[ Français ]

1832 Asset Management L.P. Conflicts Disclosure Statement



The Manager’s Statement of Policies Concerning Conflict of Interest with Related Issuers and Connected Issuers as of July 1, 2014.

Conflicts of Interest Disclosure Statement
Related Issuers
Connected Issuers
Other Related or Connected Issuers
Other Relationships
Referral Arrangements

The Manager is providing this Conflicts Disclosure Statement concerning Conflicts of Interest with Related and Connected Issuers and Related Registrants (“Disclosure Statement of Policies”) to you, our clients, to disclose to you the Manager’s relationships in respect of securities of related or connected issuers, certain other issuers and related registrants, where conflicts of interest may arise.

Under certain circumstances the Manager may deal with or for you in securities where the issuer of the securities or another party to the transaction is this firm or a party having an ownership or business relationship with us. Since these transactions may create a conflict or the appearance of a conflict between our interests and yours, the Manager has adopted policies and procedures to assist in identifying and minimizing any conflicts of interest that may arise.

In this Conflicts Disclosure Statement, the Manager describes securities transactions it may enter into that may involve issuers that are related or connected to the Manager or related registrants; the Manager’s relationships with these entities where conflicts of interest could arise; and the use of the terms “influential securityholder” , “related issuer” and “connected issuer” to describe these relationships as explained below.

Influential Securityholder – An influential securityholder exercises influence over an issuer on the basis of direct or indirect ownership of securities aggregating more than 20% of the voting rights or entitlements to distributions of an issuer (or more than 10% if accompanied by the entitlement to nominate at least 20% of a board of directors). Related Issuer – A person or company is a related issuer to the firm if they are an influential securityholder of the firm; we are an influential securityholder of theirs; or each of us is a related issuer of the same third person or company.

Connected Issuer – An issuer or selling securityholder is a connected issuer of the firm if they are distributing securities and one of them, or a related issuer of one of them, has a relationship with the firm; a related issuer to the firm; a director, officer or partner employed by the firm; or a director, officer or partner of a related issuer to the firm that may lead a reasonable prospective purchaser of the securities to question if we are independent of the issuer or selling securityholder for the distribution.

The Manager is required to make certain disclosures where it advises you, or exercise discretion on your behalf with respect to securities issued or traded by us that are securities of a related issuer or, in the course of a distribution, a connected issuer. Please note, however, that this Disclosure Statement of Policies does not list our relationships with related or connected issuers that are funds containing the name “Scotia,” which readily identifies them as affiliates of the Manager.

The Manager has a relationship with the issuers listed in this Disclosure Statement of Policies. The Manager, its directors, officers, partners, advisers and/or other employees may from time to time trade on a discretionary basis on your behalf in a security issued by these listed issuers. If you wish further information concerning the relationship between the firm and these listed issuers, please contact us. This Disclosure Statement of Policies is updated annually and is also provided at the following times and in the following manner:

  • When you open an account with the Manager, you will receive the Disclosure Statement of Policies, as part of the Investor Guide. This will be updated annually and will be available to you on request. This Disclosure Statement of Policies will also be available through the Scotiabank website.
  • When the Manager acts as a portfolio manager and exercise discretionary authority to purchase or sell securities of a related or connected issuer for your account, disclosure will be made in advance of its exercising our discretion, either through the delivery of this Disclosure Statement of Policies, the posting of this Disclosure Statement of Policies on the website, disclosure in the account agreement governing your account (which disclosure will also provide for the client’s consent to such transactions) or otherwise.

The Manager is prepared to act as an adviser in the ordinary course of its business in accordance with its usual practices and procedures and in accordance with all applicable disclosure and other regulatory requirements.

(return to top)

(A) Related Issuers

The following is a list of entities that are related issuers of the Manager or who, by reason of its relationship with The Bank of Nova Scotia (also referred to as “Scotiabank”) or one of its subsidiaries, may be deemed to be related to The Manager.

The Bank of Nova Scotia (“Scotiabank”) wholly owns, directly and indirectly, the general partner of the Manager. Based on information provided to the Manager by Scotiabank, the following parties or issuers, by reason of their relationship with Scotiabank, may also be considered to be related to the Manager.

Banco del Caribe (Venezuela)
Crediscotia Financiera S.A. (formerly Banco del Trabajo, S.A.)
Profuturo AFP S.A.
Scotia Investments Jamaica Limited
Scotia Group Jamaica Limited
Scotiabank Capital Trust
Scotiabank Inverlat, S.A.
Scotiabank, Peru S.A.A
Scotiabank Chile (formerly Scotiabank Sud Americano, S.A. (Chile))
Scotiabank Tier 1 Trust
Scotiabank Trinidad and Tobago Limited

(B) Connected Issuers

The following is a list of entities and fund families that are, or may be deemed to be, connected issuers of the Manager.

Funds managed by 1832 Asset Management L.P.

In addition to the ScotiaFunds, the Scotia Private Pools, the Pinnacle Portfolios and the Integra Funds, the following funds or fund families are managed by 1832 Asset Management L.P., an indirect wholly-owned subsidiary of The Bank of Nova Scotia:

  • The Private Trusts: The Private Trusts are pooled funds that are exempt securities that are only available for purchase by certain qualified investors. The Private Trusts include:
    • The Diversified Private Trust
    • Growth & Income Diversified Private Trust
    • Lincluden Private Trust
  • Dynamic Funds: A family of funds known as the Dynamic Funds. The name of each of the funds within the Dynamic Funds family includes the word “Dynamic or “DMP.” The Dynamic Funds are comprised of mutual fund trusts or are classes of shares of Dynamic Global Fund Corporation. The DMP Funds are classes of shares of Dynamic Managed Portfolios Ltd.

  • Dynamic Hedge Funds: A family of funds known as the Dynamic Hedge Funds. As with the Dynamic Funds above, the name of each of the funds within the Dynamic Hedge Funds family includes the word “Dynamic.” The Dynamic Hedge Funds are sold through an offering memorandum and are generally available to investors that can meet a certain minimum amount of money to invest. The Dynamic Hedge Funds family is comprised of the following funds:
    • Dynamic Alpha Performance Fund
    • Dynamic Contrarian Fund
    • Dynamic Credit Absolute Return Fund
    • Dynamic Focus + Alternative Fund
    • Dynamic Income Opportunities Fund
    • Dynamic Multi-Strategy Hedge Fund
    • Dynamic Power Hedge Fund
    • Dynamic Real Estate & Infrastructure Income Fund
  • Dynamic Pooled Funds: A family of funds known as the Dynamic Pooled Funds. The name of each of the funds within this fund family includes the name “1832.” This family of funds is comprised of the following funds:
    • 1832 Canadian Value Strategy
    • 1832 Equity Income Strategy
    • 1832 Growth Strategy
    • 1832 Global Value Strategy
    • 1832 Core Equity Strategy
    • 1832 Diversified Bond Strategy
  • Marquis Investment Program: Marquis Institutional Solutions and Marquis Portfolio Solutions are the names of the Marquis Investment Program fund families. The name of each of the funds within the Marquis Funds family includes the name “Marquis.”

  • Dynamic Protected Funds

  • Dynamic Venture Opportunities Fund Ltd.

Funds managed by Aurion Capital Management Inc. This fund family is managed by Aurion Capital Management Inc., an indirect wholly-owned subsidiary of The Bank of Nova Scotia.

  • Aurion Capital Management – Pooled Funds: A family of funds known as the Aurion Capital Management – Pooled Funds. The name of each of the funds within this family includes the name “Aurion”.

Funds managed by Tangerine Investment Management Inc. This fund family is comprised of mutual fund trusts managed by Tangerine Investment Management Inc., a wholly-owned subsidiary of The Bank of Nova Scotia.

  • Tangerine Funds: A family of funds known as the Tangerine Funds. The name of each of the funds within the Tangerine Funds family includes the name “Tangerine”.

In addition, in certain circumstances issuers with whom Scotiabank, Scotia Capital Inc. or their related issuers has a business relationship (such as being borrowers from Scotiabank or issuers in which Scotiabank has a significant investment) may be considered connected issuers of Scotiabank. In certain provinces, the issuers listed as connected issuers may be considered to be related issuers of Scotia Capital Inc. because Scotia Capital Inc. has the power to exercise a controlling influence over the issuer’s management or policy.

(return to top)

(C) Other Related or Connected Issuers

The following is a list of entities that are, or may be deemed to be, related issuers or connected issuers of the Manager. Scotia Managed Companies Administration Inc. acts as administrator of these entities for a fee and certain directors or officers of the entities may be employees of related parties to the Manager.

  • Advantaged Canadian High Yield Bond Fund
  • Allbanc Split Corp
  • Allbanc Split Corp II
  • Anchor Managed Defensive Income Fund
  • Anchor Managed Dividend Growth Fund
  • Anchor Managed High Income Fund
  • BNS Split Corp II
  • Canadian Resources Income Trust (CaRIT)
  • Cascadia Diversified Monthly Income Fund
  • Europe Blue-Chip Dividend & Growth Fund
  • Kingsway Linked Return of Capital Trust
  • Moneda Latam Corporate Bond Fund
  • Moneda Latam Fixed Income Fund
  • Moneda Latam Growth Fund
  • NewGrowth Corp.
  • R Split III Corp
  • SCITI ROCS Trust
  • SCITI Trust
  • Top 20 Dividend Trust
  • Top 20 Europe Dividend Trust
  • Top 20 U.S. Dividend Trust
  • Utility Corp.

(D) Other Relationships

Related Registrants

The following is a list of registrants under the Securities Act (Ontario) which are wholly owned, directly or indirectly, by The Bank of Nova Scotia:

  • 1832 Asset Management L.P.
  • Aurion Capital Management Inc.
  • Tangerine Investment Funds Limited
  • Tangerine Investment Management Inc.
  • Scotia Capital Inc.
  • Scotia Managed Companies Administration Inc.
  • Scotia Securities Inc.

Special Purpose Entities

The following is a list of special purpose entities which are managed by Scotia Capital Inc. or The Bank of Nova Scotia:

  • Scotia Capital Inc. is the administrator of the following asset backed commercial paper or asset backed securities conduits:
  • Bay Street Funding Trust
  • King Street Funding Trust
  • Halifax Receivables Trust: Scotia Capital Inc. is a dealer for the medium term note program of the trust, which purchases interests in a revolving pool of receivables established by The Bank of Nova Scotia.

Commission Finance Vehicles

The following entities are financing vehicles used for arranging and paying the selling commissions related to the distribution of units sold on a redemption charge basis managed by 1832 Asset Management L.P.

  • Infinity 1997 Limited Partnership
  • O’Donnell 1996 Limited Partnership
  • O’Donnell 1997 Limited Partnership

TMX Group Limited

Scotia Capital Inc. owns or controls less than a 10% equity interest in the TMX Group Limited (“TMX”) and has a nominee director serving on its Board of Directors. As such, Scotia Capital Inc. may be considered to have an economic interest in TMX which creates the potential for conflicts of interest between Scotia Capital Inc. and TMX and the marketplaces or entities owned and operated by it, including the Toronto Stock Exchange, the TSX Venture Exchange, the Alpha Exchange and related Alpha entities (referred to as “Alpha”), Clearing and Depository Services Inc., Canadian Derivatives Clearing Corporation, Montreal Exchange Inc. and the services and products each provides. In order to address potential conflicts of interest, Scotia Capital Inc. is required to meet certain terms and conditions pursuant to recognition orders issued by the Ontario Securities Commission on July 4, 2012 and by the Autorité des marchés financiers on May 2, 2012.

Other Conflicts of Interest

Although the Manager is under common ownership with the other registrants and may from time to time have directors and officers in common with the other registrants, the Manager is a separate and distinct corporate entity.

The Manager generally carries on its advising activities independent of the other registrants owned by Scotiabank. However, from time to time there may be certain cooperative business arrangements between it and the other registrants, such as arrangements relating to introduction of clients, distribution of products, advisory relationships or administrative support.

In addition to applicable regulatory provisions and contractual provisions respecting any business arrangements that may exist between the Manager and the other registrants, the directors, officers and employees of each of the registrants are subject to Guidelines or Codes of Conduct governing their actions. These Guidelines are supplemented by our internal compliance policies and procedures.

Allocation of Investment Opportunities

The Manager has adopted the following policy to ensure fairness in the allocation of investment opportunities among clients:

  1. When orders are placed simultaneously for execution at the same price, such orders and their commission will be allocated on a pro rata basis amongst all client accounts participating in the order.
  2. In the case of a new securities issue, where the allotment received is insufficient to meet the full requirements of all Accounts on whose behalf orders have been placed, allocation shall be made on a pro rata basis. However, if such prorating should result in an inappropriate position for any Account, such allotment shall be reallocated to other Accounts. Depending on the number of new issues over a period of time, every effort shall be made to ensure that these prorating and reallocation policies result in fairness and equal treatment of all Accounts.

Disclosure of Brokerage Commission

In the course of managing the Client’s investment portfolio, brokerage commissions may be generated through security purchases and sales. The Manager may direct these commissions to pay for order execution as well as services used in the investment decision-making process that will be of benefit to all clients’ investment portfolios. Upon written request, the Manager will provide the Client with the names of the persons or companies who received payment through brokerage commissions, and the nature of the services purchased.

(return to top)

Referral Arrangements

General

Referral arrangements may exist from time to time within Scotiabank Group. Referral arrangements are arrangements in which an existing or prospective client is referred to or from a registrant within Scotiabank Group, and compensation is provided to or by a registrant in respect of the referral service provided. Referrals may be made for a variety of reasons, including to provide specific products or services suited to your financial planning needs, geographic location, or as part of a transition to another relationship manager or firm.

The amount and calculation of compensation that may be paid for a referral varies. Fees may be calculated by reference to the number or size of referrals, the business resulting, or some combination. A calculation may involve a fixed or variable amount based on revenue or assets, and may be a one-time payment or ongoing. It may also depend on certain conditions, such as a relationship being established.

Securities regulations require you be referred to a party with the appropriate qualifications and registrations to provide the services. Other regulations may require individual employees and members within Scotiabank Group to be authorized to deal in specific products or services provided to a referred client. In limited circumstances, referral arrangements may be entered into by members of Scotiabank Group with persons or organizations outside of Scotiabank Group.

Specific

You may have been referred to the Manager by another member of Scotiabank Group. Or you may have been referred by the Manager to another member of Scotiabank Group that is qualified and registered to offer you products or services not offered by the Manager. The purpose of these referrals is to introduce you to experts within Scotiabank Group who are best suited to help you achieve your financial goals. Referral fees may be payable to those providing the referral service, but the amount of any referral fee paid or received for referral services will not affect the fees paid or payable by you. A brief description of the members of the Scotiabank Group to whom you may be referred, and the general nature of the services each provides, is set out below.

  • The Bank of Nova Scotia (Scotiabank) is a federally regulated bank that provides a broad range of banking services, including day-to-day banking, power savings accounts, chequing accounts, registered savings accounts, GICs, lending services, mortgages, credit cards, electronic banking, and financial planning through both domestic and international business lines.
  • The Manager is a registered adviser in all provinces and territories of Canada (other than the Northwest Territories and Nunavut) and provides discretionary investment management services to individual and institutional clients, including managing ScotiaFunds and Dynamic Funds.
  • ScotiaMcLeod Financial Services Inc. is a provincially regulated insurance firm and provides insurance products and strategies for income and asset protection to its clients.
  • Scotia Capital Inc. (SCI) is a registered investment dealer in all provinces and territories of Canada that provides investment advisory, securities trading, asset management, financial planning, and related services to individual and non-individual clients through its full-service brokerage division, ScotiaMcLeod, and self-directed, electronic securities trading services through its on-line, self-directed, non-advisory brokerage divisions and Scotia iTRADE.
  • Roynat Capital Inc. (Roynat) is in the business of advancing and making debt, subordinated debt, mezzanine capital and equity investments in mid-sized companies in Canada.

Fees for Referral Services

A referral fee may be paid or received, directly or indirectly, by a registrant member of Scotiabank Group or by a referring employee of the firm. As indicated earlier, the amount of any referral fee paid or received for referral services will not affect the fees paid or payable by you. Particulars of the referral arrangements involving the Manager and fees paid or received in respect of its referral arrangements, are provided below. If you would like more information on these referral arrangements, do not hesitate to ask the Manager’s representative helping you today. Our goal is to ensure that you have an outstanding experience working with us and that our services are tailored to your needs.

Current Referral Arrangements Involving the Manager

  1. To the Manager from Scotiabank
    Financial Consultants employed by Scotiabank who are involved in sales activities related to Scotiabank Group account(s) refer clients to the expert within Scotiabank Group best suited to helping them achieve their financial goals. If a referral is made by Scotiabank to the Manager. that results in new business for the Manager, compensation for these referrals may be paid by the Manager to Scotiabank, calculated as a percentage of the Manager’s gross fees earned from the referred business during the first year following the referral.
  2. To the Manager from ScotiaMcLeod
    ScotiaMcLeod receives payment from the Manager for the referral of a client which results in the opening of an Investment Management Account or sale of certain proprietary funds by the Manager or its U.S. affiliate. To qualify, the referral must meet minimum dollar value thresholds. The payment is either a one- time payment, based on a percentage of fees received from the referred business during the initial year following the referral or, if relationship management responsibility remains with the referring ScotiaMcLeod adviser, it is a continuing monthly payment based on a percentage of fees received from the referred business. One-half of the payment received by ScotiaMcLeod is paid by ScotiaMcLeod to its referring adviser.
  3. By the Manager to/from Roynat Capital Inc. (“Roynat”)
    The Manager may receive a one-time payment from Roynat for referring new business that results in a transaction, equal to a percentage of Roynat’s fee from the transaction, subject to conditions. The referring employee may receive up to one-half of the payment from Roynat to the Manager, subject to certain limits.

The Manager may pay a one-time fee to Roynat for a referral of new business that results in a new client for the Manager, equal to a percentage of the estimated first year’s management expense ratio from the new business. Eligible Roynat personnel who refer the new business may receive up to one-half of the payment to Roynat, subject to certain performance conditions and a maximum amount payable per referral.

Other Matters of Interest

Policies and procedures have been adopted by Scotiabank Group to assist in identifying and addressing any conflicts of interest that may arise from these referral arrangements.

A referral fee may also be paid if a referral arrangement is entered into between the Manager and a person or entity outside of Scotiabank Group. As with referral arrangements between the Manager and another member of Scotiabank Group, details of these referral arrangements, including the manner in which the referral fee for referral services is calculated and the party to whom it is paid, will be provided to referred clients. All services resulting from a referral arrangement relating to your account which require registration under applicable securities laws will be provided by the registrant receiving the referral.

(return to top)