New to Target Click Funds?

New to Target Click Funds?

IA Clarington Target Click Funds are still taking the worry out of investing

Recent events in the worlds' financial markets are shaking investor confidence. The IA Clarington Target Click Funds (Target Click Funds) are Canada's first guaranteed mutual funds and were designed specifically to protect investors and provide peace-of-mind to keep them invested through market volatility like we are currently experiencing. Here's how:

How do the Target Click Funds take the worry out of investing?
Can you explain how the Target Click Funds work?
What about the guarantee?
How does the annual rebalancing benefit you?
How long have the Target Click Funds been around?
What are the key benefits of this unique product?

Q: How do the Target Click Funds take the worry out of investing?

The Target Click Funds guarantee the highest month-end price (net asset value per unit) achieved during the life of the fund no matter when the funds are purchased (see chart below). This means that regardless of how markets perform, or when you purchase a Target Click Fund, you are guaranteed to receive at least the highest month-end unit price, if you hold the fund to the scheduled maturity date.

For illustrative purposes only.

Q: Can you explain how the Target Click Funds work?

Each fund is comprised of three components

1. Government of Canada Federal and Provincial Strip Bonds
Through the Target Click Funds respective allocations to strip bonds issued by federal and provincial governments of Canada, the Funds are designed to meet the guarantee requirement at maturity. Strip bonds are purchased at a discount and mature at par on the scheduled maturity date of each Target Click Fund (June 30th of the year in the name of the fund). Strip bonds are the component used to support the guarantee of the initial investment and any month-end gains.

2. Cash
The cash component of the Fund is invested in treasury bills. This component of the Target Click Funds is used for rebalancing the equity account which occurs once a year (in February) and along with equities is used to purchase more strip bonds when the Fund "clicks" to a new month end high. The annual rebalancing between the cash and equity accounts is beneficial because if the equity account has diminished the cash will replenish the equity account so the Target Click funds will participate in future market growth (buying equities at a low). The opposite happens if the equity account has grown and is rebalanced with the cash component, this would mean some of the equity component of the fund would be sold (selling equities at a high) and moved into the cash component.

3. Equities
The equity portion of the Target Click Funds invests in units of the BNP Paribas Global Equity Exposure Fund (GEEF), which provides global equity exposure through a portfolio of six global stock indices. This component is the primary engine driving growth. The GEEF's equity exposure is magnified through the use of a derivatives portfolio that has historically magnified its exposure to the underlying indices by up to three times. For example, if the indices that the GEEF is exposed to have an average one-year return of 6%, this may result in the GEEF experiencing an approximate one year return of 18%. Alternatively, if the indices that the GEEF is exposed to have an average one year return of -6%, this may result in the GEEF experiencing an approximate one year return of -18%.

Q: What about the guarantee?

Beyond the strip bonds securing the highest month end price, IA Clarington Investments Inc. has a partnership with Industrial Alliance Insurance and Financial Services Inc.  who is required, at maturity, to pay any shortfall that may exist between each fund's net asset value per unit at maturity and the guaranteed amount.

Q: How does the annual rebalancing benefit you?

Each year the IA Clarington TargetClick Funds rebalance the cash and equity accounts in February. The annual rebalancing is beneficial and can happen in two ways. First, if the equity account has declined due to poor equity market performance the cash is used to reinvest in the equity account.

This process enables the Target Click Funds to buy more equities when equity markets are low. Second, if the equity account grows due to strong equity market performance some of the equity account is sold and reinvested into the cash account. This process enables the Target Click Funds to take profits when equity markets are performing well.

Buying Equities at a Low

• If the equity account is lower than the cash account, cash is used to increase equity exposure.

Cash and Equity are rebalanced equally once per year in February.

Selling Equities at a High

• If the equity account is higher than the cash account, equities are sold and allocated to the cash account (taking profits)

Cash and Equity are rebalanced equally once per year in February.

Q: How long have the Target Click Funds been around?

The Target Click Funds were originally introduced in Europe in November 2000. IA Clarington introduced the Target Click Funds to Canadian investors in February 2005.Target Click Funds can also be found in:

	Austria		Norway		Germany
	Netherlands		Hong Kong		Sweden

Q: What are the key benefits of this unique product?

1. The Target Click Funds can help take the worry out of investing by providing the safety of a guarantee when held to maturity
2. The Target Click Funds encourage sound investment strategies, like buy and hold, with the safety of a guarantee
3. The Target Click Funds offer daily liquidity and declining management fees over time
4. The Target Click Funds reduce their equity over time