IAC TT Client CCE client presentation September 2017 (003) · IA(ClaringtonConservative(Equity(FundonApril(1,2016(andis(now(the(sole(manager(of(the(Fund. 1Brendan#Wood#International#isa#global#advisoryfirm#&#the#managing#sponsor#of#the#TopGun#Club.#The#TopGun#Investment#Mind#isan#award#that#recognizes

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IA Clarington Canadian Conservative Equity Fund

TERRY THIBSEPTEMBER 2017

be investedIA Clarington Canadian Conservative Equity Fund

Investment philosophyA disciplined approach that seeks to generate current income and long-‐term capital growth through investments in reasonably valued companies that generate sustainable, enduring dividend growth.

Investment approach• Focus on Quality, Value and Growth.

• Bottom-‐up* screening model with thorough and independent fundamental research/analysis*, combined with a top-‐down macroeconomic overlay.

• Active management with flexibility in security selection.

*Please see disclaimer for definition of terms under targeted investments.

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IA Clarington Canadian Conservative Equity Fund1) Disciplined• Employs a disciplined, risk-‐conscious investment process that blends top-‐down*, macroeconomic analysis with bottom-‐up* security selection to identify quality, undervalued companies with growth potential.

2) Income focused• The fund invests primarily in large-‐cap companies with potential for dividend growth.• Yield enhancement strategy through covered calls and written puts.*

3) Diversified• The portfolio is well diversified at both the sector and security levels.• Flexibility to allocate up to 30% of its assets to foreign securities.

*Please see disclaimer for definition of terms.

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Investment Process• Quality

ü Return on Invested Capital (ROIC)

ü Free cash flow yield

• Dividend/Incomeü Increases in dividends

• Backboneü Steady/reliable

ü Economically resilient businesses

*Please see disclaimer for definition of terms under targeted investments.

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Dividend-‐paying stocks have outperformed over time Compound annual total returns (CDN$)

Source: RBC Capital Markets Quantitative Research for S&P/TSX Composite Total Return Index data & © 2017 Ned Davis Research, Inc. for S&P 500 data.

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How our dividends have fared year-‐to-‐date

• Current portfolio internal dividend yield of 3.4% compares favourably to the S&P/TSX Composite’s 2.9%.**

IA Clarington Canadian Conservative Equity Fund

2017 YTD** 2016*

Increased 66% 58%

Maintained 34% 30%

Cut 0% 12%

Weighted Average Increase 7.3% 0.4%

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Source: Thomson Reuters (all performance figures are total return). Percentage number of companies in the Portfolio either increased,maintained or reduced dividend payments. *Weightings as at Dec 31, 2016 **Weightings as at August 31, 2017;; Please see disclaimer for definition of portfolio internal dividend yield.


2017 First Half Year Review Perfect Storm for Canada – Anything that could go wrong went wrong. • Energy – Oil (WTI*) has declined 12.1% to $47.23; TSX Energy

sector down 14.2%.** • Inflation was muted in the first half of 2017; rates have declined

rather than risen. • NAFTA/Border Adjustment Tax (BAT) overhang.*• Housing Fears• Bank of Canada – interest rate hikes / policy error?

*Please see disclaimer for definition of terms. ** As at August 31, 2017.

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Canada vs. WorldDivergence in price movement since late spring

Source: Bloomberg, September 12, 2017. *R1 = first right side axis;; R2 = second right side axis;; R3 = third right side axis;; L1 = first left side axis;; L2 = second left side axis;; L3 = third left side axis. MSCI ACWI Index = MSCI All World Country Index and includes both emerging and developed world markets.

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2017 Year-‐to-‐DateCanada Underperforming the United States

A perfect storm led by falling energy prices alongside low inflation/rates and NAFTA concerns.

Outperformance led by rising “FAANG” stocks (Facebook, Amazon, Apple, Netflix, and Google).

New Flyer Industries gets added to the index and leads fund returns year-‐to-‐date.

Energy stocks leading the declines alongside non-‐bank financials.

Source: IA Clarington Investments Inc. Return figures reflect closing prices on August 31, 2017.

Sector Year-‐to-‐DateWeight Return *

CANADAS&P/TSX Composite 1.3%S&P/TSX Composite -‐ Energy 19.6% -‐14.2%UNITED STATESS&P 500 11.9%S&P 500 -‐ Information Technology 23.5% 26.6%* As of August 31, 2017

Average ContributionWeight to Return

Top PerformersNew Flyer Industries 2.17% 0.56%Rogers Communications 1.88% 0.47%Brookfield Infrastructure 1.97% 0.45%Canadian National Railway 2.45% 0.39%Enercare Inc 2.04% 0.38%Bottom PerformersCenovus 2.22% -‐1.80%Crescent Point Energy 2.13% -‐1.57%Element Fleet Management 1.32% -‐0.45%Enbridge Inc 4.49% -‐0.43%Altagas Ltd 2.38% -‐0.40%

Index / Sector

Fund Contributors & Detractors

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2017 2nd Half Outlook • Potential for Canada catch-‐up trade.• Inflation will probably move higher, but less than initially expected. Employment will

move it higher, and rates therefore should be stable to up. • Composition of Canadian economic growth probably to change / cognizant of domestic

economy.• Canadian dollar to potentially stabilize.• Housing fears to slowly dissipate.• U.S. continues to progress /potential for positive regulations on infrastructure and

taxes.• Added infrastructure spending on the back of two hurricanes in one season.• Energy – to stabilize in the $40-‐50 range. • NAFTA overhang.*

*Please see disclaimer for definition of terms.

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2017 positioning • Focusing on quality – due to increased market volatility; • Focusing on income and resiliency• Focusing on Canadian companies that derive their revenues and

earnings outside of Canada, but are domiciled in Canada.• Targeting a portfolio yield greater than the index;• Employing a “barbell” strategy:

– One portion of the portfolio is positioned in companies that should perform well in a rising interest rate environment (e.g. financials, energy, consumer discretionary, industrials).

– Another portion is allocated to securities that tend to provide downside protection (e.g. telecommunication companies, pipelines, utilities).

*Resilient companies that are able to weather market downturns and operate profitably. Please see disclaimer for definition of other terms.

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Source: IA Clarington Investments Inc., as at August 31, 2017. * Using market weights. **AGU = Agrium Inc., CP = Canadian Pacific Railway Ltd., CSX-US = CSX Corp., MG = Magna International Inc., NFI = New Flyer Industries Inc., PKI = Parkland Fuel Corp., BTE = Baytex Energy Corp., ECN = ECN Capital Corp., MTS = Metallis Resources Inc. and RUS = Russel Metals Inc. ***Between December 31 2015 and August 31, 2017, some of the transactions that were completed to decrease the portfolio’s energy sector weighting included the elimination of Baytex Energy and Encana Corporation, as well as the reduction of shares in following energy securities: AltaGas Ltd. (-56%), Cenovus Energy Inc. (-59%), Crescent Point Energy Corp. (-32%), Enbridge Inc. (-7%), Freehold Royalties Ltd. (-33%), Pembina Pipeline Corp. (-86%) and TransCanada Corp. (-74%). **** Please see disclaimer for definition of terms.

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2017 PositioningEnergy Exposure Continues to Unwind


Well diversified, but not driven by the benchmark

Source: IA Clarington and S&P Dow Jones Indices, August 31, 2017.

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0 5 10 15 20 25 30 35 40

Financials

Energy

Industrials

Utilities

Consumer Discretionary

Consumer Staples

Telecommunication Services

Materials

Health Care

Information Technology

Real EstateIA Clarington Canadian Conservative Equity

S&P/TSX Composite Index


How we are different from a ETF• Small fixed-‐income sleeve to provide stability and yield; • Option overlay – yield enhancement 1-‐2%; • Addition of high Quality dividend paying mid cap names;

• Disciplined Process -‐ Focus on Quality and Free Cash Flow with dividend growth;

• Conscious decision to limit price-‐taking companies;• Can add a small amount of foreign content (currently, U.S.).

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IA Clarington Canadian Conservative Equity FundInvestment Profile

*

Source: IA Clarington Investments Inc. *Please see disclaimer for definition of terms under targeted investments.

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Summary• Core portfolio that is well diversified on the sector and security levels.• Invests primarily in large-‐cap companies with the potential to increase

their dividends.• Strong capital and income growth since the fund’s inception in 1950.• Disciplined investment process that blends top-‐down macroeconomic

analysis with bottom-‐up security selection to identify quality, undervalued companies with growth potential.

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Terry Thib, Portfolio Manager and VP, Investments• Terry joined IA Clarington as a Portfolio Manager and Vice President, Investments, in

2014. Prior to this, Terry was part of an income and growth team with a boutique Canadian investment firm.

• Terry has over 10 years of investment experience and was selected as a TopGun Investment Mind by Brendan Wood International in 2012, 2014, 2015/2016 and 2017.1

• In addition to holding a Masters of Engineering Science, an MBA and the Chartered Financial Analyst designation, he is a professional engineer.

• Terry uses a disciplined, risk-‐conscious approach to investing that blends fundamental and quantitative analysis* with a macroeconomic overlay. Mr. Thib began managing the IA Clarington Conservative Equity Fund on April 1, 2016 and is now the sole manager of the Fund.

1Brendan Wood International is a global advisory firm & the managing sponsor of the TopGun Club. The TopGun Investment Mind is an award that recognizes exceptional performance of buy-side professionals. Recipients are selected by a group of sell-side counterparties.*Please see disclaimer for definition of terms.

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Macro

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Canada vs. U.S. -‐ Relative Valuation(P/E)Divergence in valuation since late spring

Source: Bloomberg, July 14, 2017. BEst = Bloomberg Estimate. Please see disclaimer for definition P/E Ratio.

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Jul-‐14 Oct-‐14 Jan-‐15 Apr-‐15 Jul-‐15 Oct-‐15 Jan-‐16 Apr-‐16 Jul-‐16 Oct-‐16 Jan-‐17 Apr-‐17 Jul-‐17

BEst P/E Ratio (TSX Index)(Next 4 Quarters)BEst P/E Ratio (S&P 500)(Next 4 Quarters)


Canada vs. U.S. -‐ Relative Valuation(P/BV)20

Sources: RBC CM Quantitative Research;; RBC CM Canadian Equity Strategy, as at July 31, 2017. Please see disclaimer for definitions of P/BV and standard deviation.


Bank Valuations & Subsequent Returns 21

Sources: RBC CM Quantitative Research;; RBC CM Canadian Equity Strategy, as at July 31, 2017. σ = Standard deviation. Please see disclaimer for definitions of PE ratio.

Average PE ratios of TSX banks with +/-‐1 σ bands


Energy Valuations Near Lows – Again!

As at April 2017. *Please see disclaimer for definition of terms.

. P/BV = Price to book value ratio.*

When current P/BV < than long-‐term average P/BV, then pricemay be considered cheap assuming that current P/BV will eventually revert to its long-‐term average.

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Geopolitical Event Date Initial drawdown 3 month return 6 month return 12 month return

Pearl Harbour Attack 12/7/1941 -‐4.4% -‐9.0% -‐6.7% 3.7%

Korean War 6/25/1950 -‐12.8% 1.5% 4.9% 11.2%

Kennedy Assassination 11/22/1963 -‐2.8% 11.5% 16.0% 23.9%

Cuban Missile Crisis 10/22/1962 -‐2.7% 19.1% 26.1% 32.8%

Reagan shooting 3/30/1981 -‐0.3% -‐2.3% -‐13.5% -‐16.4%

Nixon aids convicted of conspiracy 01/30/1973 -‐4.3% -‐1.2% -‐6.7% -‐10.9%

Special Prosecutor into Watergate 05/18/1973 -‐9.0% +8.9% -‐5.1% -‐14.0%

Iraq’s Invasion of Kuwait 8/2/1990 -‐5.9% -‐11.3% -‐2.4% 10.2%

Clinton Impeachment 12/19/1998 -‐3.9% 10.1% 11.1% 17.6%

9/11 Terrorist Attacks 9/11/2001 -‐11.6% 9.6% 13.1% -‐14.6%

2003 Gulf War (UN demands cooperation or war) 1/20/2003 -‐9.4% 15.3% 20.4% 40.2%

Madrid bombing 3/10/2004 -‐3.0% 3.1% 2.4% 10.3%

Averages -‐5.8% 4.6% 5.0% 7.8%

Medians -‐4.4% 6.0% 3.7% 10.3%

Source: Bloomberg as at April 13, 2017.

History shows that markets tend to recover relatively quickly post geopolitical events-‐S&P 500 returns

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Returns

Source: IA Clarington as at August 31, 2017. On April 1, 2016, IA Clarington Investments Inc. was added as a sub-advisor to the Fund.

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Thank You!


Q&A


DisclaimerTerms: Active management: Active management uses research and analysis to select stocks or other securities with the goal of outperforming a designated index or benchmark. Adjusted NFCI(ANFCI): The ANFCI isolates a component of financial conditions uncorrelated with economic conditions to provide an update on financial conditions relative to economic conditions. Border Adjustment Tax (BAT): A border adjustment tax is a value added tax levied on imported goods. Exported goods are exempt from tax;; imported goods sold domestically are subject to the tax. Bond: A bond is a fixed-income investment which involves an individual lending money to an entity (usually corporate or governmental), which borrows the money for a stated period at a fixed or variable interest rate. The individual investor receives interest payments from the borrower during the stated period until maturity, at which point the borrower returns the initial amount of funds borrowed to the lender. Bottom-up investing: Bottom-up investing is the process of analyzing and selecting stocks for a portfolio based on their fundamental characteristics, while de-emphasizing the significance of economic and market factors. This is the opposite of top-down investing, where market and economic factors are analyzed and emphasized to determine which industries and regions are poised to perform well or poorly. Book value: Book value of a company is the company’s total assets minus intangible assets (such as patents) and liabilities (what the company owes).Breakeven Inflation Rate: The breakeven inflation rate represents a measure of expected inflation. Call option: A call option is a financial instrument that allows the purchaser of the option to buy a security at a specified price from the person who sold the option. These investors agree on the terms of the option, including the price and time period. Compound annual total return: The compound annual total return, usually expressed as a percentage, represents the cumulative effect that a series of gains or losses have on an investment, assuming interest, capital gains, dividends and distributions are reinvested. Compound returns are typically stated in annual terms, which means that the percentage reported represents the annualized rate at which capital has compounded over time. Annualized returns are returns over a period scaled up or down to a 12-month period. Corporate bond: A corporate bond is a fixed-income offering from a company, as opposed to a government. Covered call strategy: A covered call strategy involves writing call options on securities you already own. Typically, an investor will do this when he or she believes those securities are unlikely to rise meaningfully during the period in which the option is valid. Derivative: A derivative is a security with a price that is dependent upon one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. Earnings per share (EPS):EPS is the portion of a firm's net income allocated to each outstanding share of common stock. EPS serves as a gauge of a business's profitability. Fundamental analysis: Fundamental analysis involves analyzing characteristics of a company to determine its worth (e.g. assets, debts, earnings, current cash, etc.). Economic and financial factors are also taken into consideration. Inverted yield curve: An inverted yield curve represents market conditions in which long-term debt instruments have lower yields than short-term debt instruments. An inverted yield curve has historically been a leading indicator of recession. Large cap stocks: Large-cap companies have a market capitalization value (calculated as the total number of outstanding shares multiplied by the current stock price) of more than $5 billion. NAFTA: North American Free Trade Agreement is one of the world's largest free trade zones between Canada, the United States and Mexico. LEI: A leading economic indicator (LEI) is a measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading economic indicators are used to predict changes in the economy. National Financial Conditions index (NFCI): The NFCI measures risk, liquidity and leverage in the financial system. A zero value for the NFCI indicates that the U.S. financial system is operating at average levels of risk, liquidity and leverage. Positive values indicate tighter-than-average financial conditions, while negative values indicate looser-than-average conditions.Normal yield curve: A normal yield curve represents market conditions in which long-term debt instruments have higher yields than short-term debt instruments. Normalized: A normalized metric factors out the influence of one-time or cyclical influences. Option: An option is a financial instrument that allows investors to enter into an agreement where one person has the right to buy (sell) a security at a specified price and the other person is obligated to sell (buy). These investors agree on the terms of the option, including the price and time period;; some options can be exercised within a specific time period (American options), while others are exercised only on a particular date (European options). Preferred share: A preferred share is a share of ownership in a corporation. Preferred stocks typically pay dividends, which are paid out before common share dividends. Preferred shareholders are also paid before common shareholders in the event of bankruptcy. Unlike common shares, preferred shares do not generally come with voting rights.


DisclaimerTerms: Price-taking security (company): A company is considered a price-taking company if the price it sets and quantity of goods it produces do not have any effect on the market price, and, hence, the company is usually forced to accept the market price if it wishes to sell its goods. Price-to-book value ratio (P/B Ratio): P/BV is a ratio used to compare a stock's price to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. A lower P/B ratio compared to historical values or relative to competitors could mean that the stock is undervalued. Since stock markets or subsectors of the stock markets are composed of stocks, the ratio can be applied to the stock markets or subsectors of the stock markets in the same manner. P/E Ratio: P/E is a ratio used to compare a stock's price to its EPS (earnings per share). It is calculated by dividing the current closing price of the stock by the latest earnings per share. A lower P/E ratio compared to historical values or relative to competitors could mean that the stock is undervalued. Since stock markets or subsectors of the stock markets are composed of stocks, the ratio can be applied to the stock markets or subsectors of the stock markets in the same manner. Portfolio internal dividend yield: The portfolio internal dividend yield is the weighted average of the indicated yield of all equity holdings within the portfolio. Indicated yield is calculated by dividing the most recent dividend multiplied by the number of dividend payments each year (the indicated dividend) by the current share price, and is usually quoted as a percentage. Put option: A put option is a financial instrument that allows the purchaser of the option to sell a security at a specified price to the person who sold the option. Typically, investors purchase put options as insurance against the possibility that the stock market could fall. A purchaser of put options who exercises the options in a down market is usually selling securities to the put option seller for a price that exceeds the current market price of the securities being sold. Put writing: Put writing is a strategy whereby an investor sells a put option contract to another investor (see "Put option" definition). The buyer of the put option pays the seller a specific amount, known as the option premium, in exchange for the right to sell the put writer’s securities at a specified price within a predetermined timeframe. Quantitative analysis: Quantitative analysis involves using mathematical and statistical models to screen large amounts of financial data according to predetermined criteria. Real return: A real return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. Risk-adjusted return: A Risk-adjusted return is the amount of return generated by an investment per unit of risk taken. Senior loans: In a senior loan arrangement, the lender has first claim on the borrower's assets in the event of bankruptcy. These loans have floating rates that are reset at regular intervals. Standard deviation: Standard deviation (usually illustrated by the Greek letter sigma σ) is a measure that is used to quantify the amount of variation or dispersion of a set of data values. A low standard deviationindicates that the data points tend to be close to the mean (average value) of the set, while a high standard deviation indicates that the data points are spread out over a wider range of values. In finance, standard deviation is widely used to measure risk in terms of the volatility of returns. It represents the historical level of volatility in returns over set periods. A lower standard deviation means the returns have historically been less volatile and vice-versa. West Texas Intermediate (WTI): WTI crude oil is produced, refined and consumed in North America. It is lighter and sweeter than the other major oil benchmarks: Brent crude and Dubai crude. Term Premium: The term premium is the excess yield that investors require to commit to holding a long-term bond instead of a series of shorter-term bonds. Treasury notes: Treasury notes are debt instruments issued by the U.S. government. Their interest rates are fixed and maturities range from one to 10 years. Treasury Yield:The treasury yield is the interest rate that the U.S. government pays to borrow money for different lengths of time. TSX E&P subsector: The TSX E&P subsector is the TSX energy sector subsector that is composed of exploration and production companies. West Texas Intermediate (WTI): WTI crude oil is produced, refined and consumed in North America. It is lighter and sweeter than the other major oil benchmarks: Brent crude and Dubai crude. Yield: A bond yield is the amount earned from a fixed-income security. This is generally the sum of interest payments and the difference in purchase price and amount received on the maturity date. There are also a number of equations that measure yield, including current yield (calculated as annual cash flows divided by current market price) and nominal yield (the stated interest rate or coupon rate on the bond). Yield curve: The yield curve graphically illustrates the yields and maturities of bonds of similar credit quality. A normal yield curve slopes upwards (i.e. bond yields rise as maturities lengthen).


DisclaimerSponsored in part by IA Clarington Investments Inc. The information provided herein does not constitute financial, tax or legal advice. Always consult with a qualified advisor prior to making anyinvestment decision. Commentaries are provided by the portfolio manager or sub-advisor responsible for the management of the fund's investment portfolio, as specified in the applicable fund'sprospectus ("portfolio manager"). Statements by the portfolio manager represent their professional opinion, do not necessarily reflect the views of iA Clarington, and should not be relied upon for anyother purpose. Information presented should not be considered a recommendation to buy or sell a particular security. Specific securities discussed are for illustrative purposes only. Mutual funds maypurchase and sell securities at any time and securities held by a fund may increase or decrease in value. Past investment performance of a security may not be repeated. Unless otherwise stated,the source for information provided is the portfolio manager. Statements that pertain to the future represent the portfolio manager's current view regarding future events. Actual future events maydiffer. iA Clarington does not undertake any obligation to update the information provided herein. The information presented herein may not encompass all risks associated with mutual funds.Please read the prospectus for a more detailed discussion on specific risks of investing in mutual funds.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are notguaranteed, their values change frequently and past performance may not be repeated. Trademarks displayed herein that are not owned by Industrial Alliance Insurance and Financial Services Inc.are the property of and trademarked by the corresponding company and are used for illustrative purposes only.

The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and areused under license.

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