodic paymentsfrom any of the Funds may give standinginstructions to redeem a specified number or valueof Shares at regular intervals (see "Redemption").

Shareholders should note that the Articles providethat if dividends are declared, then any dividend orother amount payable to a Shareholder whichremains unclaimed six years from the date when itbecomes payable shall be forfeited automatically infavour of the relevant Fund.

Investing in any of the Funds is subject to certain riskfactors including, but not limited to the following:

• General Considerations. Investors shouldrecognise that each Fund has a particularinvestment objective and that investing in any orall of the Funds should not be considered as acomplete or balanced investment program.

• Achievement of Objectives. There is noguarantee that any Fund will achieve itsinvestment objectives.

• Economic Conditions. The success of anyinvestment activity is affected by general economicconditions, which may be affected by the level andvolatility of interest rates and market prices.Unexpected volatility and illiquidity in the marketsin which any of the Funds have invested couldimpair the ability of such Funds to carry out theirbusiness or cause them to incur losses.

• Political and Regulatory Risks. The value of theassets of any Fund may be affected by uncertaintiessuch as international political developments,changes in government policies, taxation,restrictions on foreign investment on currency

repatriation, currency fluctuations, and otherdevelopments in the laws and regulations of thecountries in which any of the Funds invests its assets

• Suspension of Trading. Securities exchangestypically have the right to suspend or limit tradingin any particular instrument. Such a suspension orlimitation could render it impossible for theManager to liquidate investment and therebyexpose a Fund to losses.

• Liquidity Risks. Although the Shares aretransferable, subject to certain restrictionsdescribed herein under “Transfer of Ownership”,it is not anticipated that there will be an activesecondary market in such Shares. Accordingly, anyinvestment in such Shares will normally beliquidated through redemption rather than transfer.

• Conflicts of Interest. Instances may arise wherethe interests of the Manager and the InvestmentAdvisor or their affiliates conflict with theinterests of the Funds and their Shareholders.Such conflicts include, but are not limited to, thefact that the Manager and the Investment Advisormay be engaged in other substantial activities apartfrom the activities described in this Prospectus andmay therefore devote to the Funds only such timeas they consider reasonably necessary. Furthermore,the Funds may from time to time invest inproducts promoted by or assets owned by theScotiabank Group or its subsidiaries. It should alsobe recognized that the terms upon which theManager and Investment Advisor were appointedhave not been negotiated at arm’s length.

• Multi-class Insolvency. Scotiabank MoneyMarket Fund is a multi-class mutual fund and theassets relating to each class of shares in issue willbe accounted for and valued separately. Underthe laws of the Cayman Islands the assets relatingto a particular class of shares are available to meetthe claims of creditors of the company as a whole.

• Control Risk. The Directors or Shareholders ofScotiabank Global Growth Fund and of ScotiabankUS Growth Fund may not be able to control theGlobal Diversified Value Fund Segregated Portfolioor the Scotia U.S. Index Fund respectively.

Additional risks are identified in the InformationRelating to the Global Diversified Value FundSegregated Portfolio, a segregated portfolio ofClose Brothers Funds SPC on page 17 and theSummary of Prospectus for the Scotia U.S. IndexFund on page 21 of this Prospectus.

4

Dividend Policy

Risk Factors

SSUUBBSSCCRRIIPPTTIIOONN

Shares of the Funds are issued by the Manager atthe current subscription price determined byreference to the Net Asset Value of the relevantFund (see "Valuations") on the applicable DealingDay. If a signed Purchase Request Form and, forinitial applications only, a New Account RequestForm (see Appendix IV) is received by the Fund bythe Valuation Point as referred to in the articles ofassociation of the Funds on a Business Day, thenthat shall be the applicable Dealing Day. A DealingDay is any day normally treated as a Business Day (A“Business Day” is any day on which banks are openfor business) in the Cayman Islands, Toronto, NewYork or any other relevant jurisdiction or the nextBusiness Day if it is a public holiday in any relevantjurisdiction. The issue of Shares is conditional uponthe signed Application Form and of cleared fundsfor such Shares having been received by or onbehalf of the relevant Fund by the Valuation Pointon the relevant Dealing Day. No Shares of any Fundwill be issued whilst the calculation of Net AssetValue is suspended.

Subscriptions for Shares should be made using thePurchase Request Form and, for initial applicationsonly, a New Account Request Form (see AppendixIV). A New Account Request Form is not required ifa subscriber already holds Shares in one or more ofthe Funds. The Purchase Request Form and, ifapplicable, the New Account Request Form must becompleted and signed by the Subscriber(s) andreturned to the Sub-Administrator at the addressgiven on the Form. Forms will be accepted byfacsimile but the original signed Forms must beforwarded promptly to the Sub-Administrator andno redemption of such Shares will be allowed untilthe original New Account and Purchase RequestForms are received. Neither the Funds, the Sub-Administrator nor the Manager nor any otheragents of the Funds will be responsible or liable inany way for any invalidity of the signatures or anyother errors arising from acceptance of faxed Forms.No interest is credited or paid on subscriptionmonies pending the issue of Shares.

The Directors reserve the right to require at anytime satisfactory evidence of the status of Subscribersas Qualified Holders as referred to in the articles ofassociation of the Funds, i.e. as bein entitled to acquirea holding in a Fund. The right is reserved to rejectany application for Shares in whole or part. If anapplication is rejected, the subscription monies will

be returned without interest, at the risk and expenseof the applicant within three Business Days of rejection.

The minimum initial aggregate investment in anyone or more of the Funds is US$5,000 or such otheramounts or currencies as may be prescribed fromtime to time by the Directors. Subscriptions foradditional Shares are subject to a minimum ofUS$1,000 in any one or more of the Funds, or suchother amounts or currencies as may be prescribedfrom time to time by the Directors. Subscriptionsmay take the form of a standing instruction tosubscribe for a specified number or value of Shares atspecified intervals. An appropriate form of standinginstruction is available from the Manager on request.The Manager reserves the right to redeem the sharesof any or all the Funds within an account and closethe account if the value of the aggregate investmentsin any one or more of the Funds falls below theminimum initial investment set out above.

With the exception of the Scotiabank Money MarketFund for which no initial or deferred charge is payable,the Manager is entitled, at its discretion, to an initialor deferred charge of up to 5% of the total amountpaid by investors and all or a portion of the amount,if any, may be paid by the Manager as a commissionto the Distributor of the Shares. The net subscriptionamount, after deduction of the initial charge, if any,will be invested in the designated Fund.

Scotiabank Money Market Fund is presentlycomprised of only one class of Share – the US DollarClass. However, the Directors of the Fund reservethe right to create other Classes of Shares in thefuture, each of which may be denominated in adifferent currency and may have different investmentpolicies and objectives from those of the US DollarClass. The assets relating to each Class will bemaintained in separate funds for accounting andvaluation purposes. A Class Profile will be publishedin respect of each additional Class of Shares.

RREEGGIISSTTRRAATTIIOONN

Shares are issued in registered form and nocertificates will be issued. The Funds will issue anAccount Transaction Summary, which will act asconfirmation of purchase. The advantage of anadvice over a certificate is that Shares may beredeemed or transferred without the necessity ofsurrendering the certificate.

5

Subscription, Registration,Redemption, Transfer & Conversion

PPRREE -- AAUUTTHHOORRIIZZEEDD CCOONNTTRRIIBBUUTTIIOONNSS ((PPAACC))

Following an initial investment of US$1,000, aninvestor may make regular purchases of Shares ofany Fund using automatic transfers from his or herScotiabank banking account to the Fund selected.Following the initial investment, an investor caninvest a minimum monthly amount of US$100, witha minimum of US$50 in each Fund. The Managerreserves the right to redeem the Shares of any or allFunds within an account and close the account if thevalue of the Funds within the account falls below theminimum initial investment for PACs set out above.

Such requests will be made on receipt of acompleted and signed Pre-Authorized Contribution(PAC) Plan Request Form (see Appendix IV). The sameForm may also be used to discontinue the PAC plan.

RREEDDEEMMPPTTIIOONN

Shares of the Funds will be redeemed at the currentredemption price determined by reference to theNet Asset Value of the relevant Fund (see"Valuations") on the applicable Dealing Day. If asigned Redemption Request Form (see Appendix IV)is received by the Fund by the Valuation Point asreferred to in the articles of association of the Fundson a Business Day, then that shall be the applicableDealing Day. A Dealing Day has the same meaning asgiven under “Subscription”. The redemption ofShares is conditional upon the Redemption RequestForm for such Shares having been received by or onbehalf of the relevant Fund by the Valuation Pointon the relevant Dealing Day. Late receipt of aRedemption Request Form will result in theredemption being dealt with on the next DealingDay. No Shares of any Fund may be redeemed whilstthe calculation of Net Asset Value is suspended.

Redemptions of Shares should be made using theRedemption Request Form (see Appendix IV). TheManager may decline to effect a redemption (unlessit relates to all of the Shares held by such Shareholder)if the aggregate redemption payment from theFunds as a whole would be less than US$1,000 or itsequivalent in other currencies or such other amountas the Directors may determine either generally or inany particular case. The Redemption Request Formmust be completed and signed by the holder andreturned to the Sub-Administrator at the addressgiven on the Form. Redemption Request Forms willbe accepted by facsimile but the original signed

Forms must be forwarded promptly to the Sub-Administrator. Neither the Fund, the Sub-Administratornor the Manager nor any other agents of the Fundwill be responsible or liable in any way for anyinvalidity of the signatures or any other errorsarising from acceptance of a redemption request byfacsimile. If a certificate has been issued for any ofthe Shares being redeemed, the certificate must bereturned to the Sub-Administrator in order for theredemption request to be processed.

With the exception of the Scotiabank Money MarketFund Shares and interfund conversions, Shares thatare redeemed within 90 days of purchase may besubject to a redemption fee of up to 2% of theredemption amount.

Payment of redemption proceeds will normally bedispatched within seven Business Days after therelevant Dealing Day at the risk and expense of theholder. In the case of a joint share holding, if theredemption request does not provide expresspayment instructions, the Fund may make paymentto any of the joint holders.

Redemption requests, once given, may not berevoked without the Manager's approval, exceptduring a suspension of valuations and redemptions.Redemption requests may take the form of astanding instruction to redeem a specified numberor value of shares at specified intervals. Anappropriate form of standing instruction is availablefrom the Manager on request.

TTRRAANNSSFFEERR OOFF OOWWNNEERRSSHHIIPP

For transfers of ownership, the transferor mustcomplete a Redemption Request Form (see AppendixIV) and the transferee must complete a New AccountRequest Form (see Appendix IV). Similarly, whenchanging names or subscriber type (for example byadding additional account holders or changing theholder to a company) on a Scotiabank Mutual Fundsaccount, it is necessary to close the current accountand open a new account.

The Directors may decline to register a transfer ofShare ownership:

(a) unless a fully completed instrument of transfer(together with certificate, if any) is depositedwith the Directors together with any otherevidence necessary to show the transferor’s rightto transfer, or

6

(b) if the transferee and any person upon whosebehalf the transferee would hold them arerestricted persons (see “Distribution”), or

(c) unless, following registration, the holdings of thetransferee (and the transferor if such be the case)do not result in their being liable to becompulsorily redeemed (see "CompulsoryRedemption").

IINNTTEERRFFUUNNDD CCOONNVVEERRSSIIOONN

Holders of Shares in one Fund may convert such Sharesto Shares in any of the other Scotiabank Fundsdescribed in this Prospectus or any subsequent ClassProfile. Such conversions will be made on receipt of acompleted and signed Interfund Request Form (seeAppendix IV) and are subject to a procedure similar tothat involved upon redemption. Administration chargesor sales fees may be charged on such conversions.

MMAAIINNTTEENNAANNCCEE

Holders of Shares may change their registered particulars(other than ownership details) by notifying the Sub-Administrator using the Maintenance Request Form (seeAppendix IV).

The Net Asset Values of the Funds will be determined bythe Manager at the close of business in the CaymanIslands on each Dealing Day in accordance with theprinciples set out in the respective Articles of Associationand in accordance with International AccountingStandards, as summarized below. The Net Asset Valuerepresents the market value of all assets less all liabilitiesof the relevant Fund on the Dealing Day.

The valuation principles followed by the Funds maybe summarized as follows:

(a) Securities listed upon a public stock exchange ortraded through an inter-dealer market are valuedat their latest sales price on the principal exchangeon the Dealing Day. Securities not traded on thatdate are valued at the latest average of the closingrecorded bid and ask prices. In the event that any

of the securities are no longer so listed or traded,such securities will be valued on the basis of themarket quotation for similar securities which, inthe opinion of the Manager, most closely reflectstheir fair market value;

(b) Short-term debt instruments with maturities ofless than 90 days are valued at amortized cost,which approximates market value. Other short-term debt instruments with maturities exceeding90 days, are valued on a mark-to-market basis,until such time as they reach a remainingmaturity of 90 days, whereupon they shall bevalued using the amortized cost method, takingas cost their market value on the 91st day.

(c) Other securities for which market quotations arenot readily available are valued at their fairvalue using methods which are in accordancewith recognized accounting principles and whichhave been approved by the Manager.

(d) Subject to the approval of the Directors, theManager may depart from the normal valuationprinciples if they appear to be inapplicable orunfair in the circumstances.

The subscription and redemption prices for Sharesare calculated by taking the Net Asset Value of therelevant Fund on the relevant Dealing Day anddividing it by the number of Shares in issue ordeemed to be in issue. No independent verificationof the pricing of information is done for theunderlying mutual fund investment.

SSUUSSPPEENNSSIIOONN

The determination of Net Asset Value may besuspended by the Directors for the whole or part ofa period during which:

(a) by reason of the closure or suspension of tradingon any money market or stock exchange or overthe counter market or for any other reason, theDirectors consider it not reasonably practicablefor the investments of any Fund to be realised ordisposed of or for the Net Asset Value of all orany class of Shares to be fairly determined;

7

Valuations

Suspension & Compulsory Redemption

(b) as a result of an emergency state of affairs, thereasonable disposal of securities of any Fundbecomes impracticable or there exist circumstanceswhich the Directors deem will cause material harmor serious prejudice to the relevant Shareholders;

(c) there is a breakdown in the means normallyemployed by the Directors in ascertaining thevalue of investments or for any other reason suchDirectors consider that they cannot ascertain thevalue of such investments or other assets of theFunds at the valuation point on the day appointedfor settlement of the transaction in question; or

(d) the Directors deem it impracticable to transfermoneys of or for any Fund at normal exchangerates at any time.

Any such suspension shall be publicized by the Fundin such manner as the Directors may think fit, shallbe communicated immediately to the CaymanIslands Stock Exchange, and shall take effect at suchtime as such Directors shall declare but not laterthan the close of business in the Cayman Islands onthe business day next following such declaration.Thereafter there shall be no determination of theNet Asset Value of such Fund until the Directorsshall declare the suspension at an end except thatthe suspension shall terminate, in any event, on thefirst business day on which:

(i) The condition giving rise to the suspension shallhave ceased to exist; and

(ii) No other condition under which suspension isauthorised shall exist.

During any suspension of valuation, the subscriptionand redemption of Shares will also be suspended;and any unprocessed redemption requests may bewithdrawn during the period of suspension; anysuch suspension shall be communicated immediatelyto the Cayman Islands Stock Exchange.

CCOOMMPPUULLSSOORRYY RREEDDEEMMPPTTIIOONN

The Funds may compulsorily redeem Shares at thecurrent redemption price, in certain circumstancesincluding, but not limited to, the following:

(a) the redemption value of the Shares held by aShareholder is less than US$1,000 in aggregateover all the Funds or such other amount orcurrency as the Directors may determine eithergenerally or in any particular case or;

(b) it comes to the notice of the Manager that Sharesare owned directly or beneficially in breach of anylaw or requirement of any country or governmentalauthority or that any person is not qualified tohold such Shares directly or beneficially by virtueor such law or requirement or that the relevantShareholder has refused or failed to providesatisfactory evidence that such Shares are not beingheld in breach of such law or requirement; or

(c) it comes to the notice of the Manager thatcontinued direct or beneficial ownership of anyShares might result in pecuniary or financialdisadvantage to any Fund or any of its agents orany of its Shareholders.

Scotiabank Group

The Manager and the Investment Advisor are allpart of the Scotiabank Group and have extensiveexperience and a successful track record in carefullymanaging the investments of their clients. Thehistory of the Scotiabank Group dates back to 1832;it is one of the five largest banks in Canada andamong its leading financial institutions with overUS412 billion in assets, and over twenty one hundredbranches and offices in some fifty countries as at thedate hereof. As companies and personnel withinScotiabank Group direct, control and manage theFunds, the operations of the Funds may give rise toconflicts of interest or duty. The Articles ofAssociation of each Fund contain provisions enablingthe Directors to act notwithstanding such conflicts.

Directors of the Funds

Details of the Directors of the Funds are set out inAppendix I, which forms part of this Prospectus.

The Directors of each Fund may appoint additionalDirectors from time to time and any Director may beremoved by a resolution of the holder of theManagement Shares of each Fund, which, in eachcase, is the Manager. There are no service contractsbetween any Fund and its respective Directors and

8

Management & Service Providers

none of the Directors is entitled to receive any fee orremuneration from any Fund for serving as one of itsDirectors. The Articles of Association of the Fundsprovide for their management and administration tobe delegated to the Manager, subject to the overallsupervision of their Directors.

Manager

By agreements dated December 29, 1992, June 24,1994 and November 1, 1999, respectively, the Fundshave appointed Scotiabank & Trust Company(Cayman) Ltd. as Manager to manage the affairsand investments of the Funds subject to the overallsupervision and control of the Board of Directors ofeach Fund. The Manager has an unrestricted mutualfund administrator’s license issued under the MutualFunds Law (2007 Revision).

The Manager was incorporated under the laws ofthe Cayman Islands on August 27, 1965. Details ofthe Directors of the Manager are set out inAppendix I, which forms part of this Prospectus.

The Manager has responsibility for the generaladministration of each Fund, but has delegated theperformance of most tasks to the Sub–Administrator,State Street Cayman Trust Company, Ltd. TheManager is at liberty to provide similar or otherservices to other funds and companies.

The Manager is entitled to receive a monthlymanagement fee computed by reference to thevaluations of the net assets of each Fund and isentitled to receive a sales commission in respect ofthe issue of Shares (see "Fees and Charges"). TheManagement Agreements may be terminated onsixty days' written notice by either the Manager orthe Fund.

Investment Advisor

By agreements dated June 24, 1994 and April 8, 1996Scotia Cassels Investment Counsel Limited (“ScotiaCassels”) has been appointed Investment Advisor tothe Scotiabank US Dollar Bond Fund and ScotiabankCanadian Growth Fund. Scotia Cassels is a Toronto,Canada based professional investment and portfoliomanagement firm established in August 1998(through the amalgamation of Scotia InvestmentManagement Limited and Cassels Blaikie InvestmentCounsel Limited) that actively manages private andcorporate investment portfolios, pension funds andother segregated funds on a fully discretionary basis.

Scotia Cassels and its predecessor companies havemanaged assets in Canada since 1877. Scotia Casselsis now one of the largest investment managers inCanada, with more than US$14 billion of client fundsunder management at the date hereof.

By an agreement dated July 23, 2007, Scotia Casselshas been appointed as Investment Advisor toScotiabank Money Market Fund.

Details of the Directors of the Investment Advisor are set out in Appendix I, which forms part of thisProspectus.

Subject to such terms and conditions as the Directorsof each Fund may from time to time impose, theInvestment Advisor is responsible to each Fund forinvestment management and advice and has powerto enter into transactions on behalf of each Fund.The Investment Advisor is at liberty to provide similaror other services to other funds or companies. TheInvestment Advisor will receive fees from theManagement Fee payable by each Fund to theManager. Each Investment Advisory Agreement maybe terminated on sixty days' written notice by eitherthe Investment Advisor or by the Fund.

Custodian

By agreements dated July 23, 2007 State Street Bankand Trust Company, a trust company organizedunder the laws of The Commonwealth ofMassachusetts, United States of America, has beenappointed Custodian to the Funds. The Custodianprovides a full range of banking, global custody andfinancial services to a worldwide clientele and willhold the assets and uninvested cash of each of thesaid Funds, either directly or through sub-custodians,nominees or agents.

As one of the world's leading investment serviceproviders, State Street Bank and Trust Companyprovides an array of customized investmentsolutions to asset managers, pension funds, hedgefunds, insurance companies, collective funds, mutualfunds and nonprofits. They offer fund accounting,fund administration, custody, securities lending,investment operations outsourcing, recordkeeping,performance and analytics and transfer agencyservices that are highly scalable and truly global.Recognized as an industry leader in providing globalcustody services, their custodian network spans morethan 100 financial markets. With their expertise andlocal knowledge, they help their customers controlcosts, develop and launch competitive newinvestment products, and expand globally.

9

No sub custodians will be appointed and none ofthe direct assets of the Funds are held by brokers. Ineach case, the Custodian may receive fees out of theManagement Fee payable by each Fund to theManager. Each of the Custodian Agreements may beterminated on ninety days' written notice by theCustodian or Fund.

Sub-Administrator

By agreements dated July 23, 2007, the Manager hasappointed State Street Cayman Trust Company, Ltd.,a trust company duly organized under the laws ofthe Cayman Islands as Sub-Administrator to performsubstantially all of the tasks required of the Managerpursuant to the Management Agreements. The Sub-Administrator has an unrestricted mutual fundadministrator’s license issued under the MutualFunds Law (2007 Revision).

The Sub-Administrator has responsibility for thegeneral administration of each Fund, and, as such,will keep the books of account, calculate the NetAsset Value of the Shares, deal with communicationsand queries from investors and deal withsubscriptions, redemptions, transfers and conversionsin respect of each Fund. The Sub-Administrator is atliberty to provide similar or other services to otherfunds and companies.

The Sub-Administrator is entitled to receive a feepayable by the Manager. The Sub-AdministrationAgreement may be terminated on sixty days' writtennotice by either the Manager or the Sub-Administrator.

Indemnification

The terms of appointment of the Manager,Investment Advisor and Custodian provide that suchappointees shall be indemnified against all claims,liabilities, expenses and like matters, except in thosecircumstances pursuant to fraud, willful deceit orgross negligence. The Directors and Officers of theFunds have the benefit of corresponding provisionsin the Articles of Association of the Funds.

Under the Management Agreements, the Manager isentitled to a fee at the annual rate of 0.60% of the

Net Asset Value of Scotiabank Money Market Fund,US Dollar Class (for the fee for all other ScotiabankMoney Market Fund Classes, please refer to therelevant Scotiabank Money Market Fund Class Profile),0.75% of the Net Asset Value of Scotiabank US DollarBond Fund, 1.50% of the Net Asset Value ofScotiabank US Growth Fund and Scotiabank CanadianGrowth Fund and 2.00% of the Net Asset Value ofScotiabank Global Growth Fund. All such fees areaccrued weekly and paid monthly in arrears. Out ofthese fees, the Manager is required to pay the fees ofthe Investment Advisor, Custodian, Sub-Administratorand any other person to whom functions aredelegated by the Manager.

In the case of the Scotiabank Global Growth Fund andof the Scotiabank US Growth Fund, the managementfee noted above includes any corresponding feescharged by the managers of the Global DiversifiedValue Fund Segregated Portfolio and the Scotia U.S.Index Fund respectively, in which such Funds mayinvest all or substantially all of their assets.

Under the Distributorship Agreements, the Manager isentitled to any initial charges (see "Subscription"), butwill be responsible for any fees and commissionspayable by the Funds to distributors of Shares and forpromotional costs, including this Prospectus and anymodifications, supplements or restatements of it. TheManager is also entitled to retain any redemptionfees charged on the Redemption of Shares (see“Redemption”).

Each Fund will be responsible for its operationalexpenses including, but not limited to, annual filingand registration fees, audit fees, legal fees, interest onborrowed money and any tax to which it may becomesubject.

With the exception of the Scotiabank Money MarketFund Shares and interfund conversions, Shares thatare redeemed within 90 days of purchase may besubject to a redemption fee of up to 2% of theredemption amount.

There are no fees or remuneration paid from theFunds to their Directors.

No change will be made in the arrangementsdescribed above concerning the Managers’ fees andthe expenses of the Funds without giving Shareholdersat least 30 days prior notice in the form of amodification, supplement or restatement of thisProspectus.

10

Fees & Charges

Financial Information about the Funds

Financial Statements

Each of the Funds will prepare annual financialstatements in accordance with InternationalAccounting Standards. The financial statements willbe audited by the Auditors in accordance withInternational Standards on Auditing.

Copies of the most recent audited financialstatements of the Funds are available from theManager (see “Documents for Inspection”).

Quarterly Reporting

Each Shareholder receives a quarterly report showingthe number and value of his Shares in each Fundtogether with a brief report on the performance ofeach Fund.

Annual Reporting

Copies of the audited financial statements of eachFund will normally be available to the Shareholderswithin 120 days of the end of each financial year.The financial year-end of each Fund is December 31in each year. In the case of the Scotiabank GlobalGrowth Fund, the audited financial statements ofthe Scotiabank Global Diversified Equity Fund (inwhich it may invest all, or substantially all, its assets)will be annexed to its own financial statements. Inthe case of the Scotiabank US Growth Fund, theaudited financial statements of the Scotia U.S. IndexFund (in which it may invest all, or substantially all,its assets) will be annexed to its own financialstatements.

Borrowings, loan capital and contingentliabilities

As at the date hereof, none of the Funds had anyoutstanding loan capital or loans made to it, anyother borrowings or indebtedness, and anyoutstanding contingent liabilities or guarantees.

Net Asset Values

The Net Asset Value per Share of each Fund (exceptas otherwise specified in the relevant Class Profile)are publicized on Bloomberg, published in localpapers (where applicable) and are available on theCayman Islands Stock Exchange website(www.csx.com.ky) immediately upon calculation.

Cayman Islands

The Cayman Islands impose no taxes on income,profits, capital gains, or appreciations of the Fundsnor are holders of Shares subject to any taxes in theCayman Islands in the nature of income, capital gains,inheritance, wealth or capital transfer or other taxes,as a result of holding such Shares as at the datehereof. The Funds have applied for and obtainedundertakings from the Government of the CaymanIslands that, for a period of twenty years from thedate thereof, no tax hereafter introduced on profits,income, gains or appreciation, or by way of estateduty or inheritance tax would apply to such Funds ortheir Shares.

Scotiabank Money Market Fund and Scotiabank USDollar Bond Fund will endeavour not to invest in anysecurity, which may give rise to withholding or othertax in the United States of America or Canada, or anyother jurisdiction in which the Funds might invest.

No stamp duty is levied by the Government of theCayman Islands on the issue, transfer or redemptionof shares. No withholding taxes are payable in theCayman Islands on dividends or other distributions oron redemptions of Shares.

There are no exchange controls and no otherrestrictions on the transfer of funds to and from theCayman Islands as at the date hereof.

General

The above information is general information onlyand does not constitute any form of tax advice ordirections to any investor in the Funds. Prospectiveinvestors not resident in the Cayman Islands shouldconsult their own professional advisors on thepossible tax, regulatory or exchange controlconsequences in any relevant jurisdiction ofacquiring, holding, redeeming or selling Shares.

11

Taxation and Exchange Controls

The Funds are regulated under the Mutual FundsLaw (2007 Revision) of the Cayman Islands andqualify as regulated mutual funds by virtue ofhaving a licensed mutual fund administrator(Scotiabank & Trust (Cayman) Ltd.) to provide theFunds’ principal office in the Cayman Islands.Among other requirements, every regulated mutualfund must have an annual audit of its financialstatements by an auditor approved by the CaymanIslands government; and a copy of the auditedfinancial statements must be filed with the CaymanIslands Monetary Authority (“CIMA”) within sixmonths of the financial year-end. The Mutual FundsLaw also gives CIMA various regulatory andremedial powers. There is no compensation schemein the Cayman Islands for investors in mutual funds.

As regulated mutual funds, the Funds will be subjectto the supervision of CIMA, which may at any timeinstruct any Fund to have its accounts audited andto submit them to CIMA within such time as CIMAspecifies. In addition, CIMA may ask the Directors togive CIMA such information or such explanation inrespect to such Funds as it may reasonably requireto carry out its duty under the Mutual Funds Law.The Directors on request must also give CIMA accessto or provide at any reasonable time all recordsrelating to such Funds and CIMA may copy or take anextract of a record it is given access to or is provided.Failure to comply with any of these requests by CIMAmay result in substantial fines being imposed on anysuch Fund and may result in CIMA applying to thecourt to have such Fund wound up.

CIMA is prohibited by the Mutual Funds Law fromdisclosing any information relating to the affairs ofa mutual fund it has acquired in the course of itsduties or in the exercise of its functions other thandisclosure required for the effective regulation of amutual fund or when required or permitted to doso by a court or under any other law.

CIMA may take certain actions if it believes that aregulated mutual fund is or is likely to becomeunable to meet its obligations as they fall due or iscarrying on or is attempting to carry on business oris winding up its business voluntarily in a mannerthat is prejudicial to its investors or creditors. Thepowers of CIMA include, inter alia, the power torequire the substitution of any Director of a Fund,to appoint a person to advise the Fund on theproper conduct of its affairs or to appoint a personto assume control of the affairs of the Fund. Thereare also other remedies available to CIMA includingthe ability to apply to the Grand Court of the

Cayman Islands for an order to take such otheraction as it considers necessary to protect theinterests of investors in, and creditors of, the Fundand, subsequently, to take any other action providedfor under the Mutual Funds Law.

Pursuant to the provisions of the MonetaryAuthority Law (as amended) (the “MAL”) CIMA mayrequire the Funds or a connected person (includinga director of a Fund) or a person reasonablybelieved to have information relevant to an enquiryby CIMA to provide or produce such specifiedinformation or documents as CIMA may reasonablyrequire in connection with the exercise of itsstatutory functions or in response to a request by anoverseas regulatory authority. Subject to certainsafeguards contained in the MAL, CIMA maydisclose to an overseas regulatory authorityinformation necessary to enable that authority toexercise its regulatory functions.

In order to comply with regulations aimed at theprevention of money laundering, the Funds willrequire verification of identity from all prospectiveinvestors. The Funds reserve the right to requestsuch information as is necessary to verify theidentity of a Subscriber. In the event of delay orfailure by the Subscriber to produce any informationrequired for verification purposes, the Fund mayrefuse to accept the subscription for Shares and, ifso, any funds received will be returned withoutinterest to the account from which the monies wereoriginally debited.

If any person who is resident in the Cayman Islandshas a knowledge or suspicion or reasonable groundsfor a knowledge or suspicion obtained in the courseof business that any other person is engaged inmoney laundering, that person is required to reportsuch suspicion pursuant to the Proceeds of CrimeLaw (as amended) of the Cayman Islands and suchreports shall not be treated as a breach of anyrestriction upon the disclosure of informationimposed by any enactment or otherwise.

12

Regulation of the Funds in the Cayman Islands

Cayman Islands Anti-Money LaunderingRegulations

Capitalization

The authorized share capital of Scotiabank MoneyMarket Fund is divided into 1000 Management Sharesof par value US$1.00 each, 100,000,000 RedeemablePreferred Shares of par value US$0.01 each, classifiedas the “US Dollar Class” and 200,000,000 unclassifiedRedeemable Preferred Shares of par value US$0.01each. The Directors of the Scotiabank Money MarketFund may from time to time create additional Classesof Redeemable Preferred Shares and may allocatesuch number of unclassified shares to such additionalClasses as they think fit.

The authorized share capital of Scotiabank US DollarBond Fund, Scotiabank Global Growth Fund andScotiabank US Growth Fund respectively is dividedinto 1000 Management Shares of par value US$1.00each and 100,000,000 Redeemable Preferred Shares ofpar value US$0.01 each.

The authorized share capital of Scotiabank CanadianGrowth Fund is divided into 1000 Management Sharesof par value Cdn$1.00 each and 100,000,000 RedeemablePreferred Shares of par value Cdn$0.01 each.

The issued share capital, if any, of the above Funds atthe most recent financial year-end is disclosed in theirrespective financial statements (see “Documents forInspection”).

Management Shares

The Management Shares of each Fund which carryfull voting rights but no rights to participate in theprofits or assets of such Funds (other than thereturn of their par value in the event of liquidation),have been issued to the Manager.

Redeemable Preferred Shares

The Redeemable Preferred Shares (referred to in thisProspectus as "Shares") confer no voting rights andno entitlement to receive notice of, or attend at,general meetings of the relevant Funds. The Sharescarry the right to participate in dividends and allother distributions of such Funds (subject only to thereturn of the par value of the Management Sharesin the event of liquidation).

The Articles of Association of each Fund prohibit the alteration of such Articles (including the rightsattached to the Shares) which would be materiallyprejudicial to the holders of Shares until after notless than 30 days written notice has been given tosuch holders, specifying the intended alteration oramendment and drawing the attention ofShareholders to their rights to request theredemption of their Shares.

Place of Business

The principal place of business of the Funds is at theoffices of the Manager in George Town, GrandCayman and no place of business has beenestablished in any other country.

Litigation

No litigation or claims against any of the Funds orinitiated by any of the Funds are known to theDirectors or Manager as at the date hereof.

Liquidation of the Funds

The Manager, as the holder of the issuedManagement Shares of the Funds, has the power toplace any of the Funds in liquidation. However, aFund will not be liquidated before at least 90 days’written notice of such liquidation is given to theFund’s Shareholders. Upon liquidation, the netassets of a Fund after paying off all liabilities wouldbe distributed by the liquidator to the holders ofthe Redeemable Preferred Shares, subject only tothe return of the par value of the ManagementShares.

13

General Information

The following contracts which are or may be materialhave been entered into by each of the Funds withentities within the Scotiabank Group otherwise thanas a result of arm’s length negotiations:

(a) Management Agreements, under which theManager provides administrative, secretarial andregistration services, and is entitled to receivethe payments detailed under “Fees and Charges”.The Management Agreements may be terminatedby either party giving to the other not less thansixty days’ written notice;

(b) Investment Advisory Agreements, under whichinvestment advice is provided by the InvestmentAdvisor. Under the terms of the InvestmentAdvisory Agreements, the Investment Advisor isentitled to receive directly from the Manager ashare of the payments detailed under “Fees andCharges”. The Investment Advisory Agreementsmay be terminated by either party giving to theother not less than sixty days’ written notice; and

(c) Distributorship Agreements, under whichDistributors are responsible for the promotionand marketing of the Funds.

The following contracts which are or may bematerial have been entered into by each of theFunds with entities outside the Scotiabank Group:

(d) Custodian Agreements, under which the Custodianhas custody of the securities and cash accounts ofthe Funds either directly or through sub-custodians, agents or nominees. Under the termsof the Custodian Agreements, the Custodian maybe entitled to receive directly from the Manager ashare of the payments detailed under "Fees andCharges". The Custodian Agreements may beterminated by either party giving to the other notless than ninety days’ written notice;

(e) Listing Agreement, under which the Listing Agentacts for the Funds in connection with the listingof their Shares on the Cayman Islands StockExchange. The Agreement may be terminated byeither party giving to the other.

Copies of the following documents are availablefrom the Manager or may be inspected during usualbusiness hours at the offices of the Manager in theCayman Islands:

(a) the Memorandum and Articles of Association ofthe Funds;

(b) he agreements appointing the Manager,Investment Advisor, Custodian, Distributors andListing Agent in respect of each Fund;

(c) the most recent Prospectus (including, in the caseof Scotiabank Global Growth Fund, the mostrecent offering memorandum of Close BrothersFunds SPC which incorporates the GlobalDiversified Value Fund Segregated Portfolio andof Scotiabank US Growth Fund, the most recentSimplified Prospectus of Scotia U.S. Index Fund)and Transaction Form in respect of each Fund; and

(d) the most recent audited financial statements ofeach Fund (including, in the case of ScotiabankGlobal Growth Fund, the audited financialstatements of Global Diversified Value FundSegregated Portfolio and of Scotiabank USGrowth Fund, the audited financial statements of Scotia U.S. Index Fund).

14

Documents for InspectionMaterial Contracts

AAPPPPEENNDDIIXX II –– DDIIRREECCTTOORRSS

The Funds

The Directors of the Funds are as follows:

Name and Country of Residence Position held in the Scotiabank Group

Bruce John; Cayman Islands Center Director - Wealth Management, Scotiabank & Trust

(Cayman) Ltd.

Farried Sulliman; Cayman Islands Managing Director, Scotiabank & Trust (Cayman) Ltd.

Daniel Wright; Canada Senior Vice President, International Wealth Management

Marcel Schroder; Canada Vice-President, Investment Products Group, International Wealth

Management

The Manager

The Directors of the Manager are as follows:


Bruce John; Cayman Islands Center Director - Wealth Management, Scotiabank & Trust

(Cayman) Ltd.

Farried Sulliman; Cayman Islands Managing Director, Scotiabank & Trust (Cayman) Ltd.

Daniel Wright; Canada Senior Vice President, International Wealth Management

Appendices

15

The Investment Advisor

The Directors of Scotia Cassels Investment Counsel Limited (“Scotia Cassels”) are as follows:


Barbara Mason; Canada Executive Vice President, Wealth Management

Edna Chu; Canada Vice President, Deputy Head, Compliance, Wealth

Management

Mike Henry; Canada Managing Director and Head of Channel Strategy

John Varao; Canada President and CEO and CIO, Scotia Cassels

Catherine Welling; Canada Managing Director and Head of Scotia Private Client Group

16

AAPPPPEENNDDIIXX IIII –– SSUUMMMMAARRYY OOFF OOFFFFEERRIINNGGMMEEMMOORRAANNDDUUMM OOFF CCLLOOSSEE BBRROOTTHHEERRSSFFUUNNDDSS SSPPCC RREELLAATTIINNGG TTOO TTHHEE GGLLOOBBAALLDDIIVVEERRSSIIFFIIEEDD VVAALLUUEE FFUUNNDD SSEEGGRREEGGAATTEEDDPPOORRTTFFOOLLIIOO CCLLAASSSS OOFF PPAARRTTIICCIIPPAATTIINNGGSSHHAARREESS

Scotiabank Global Growth Fund may invest all, orsubstantially all, its assets in the Global DiversifiedValue Fund Segregated Portfolio, a class ofparticipating shares in the capital of Close BrothersFunds SPC (formerly known as the Scotiabank GlobalDiversified Value Equity Fund, a segregatedportfolio of Scotiabank Mutual Funds SPC). Inconsequence Global Diversified Value FundSegregated Portfolio may be a master fund for whichScotiabank Global Growth Fund acts as a feederfund and this Appendix contains the informationrequired to be disclosed by the Listing Rules of theCayman Islands Stock Exchange (“CSX”) in respect ofmaster funds. Part A of the Appendix containsgeneral corporate information pertaining to CloseBrothers Funds SPC and Part B contains informationrelating specifically to the Global Diversified ValueFund Segregated Portfolio class of participating sharesin which Scotiabank Global Growth Fund may invest.

PPAARRTT AA –– CCOORRPPOORRAATTEE IINNFFOORRMMAATTIIOONN RREELLAATTIINNGGTTOO CCLLOOSSEE BBRROOTTHHEERRSS FFUUNNDDSS SSPPCC

1. Incorporation.

Close Brothers Funds SPC was incorporated in theCayman Islands under the name Scotiabank MutualFunds, SPC as a multi-class segregated portfoliocompany on 2nd September 2002 with registrationnumber CR-119702 and was registered as an open-ended mutual fund pursuant to Section 4(3) of theMutual Funds Law of the Cayman Islands on 16thSeptember 2002 with license number 5900.

2. Share Capital

The authorized share capital of Close Brothers FundsSPC is US$50,000 divided into 4,999,000participating shares of par value US$0.01 each and100 ordinary shares of par value US$0.01 each.Shares of all classes are issued fully paid only.

3. Cayman Stock Exchange (CSX) Listing

Participating shares in the capital of Close BrothersFunds SPC, Global Diversified Value FundSegregated Portfolio, are listed on the CSX.

4. Segregated Portfolios

The assets attributable to each class of participatingshares in the capital of Close Brothers Funds SPC are

held in separate segregated portfolios. UnderCayman Islands law, assets of one segregatedportfolio are not available to meet the liabilities ofanother segregated portfolio.

5. Registered Office

The registered office of Close Brothers Funds SPC isClose Brothers (Cayman) Limited, P.O. Box 1034, 4thFloor Harbour Centre, George Town, Grand CaymanKY1-1102, Cayman Islands.

6. Service Providers

The service providers, legal advisors, auditors andlisting agent of Close Brothers Funds SPC are asfollows:

Investment Manager:Close Asset Management (Cayman) Limited4th Floor Harbour CentrePO Box 1034, George TownGrand Cayman KY1-1102Cayman Islands

Investment Advisor:Alliance Capital Management L.P.1345 Avenue of the AmericasNew York, NY 10105USA

Custodian:The Bank of Nova Scotia44 King Street WestToronto, OntarioM5H 1H1, Canada

Distributor:Close Brothers (Cayman) Limited4th Floor Harbour CentrePO Box 1034, George TownGrand Cayman KY1-1102Cayman Islands

Auditors and Listing Agent:PricewaterhouseCoopersStrathvale HouseNorth Church StreetP.O. Box 258 GTGrand Cayman, Cayman Islands

Legal Counsel (as to Cayman law):Charles Adams, Ritchie & DuckworthZephyr House, 122 Mary StreetP.O. Box 709 GTGrand Cayman, Cayman Islands

17

8. Investment Manager

The Company appointed Close Brothers (Cayman)Limited as Administrator and appointed Close AssetManagement (Cayman) Limited as InvestmentManager to manage the affairs of the Company andits Segregated Portfolios, subject to the overallsupervision and control of the Directors. TheAdministrator was incorporated under the laws ofthe Cayman Islands on 13 January 1999 and theInvestment Manager was incorporated under thelaws of the Cayman Islands on 6 May 1999. TheInvestment Manager has delegated its duties to theInvestment Adviser, which remains Alliance CapitalManagement L.P., on the same terms as before. TheAdministrator has responsibility for the generaladministration of the Company and of eachSegregated Portfolio, and, as such, will keep thebooks of account, calculate the Net Asset Value ofthe Participating Shares of each Class, deal withcommunications and queries from investors andprocess subscriptions, redemptions and transfers inrespect of each Segregated Portfolio. TheAdministrator is at liberty to provide similar or otherservices to other funds and companies.

The Administrator and the Investment Manager areentitled to receive a monthly management feecomputed by reference to the Net Asset Value ofeach Segregated Portfolio and are entitled toreceive a sales commission in respect of the issue ofShares. The Management Agreement may beterminated on ninety days' written notice by any ofthe Administrator, the Investment Manager or theCompany."

9. Investment Advisor

Alliance Capital Management L.P. has been appointedas Investment Advisor to the segregated portfolioscorresponding to each class of participating shares,including Global Diversified Value Fund Segregated

Portfolio. The Investment Advisor is a globalinvestment advisor supervising client accounts withassets in excess of US$400 billion. The InvestmentAdvisor’s general partner, Alliance CapitalManagement Corporation, is an indirect whollyowned subsidiary of AXA Financial, Inc., which is itselfa wholly owned subsidiary of AXA Group, a Frenchfinancial services group. The Investment Advisor isresponsible for providing investment managementand advice for the Global Diversified Value FundSegregated Portfolio and has power to enter intotransactions on its behalf. The Investment Advisor willbe remunerated out of the management fee payableto the Investment Manager. The Investment AdvisoryAgreement may be terminated by either party givingnot less than 90 days’ written notice and will beterminated immediately on the termination of theappointment of the Investment Manager.

10. Custodian

The Bank of Nova Scotia (“Scotiabank”) has beenappointed as Custodian to the segregated portfolioscorresponding to each class of participating shares,including the Global Diversified Value FundSegregated Portfolio. Scotiabank provides a full rangeof banking, custody and financial services to aworldwide clientele and will hold the assets anduninvested cash of the Global Diversified Value FundSegregated Portfolio either directly or through sub-custodians, nominees or agents. Scotiabank, originallyincorporated in 1832, operates in more than fiftycountries and has over US$412 billion in assets underadministration on behalf of its clients. The Custodianwill be remunerated out of the management feepayable to the Investment Manager. The CustodianAgreement may be terminated by either party on 90days’ written notice.

18

7. Directors

The current Directors of Close Brothers Funds SPC are as follows:

Name and residency Position held in the Scotiabank Group

Linburgh Martin, Cayman Islands Managing Director, Close Brothers (Cayman) Limited

John Sutlic, Cayman Islands CFO and Director, Close Brothers (Cayman) Limited. CFO,

Close Bank (Cayman) Limited

There are no service contracts in existence between Close Brothers Funds SPC and its Directors and none ofthe Directors are entitled to receive any fee or remuneration.

19

operates in more than fifty countries and has overUS$412 billion in assets under administration on behalfof its clients. The Custodian will be remunerated out ofthe management fee payable to the InvestmentManager. The Custodian Agreement may beterminated be either party on 90 days’ written notice.

11. Articles of Association

The Articles of Association of Close Brothers Funds SPCcontain the following provisions:

(a) Rights of Holders of Participating Shares:participating shares entitle the holder to receivenotice of, attend and (except in respect of anymotion to change the name of the company) voteat meetings of shareholders. The participatingshares have the right to participate equally inany dividends declared by the company inrespect of the segregated portfolio to which suchparticipating shares related and are redeemableat the option of the holder at a redemptionprice equal to the net asset value per share forthe time being of the relevant segregatedportfolio. In the event of the winding-up of thecompany, each holder of a participating share isentitled to a return of the paid-up par value anda pro-rata share in the surplus assets of therelevant segregated portfolio. The rightsattached to each class of share may be variedonly with the consent in writing of the holdersnot less than three fourths of the issued sharesof the relevant class or by a special resolution ata class meeting.

(b) Director’s Interests: a Director may vote inrespect of any contract, arrangement or othermatter which may be proposed, notwithstandinghe has an interest in it, provided the nature ofthe interest shall have been disclosed to theother Directors prior to the relevant resolution.

(c) Remuneration of Directors: subject to anydirection given by the shareholders in generalmeeting, the Directors have power to determinetheir own remuneration.

(d) Borrowing Powers: the Directors have power toborrow money and to mortgage or charge theproperty of the company.

(e) Changes in Capital: the Directors have power toallot and dispose of unissued shares of thecompany and to determine the class in which suchshares shall be issued but have no power to changethe authorised share capital of the company.

12. Litigation

The Directors are not aware of any litigation or claimsagainst or initiated by Close Brothers Funds SPC.

13. Taxation

Under current legislation in the Cayman Islands, notaxes will be imposed upon Close Brothers Funds SPCor its shareholders by the Cayman Islands Governmentand there are no exchange control laws or regulationsin effect. Close Brothers Funds SPC has obtained anundertaking from the Governor in Counsel of theCayman Islands that, for a period of twenty yearsfrom the date of the undertaking, no law which isenacted in the Cayman Islands imposing any tax to belevied on profits or interests or gains or appreciationshall apply to the company or its operations and thatno such tax or any tax in the nature of estate duty orinheritance tax shall be payable on the shares,debentures or other obligations of the company.

14. Financial Information

Unaudited quarterly reports are sent to each shareholderof Close Brothers Funds SPC within thirty days of therelevant quarter end. Audited financial statements ofClose Brothers Funds SPC, including the financialstatements of Global Diversified Value Fund SegregatedPortfolio, will normally be sent to each shareholder nolater than six months after each financial year-end. Allfinancial reports of Close Brothers Funds SPC are preparedin accordance with International Financial ReportingStandards except in respect of the deferral and amortisationof organisational expenses. The most recent auditedfinancial statements of Close Brothers Funds SPC areavailable from the Investment Manager on request.

15. Indemnification

The terms of appointment of the Investment Manager,Investment Advisor and Custodian provide that suchappointees shall be indemnified against all claims,liabilities, expenses and like matters, except in thosecircumstances pursuant to the fraud, wilful deceit orgross negligence of the relevant service provider. TheDirectors and officers of the company have the benefitof corresponding provisions in the articles of association.

16.Documents available for inspection

Copies of the following documents are available from ormay be inspected during the usual business hours at theoffices of the Investment Manager in the Cayman Islands:

(a) Offering Memorandum;

(b) Articles of Association of Close Brothers Funds SPC;

(c) material contracts with service providers; and

(d) audited financial statements and unaudited quarterlyreports of Close Brothers Funds SPC, including the GlobalDiversified Value Fund Segregated Portfolio class.

20

PPAARRTT BB –– IINNFFOORRMMAATTIIOONN RREELLAATTIINNGG TTOO GGLLOOBBAALLDDIIVVEERRSSIIFFIIEEDD VVAALLUUEE FFUUNNDD SSEEGGRREEGGAATTEEDDPPOORRTTFFOOLLIIOO

1. Investment Policy, Objectives and Restrictions

The investment objective of Global Diversified ValueFund Segregated Portfolio is to provide long-termcapital growth by investing in a diversified portfolioof global equity securities that are determined bythe Investment Advisor to be undervalued. GlobalDiversified Value Fund Segregated Portfolioemphasizes stock selection based on a fundamentalvalue approach of the Investment Advisor’s BernsteinInvestment Management and Research Unit. Inselecting securities for Global Diversified Value FundSegregated Portfolio the Investment Advisor uses itsfundamental research to identify companies whoselong-term earnings power is not reflected in thecurrent market price of their securities. In order tohedge a portion of currency risk, Global DiversifiedValue Fund Segregated Portfolio may from time totime invest in currency futures contracts or currencyforward contracts and may at times use certain typesof investment derivatives such as options, futures,forwards and swaps.

2. Terms of Participating Shares

The Articles of Association of Close Brothers Funds SPCcontain the following provisions:

(a) Redemptions: participating shares may beredeemed on the dealing day next followingreceipt by the Manager of a signed redemptionrequest. A dealing day is any business day in theCayman Islands or New York. The Directors maysatisfy all or part of the redemption price in specie.

(b) Compulsory Redemption: the Directors maycompulsorily redeem all of the participating sharesheld by a shareholder if as a result of a redemptionrequest the value of participating shares held by ashareholder is reduced to less than US$50,000 or itcomes to the attention of the Directors thatparticipating shares are held by, or on behalf of, aperson who is not an eligible investor. The Directorsmay also compulsorily redeem all the participatingshares in issue of the Global Diversified Value FundSegregated Portfolio if: the net asset value is lessthan 5 million dollars on four consecutive valuationdays; the Investment Advisor notifies the Managerthat the investment objective is no longer reasonablyachievable; or any law is passed which renders itillegal or impracticable to continue operations.

(c) Net Asset Value: the net asset value ofparticipating shares is determined by the

Manager on each valuation day by ascertainingthe value of the assets of the segregatedportfolio corresponding to the Global DiversifiedValue Fund Segregated Portfolio and deductingfrom such amount the liabilities relating to suchsegregated portfolio. The net asset value perparticipating share of the Global DiversifiedValue Fund Segregated Portfolio is calculated bydividing the net asset value by the number ofparticipating shares in issue on the relevantvaluation day. The net asset value per participatingshare is the resulting sum rounded to the nearestcent. A valuation day is the business dayimmediately preceding a dealing day.

(d) Suspension of Valuation, Issue or Redemption ofParticipating Shares: the Directors may suspend thevaluation, issue or redemption of participatingshares of the Global Diversified Value FundSegregated Portfolio for the whole or part of aperiod during which:

(i) by reason of the closure or suspension of trading on any money market or stock exchange or over the counter market or for any other reason the Directors consider it notreasonably practicable for the investments ofthe segregated portfolio to be realised or disposed of or for the net asset value of the participating shares to be fairly determined;

(ii) as a result of an emergency state of affairs, the reasonable disposal of securities of the segregated portfolio becomes impracticable or there exists circumstances which the Directors deem will cause material harm or serious prejudice to the relevant shareholders;

(iii) there is a breakdown in the means normally employed by the Directors in ascertaining the value of investments or for any other reason the Directors consider that they cannot ascertain the value of such investments or other assets of the segregated portfolio at the valuation point on the day appointed for settlement of the transaction in question; or

(iv) the Directors deem it impracticable to transfermonies of or for the segregated portfolio at normal exchange rates at any time.

(e) Conversion between Classes: holders ofparticipating shares of any class may freely convertsuch shares to the number of participating sharesof any other class calculated by reference to theprevailing price per share of such classes.

3. Dividend Policy

The Directors do not anticipate that any dividends willbe paid to shareholders of Global Diversified Value FundSegregated Portfolio out of its distributable profits and itis the present intention of the Directors that all suchprofits will be reinvested.

4. Risk Factors

(a) Investor Control: although participating sharesgenerally have voting rights, the Directors of orinvestors in Scotiabank Global Growth Fund maynot be able to control the Global DiversifiedValue Fund Segregated Portfolio.

(b) Multi Class Insolvency: although as a segregatedportfolio the assets of Global Diversified ValueFund Segregated Portfolio will not be availableunder Cayman Islands law to meet the liabilitiesof any other segregated portfolio, Close BrothersFunds SPC is a single legal entity which mayoperate and have assets held on its behalf inother jurisdictions and there is a risk that theassets attributable to one segregated portfoliomay be exposed to the liabilities of another ifthe courts of any such jurisdiction do notrecognise such segregation.

(c) Conflicts of Interest: instances may arise wherethe interests of the Manager and the InvestmentAdvisor or their affiliates conflict with theinterests of Global Diversified Value FundSegregated Portfolio and its shareholders. Suchconflicts include, but are not limited to, the factthat the Manager and the Investment Advisormay be engaged in other substantial activitiesand may therefore devote to Global DiversifiedValue Fund Segregated Portfolio only as muchtime as is reasonably necessary in theirjudgement for their respective duties. It shouldalso be understood that the ManagementAgreement has not been negotiated at arm’slength and that it is unlikely that the Managerwill be replaced.

5. Net Asset Value Per Share

The current net asset value per share of the GlobalDiversified Value Fund Segregated Portfolio is availableon the website of the Cayman Islands Stock Exchange atwww.csx.ky where it is listed under ticker symbolSCBGDVE KY.

21

AAPPPPEENNDDIIXX IIIIII –– SSUUMMMMAARRYY OOFF TTHHEESSIIMMPPLLIIFFIIEEDD PPRROOSSPPEECCTTUUSS OOFF SSCCOOTTIIAAUU..SS.. IINNDDEEXX FFUUNNDD

Scotiabank US Growth Fund may invest all, orsubstantially all, its assets in Scotia U.S. Index Fund(formerly the Scotia American Stock Index andbefore that the National Trust U.S. Index Fund) anopen-ended mutual fund trust established under thelaws of Ontario, Canada by a Declaration of Trustdated December 31, 1996, as amended and restatedon November 30, 2000 by Scotia Securities Inc. (the"Trustee" and “Manager”). The following informationis a summary of the information contained in theSimplified Prospectus of Scotia U.S. Index Fund andthe terms and conditions of the Declaration of Trust.

Investment Policy, Objectives and Restrictions.

The objective of the Scotia U.S. Index Fund is toprovide Unit holders with long-term growth ofcapital by investing primarily in US equity securitiesto track the performance of a generally recognizedindex of US equity securities (the “Recognised USIndex”), currently being The Standard & Poor’s 500Total Return Index. The Scotia U.S. Index Fund willinvest in the securities that are included in theRecognised US Index in substantially the sameproportion as they are adjusted in the RecognisedUS Index. The Scotia U.S. Index Fund’s portfolio willtherefore be rebalanced with a frequency anddegree of precision that seeks to track theRecognised US Index as closely as possible,consistent with minimizing trading costs.

The Scotia U.S. Index Fund has adopted the standardinvestment restrictions and practices prescribed byNational Instrument 81-102 published by theCanadian Securities Administrators. The Scotia U.S.Index Fund will not take management control ofany issuer of securities in which it invests. The ScotiaU.S. Index Fund may use derivatives in accordancewith applicable securities regulations. Derivativesmay not be used for speculation or to create aportfolio with excessive leverage. The Scotia U.S.Index Fund may not borrow money except as atemporary measure for the purpose ofaccommodating requests for the redemption ofUnits and providing such borrowings do not exceed5% of the Net Asset Value of the Fund taken atmarket value at the time of borrowing.

22

Distribution Policy

Distributions by the Scotia U.S. Index Fund will bemade to Unitholders on specified dates. In addition,the Manager of the Scotia U.S. Index Fund maymake other distributions to Unitholders at itsdiscretion. Net income and realised capital gains(after deduction of any losses carried forward) aredistributed by the Scotia U.S. Index Fund annually inDecember of each calendar year to Unitholders ofrecord no earlier than the last business day beforethe distribution.

Distributions will be automatically reinvested inadditional Units of the Scotia U.S. Index Fund basedon the net asset value per unit at the relevant timeunless Unitholders have requested in writing toreceive cash distributions in lieu of reinvestment.

Risk Factors

The value of investments made by the Scotia U.S.Index Fund will vary with prevailing marketconditions. Fluctuations in the value of the investmentportfolio will affect the Net Asset Value of Units andthere is no assurance as to the amounts that will bereturned to Unitholders on the redemption of theirUnits.

The main risks of investing in this fund are currency,index, liquidity, concentration and equity risk:

Currency RiskWhen a mutual fund buys an investment that isdenominated in a foreign currency, changes in theexchange rate between that currency and theCanadian dollar will affect the value of the fund.

Concentration RiskSome mutual funds concentrate their investments ina single industry, country or geographic area. Thisallows them to focus on the potential of thatparticular industry, country or area. Other funds, suchas index funds, may be permitted to concentratemore of their assets in one or more securities than isusually permitted for mutual funds. This allows themto more accurately track the performance of theirtarget index. Mutual funds that concentrate theirinvestments tend to have greater fluctuations inprice than funds with broader diversification. This isbecause they invest in fewer securities, which tend tobe affected by the same factors.

Liquidity RiskLiquidity is a measure of how quickly an investmentcan be sold for cash at a fair market price. If a fundcan’t sell an investment quickly, it may lose money

or make a lower profit, especially if it has to meet alarge number of redemption requests. In generalinvestments in smaller companies, smaller marketsor certain sectors of the economy tend to be lessliquid than other types of investments. The lessliquid an investment the more its value tends tofluctuate.

Equity RiskFunds that invest in equities, such as commonshares, are affected by changes in the generaleconomy and financial markets, as well as by thesuccess or failure of the companies that issued thesecurities. When stock markets rise, the value ofequity securities tend to rise. When stock marketsfall, the value of equity securities tend to fall.

Index RiskSome mutual funds have an investment objectivethat requires them to duplicate the investmentportfolio of a particular index. Depending on marketconditions, one or more of the securities listed inthat index may account for more than 10% of thenet assets of the fund. As an index mutual fund, andthe index it tracks, become less diversified, the indexmutual fund is exposed to greater concentration andliquidity risks, and may become more volatile.

Manager and Service Providers

The Manager is responsible for the overallmanagement of the business and affairs of theScotia U.S. Index Fund. Under the terms of theManagement Agreement dated October 24, 1998 asamended, the Manager may engage agents toperform administrative functions and engagebrokers or dealers in connection with theinvestment portfolio transactions of the Scotia U.S.Index Fund. The Management Agreement may beterminated upon sixty days' written notice by theManager or after a Unitholders' meeting approvingthe termination.

State Street Global Advisors, Ltd. (the "InvestmentAdvisor") has been appointed to provide investmentadvice to the Scotia U.S. Index Fund. The InvestmentAdvisor is a Montreal, Canada based professionalinvestment and management firm and is an industryleader in the development of index funds and is oneof the world's largest managers of both US andnon-US indexed strategies with approximately $900billion in indexed investments under management.

The Bank of Nova Scotia, a chartered bankincorporated under the Bank Act of Canada in 1871,has been appointed Custodian to Scotia U.S. IndexFund by an agreement dated October 24, 1998 as

23

amended and restated on January 31, 2001. TheCustodian provides a full range of banking, globalcustody and financial services to a worldwideclientele and will hold the assets and uninvested cashof Scotia U.S. Index Fund either directly or throughsub-custodians, nominees or agents.

Fees and Expenses

The Manager receives a management fee equal toor less than 0.80% of the Net Asset Value of theScotia U.S. Index Fund. Management fees arecalculated and payable daily.

Reductions in management fees may be negotiatedbetween the Manager and certain Unitholders. Suchreductions are paid by the Scotia U.S. Index Fundand are currently effected through additionaldistributions of units of the Scotia U.S. Index Fund.These reductions are intended to attract largeinvestments, which might not otherwise be investedin the Scotia U.S. Index Fund. The Manager maydiscontinue these reductions at any time uponwritten notice to the investor or his agent. TheScotia U.S. Index Fund reserves the right to varyfrom time to time the method by which suchreductions are effected.

The Scotia U.S. Index Fund pays its own expensesincluding commissions and brokerage fees on thepurchase and sale of portfolio securities, taxes, chargesfor registry and transfer agency services, dividendcrediting services, interest expense, audit and legalfees, custodianship charges, and the costs of preparingand sending annual and semi-annual reports andother required information to Unitholders.

Conflicts of Interest

As companies and personnel within the ScotiabankGroup direct, control and manage Scotia U.S. IndexFund and act as its Custodian, the operations of theFund may give rise to conflicts of interest or duty.

Financial Information about the Fund

Audited financial statements of Scotia U.S. IndexFund are currently provided to Unitholders within140 days following the Fund’s financial year-end.The annual financial statements are prepared inaccordance with Canadian generally acceptedaccounting principles and are audited by the auditorsin accordance with Canadian generally acceptedauditing standards. The most recent audited

financial statements of Scotia U.S. Index Fund areavailable as noted (see “Documents for Inspection”).

Terms of the Units

(a) Valuations: The Units are valued by the Trusteeon each day (the “Valuation Day”) that theToronto Stock Exchange is open for business. TheNet Asset Value per Unit is equal to the marketvalue of the trust property less the totalliabilities of the Scotia U.S. Index Fund dividedby the total number of Units outstanding at therelevant time.

(b) Redemptions: The Trustee may redeem Units atthe option of the Unit holder at the Net AssetValue per Unit on the next Valuation Dayfollowing receipt of the redemption request.

(c) Payment on redemption: Payment on redemptionwill normally be made by cheque or such othermethod of payment approved by the Trustee.The Trustee may elect to make payment in specieby delivery of securities or other assets to theinvestor in which case the Trustee has completediscretion to determine the assets to bedistributed and their values, determined on areasonable basis, for distribution purposes.

(d) Compulsory redemptions: The Trustee mayrequire Unitholders to redeem Units on givingthe Unitholder ten days’ prior notice if theaggregate value of the Units held by aUnitholder is less than the minimum amountspecified in the Simplified Prospectus of theScotia U.S. Index Fund.

(e) Suspension of Valuation and Redemption: TheTrustee may suspend or postpone the valuationand redemption of Units with, where necessary,the prior consent of the Ontario SecuritiesCommission, and may postpone the payment ofredemption proceeds provided such suspensionor postponement complies with the law.

(f) Transfer of Units: Units of the Fund are nottransferable, but Unitholders may redeem Unitsas noted above.

24

General Information

Each Unitholder of Scotia U.S. Index Fund is boundby the terms and conditions of the Declaration ofTrust and has a beneficial interest in the Net Assetscomprising the Fund. The Units are redeemable atthe option of the Unit holder. The Scotia U.S. IndexFund may be terminated at any time by the Trusteeand will be terminated, in certain circumstances, if asuccessor Trustee is not appointed within adesignated time. On termination, the Unitholderswill participate pro-rata in the Net Assets of theScotia U.S. Index Fund. The Trustee may be removedby the Manager provided a successor Trustee hasbeen appointed either by the Manager or byresolution of the Unitholders.

The Trustee has power to amend the provisions ofthe Declaration of Trust provided, where approvalof Unitholders is required under securitiesregulations, such amendment is approved by at leasta majority of the votes cast in person or by proxy ata meeting of the Unitholders called for the purpose.

Litigation

No litigation or claims against the Scotia U.S. IndexFund or initiated by the Scotia U.S. Index Fund isknown to the Trustee or Manager of Scotiabank USGrowth Fund as at the date hereof.

Material Contracts

By agreements dated October 24, 1998, as amended,the Trustee acts as Manager, Registrar and TransferAgent and Distributor and The Bank of Nova Scotiaacts as Custodian of the assets of the Scotia U.S.Index Fund.

Documents for Inspection

Copies of the following documents are availablefrom the Manager of Scotiabank US Growth Fund ormay be inspected during usual business hours at theoffices of the Manager in the Cayman Islands:

(a) The Declaration of Trust in respect of Scotia U.S.Index Fund;

(b) The agreements appointing the Manager,Registrar and Transfer Agent, Custodian andPrincipal Distributor of the Scotia U.S. Index Fund;

(c) The most recent Simplified Prospectus of theScotia U.S. Index Fund; and

(d) The most recent audited financial statementsand unaudited semi-annual financial statementsof the Scotia U.S. Index Fund.

APPENDIX IV – TRANSACTION FORMS

Any person wishing to subscribe for Shares in any ofthe Funds, redeem all or part of their holding ofShares in any of the Funds, convert Shares from oneFund to another Fund, transfer Shares to a thirdparty or amend their registered particulars shouldcomplete and sign the appropriate Form listedbelow and return it to the Manager. Copies of theForms are attached.

Forms may be submitted by facsimile provided theoriginals are forwarded by airmail or courier. IfShare certificates are held in respect of the Shares tobe redeemed, they must be returned at the sametime as the Redemption Request Form and failure todo so may delay the redemption of the related Shares.

Forms:

New Account Request Formto be completed by all new investors includingpersons purchasing Shares from existing investors

Purchase Request Formto be completed by all investors including personspurchasing Shares from existing investors

Redemption Request Formto be completed whenever Shares are to be redeemed

Interfund Request Formto be completed when an investor wishes to convertShares held in a Fund to Shares in any other Fund

Maintenance Request Formto be completed whenever a holder of Shares wishesto amend his or her registered particulars excludingdetails of ownershipp

Pre Authorized Contribution (PAC) Plan Request FormTo be completed when ever a shareholder wishes tocommence/ or stop their PAC plan.

Forms should be signed after completion andforwarded to:

Scotiabank & Trust (Cayman) Ltd.Scotia Centre

P.O. Box 501 6 Cardinal AvenueGrand Cayman KY1-1106Cayman Islands, BWI

Telephone (345) 949-2001Facsimile: (345) 949-7097

® Standard and Poor’s, S&P and S&P 500 are trademarks of The McGraw-Hill Companies and have been licensed for use by The Bank of Nova Scotia and its subsidiary companies.

* Trademark of The Bank of Nova Scotia, used under licence (where applicable). (05/09)

See your Scotiabank Mutual Funds Investment Advisor today.