Relationship Disclosure and Terms and Conditions. This brochure contains your Account Agreements and information about your Client Account Agreement.

Transcription

1 Relationship Disclosure and Terms and Conditions This brochure contains your Account Agreements and information about your Client Account Agreement.

2 TABLE OF CONTENTS 1 RELATIONSHIP DISCLOSURE Purpose of this Document Delivery of this Document Who We Are Our Products and Services Account Documentation Your Costs and Compensation We Receive Other Costs of Making, Holding and Selling Investments Suitability Assessments Suitability assessment for an advisory account Suitability assessment for a managed account Understanding KYC Information Investment Knowledge and Experience Investment Objectives Investment Time Frame Risk Tolerance Changes in Investment Objectives and Risk Tolerance Leverage/Margin Risk Disclosure Statement Investment Performance Benchmarks How We Report to You about Your Accounts Referral Arrangements Conflicts of Interest Related and/or Connected Mutual Funds Our Trading and Brokerage Practices Complaints and Dispute Resolution Service Related Matters Securities Related Matters Timelines TERMS AND CONDITIONS Parties and Definitions Our Contract with You For Quebec Residents Information for Clients in the United States Types of Accounts Cash Accounts Margin Accounts Applicable Rules and Regulations Settlement and Transaction Charges

3 2.6 Operation of the Account Payment of Indebtedness Margin Terms Pledge and Use of Collateral Elimination or Reduction of Indebtedness Your Securities Free Credit Balances Transfers to Other Accounts Good Delivery Service Charges, Interest and Foreign Exchange Account Statements Your Information Communications with You Capacity Other Agreements Further Assurances Severability Successors and Assigns Governing Law Credit Rating Securities Related Business Segregated Fund Contracts Leverage Risk Disclosure Currency Conversion Deemed Insiders & Control Positions Explanation of the Limitation on Benefits Article and Treaty Statement Residents of Countries Other Than Canada Electronic Funds Transfer Agreement Joint Account Agreement Option Account Agreement National Instrument Communication with Beneficial Owners of Securities Disclosure of Beneficial Ownership Information Receiving Security Holder Materials Preferred Language of Communication Electronic Delivery of Documents Scotiabank Group Privacy Agreement Collecting, using and disclosing your information Refusing or withdrawing consent

4 1 RELATIONSHIP DISCLOSURE 1.1 Purpose of this Document This document contains important information concerning our relationship with you. It contains information about us, our affiliates, the services and products that we offer, the nature of the account(s) you have with us, the manner in which they are operated, and our responsibilities to you. This document also describes conflicts of interest that arise, or may arise, between us, our advisors or other individuals acting on our behalf and on behalf of our clients, or between the differing interests of two or more of our clients to whom we owe, in each case, a duty that a reasonable investor would expect to be informed of or that we believe is necessary to disclose to our clients to ensure they are adequately informed of matters that may affect the services we provide to them. Additional important information you need to know about your relationship with us is contained in other documents we provide to you, such as the account opening form, trade confirmations, account statements, and the updates we provide to you from time to time, about any changes that have occurred to the information that you have received from us. Specific documents that you may receive from us during the course of our relationship are discussed in Section 1.5 Account Documentation. 1.2 Delivery of this Document This document will be provided to you at the time you open your account(s) with us or before we begin providing advice or trading services to you. If there is a significant change to the information contained in this document we will provide you with updated information on a timely basis. 1.3 Who We Are Scotia Capital Inc. We are a full service investment dealer, and are registered in all provinces and territories in Canada under the securities legislation of those jurisdictions. We are also a dealer member of the Investment Industry Regulatory Organization of Canada ( IIROC ), and a member of the Canadian Investor Protection Fund ( CIPF ). HollisWealth is a division of Scotia Capital Inc. We are a wholly-owned subsidiary of The Bank of Nova Scotia ( Scotiabank ); one of Canada s largest financial organizations. Scotiabank is a leading multinational financial services provider and Canada s most international bank. Since welcoming our first customers in Halifax, Nova Scotia, in 1832, Scotiabank has continued to expand its global reach. Today, through our team of more than 81,000 employees, Scotiabank and its affiliates offer a broad range of products and services, including personal, commercial, corporate and investment banking, to over 19 million customers in more than 55 countries around the world. Scotiabank has a number of subsidiaries and affiliates with whom we may have business relationships which may give rise to conflicts of interest. The conflicts of interest we may face are discussed in Section 1.14 Conflicts of Interest. We have policies and procedures in place for identifying and minimizing the conflicts of interest arising from our business activities and the business relationships we have with members of the Scotiabank group of companies. 1.4 Our Products and Services HollisWealth is committed to providing you with high quality advice and services intended to assist you in meeting your financial objectives. The services we provide include: Accounts and plans e.g. individual pension plans, group retirement plans and registered education saving plans. Investment programs e.g. Summit Account Advisory Program, Vintage Investment Program, and Managed Portfolios. Details about these and all investment programs can be found at 3

5 In connection with these services, we offer you a wide range of investment products that include but are not limited to: Fixed Income Equities Preferred shares Mutual funds Exchange traded funds Options We do not provide tax advice in respect of any of the services or products we offer. For more information about the products and services we offer you can speak to your HollisWealth Advisor or visit our website at We also provide insurance, including segregated funds, sales, service and advice through HollisWealth Insurance Agency Ltd. ( HollisWealth Insurance ), Scotiabank s wholly-owned Managing General Agency ( MGA ). All insurance products, including segregated funds, are offered through HollisWealth Insurance by licensed life insurance agents and in Quebec, by financial security advisors. Many of our advisors and other employees are dually registered/licensed with both HollisWealth and HollisWealth Insurance. When they deal with you in respect of insurance products they are acting on behalf of HollisWealth Insurance. And when they deal with you in connection with the investment products that we offer they are acting on behalf of HollisWealth. Additional information about the insurance products and services offered by HollisWealth Insurance can be found at Through HollisWealth, we offer our clients two different types of relationships advisory accounts and managed accounts. Advisory Account: In an advisory account relationship, our relationship with you is that of a nondiscretionary advisor. While we will provide you with advice and recommendations, you must make the decision on what actions are to be taken and provide your specific authorization for each investment transaction. You also need to monitor your account and the holdings in your account on an ongoing basis and inform your advisor if you would like to make any changes. Managed Account: In a managed account relationship, a HollisWealth Portfolio Manager is given the discretion to make and implement investment decisions for you within agreed limits. In this type of account you delegate the day-to-day investment decisions to your advisor, and are not required to authorize each transaction. Depending on the account relationship that you enter into with us, you may open one or more of the following and is not limited to: Cash Account Margin Account Registered Retirement Savings Plan Account Registered Retirement Income Fund Account Registered Education Savings Plan Account Group Retirement Savings Plan Account Options Account Tax-free Savings Account It is important that you understand the differences between the various types of accounts and how they operate. You can find more information about the terms and conditions applicable to each of these accounts in Section 2 Terms and Conditions. 4

6 1.5 Account Documentation We provide you with various types of documentation in connection with your account. At the time of opening your account with us, you will receive a Welcome Package and other documentation, including the following: A copy of your completed New Client Application Form this includes the KYC information that we collected from you (as discussed in more detail below). Statement of Policies Administration and Service Fees brochure IIROC s brochure An Investor s Guide to Making a Complaint How to Make a Complaint to HollisWealth Depending on the nature of the account relationship that you have with us, you may also receive other documents that are relevant to your particular account which your HollisWealth Advisor will discuss with you. 1.6 Your Costs and Compensation We Receive We offer two broad pricing bases commission based and fee based. Commission based: You pay a commission in relation to each trade that you make in your account. Fee based: You pay fees on a monthly or quarterly basis which are calculated as a percentage of the value of the assets in your account (which may include cash), regardless of the number of trades you make during the period. There are options within these two broad categories as well. For example, in some circumstances a fee may be charged for a specific number of trades and trades beyond that number are subject to additional commissions. You select the pricing basis for your account. However, as discussed in Section 1.8 Suitability Assessments, we will consider the account type and pricing basis in the context of our suitability obligation to you. Other costs you may incur in respect of the operation of your accounts with us, and the investments you hold in those account(s) take the form of fees and charges and may include: Administrative fees e.g. fees for automated services, registered account trustee and administrator fees Service fees e.g. account transfer fees, wire transfer fees Interest charges e.g. in the event you do not make full payment when due in your cash account we will charge interest on the overdue balance Foreign exchange conversion costs e.g. when you execute a securities trade in a foreign market and settle the trade in a Canadian dollar account, a currency conversion will occur at the foreign exchange rate applied by us to the transaction. For further information, refer to Section 2.29 Currency Conversion. The administration and service fees that we charge are set out in the Administration and Service Fees brochure provided to you upon the opening of your account(s). We will give you 60 days prior notice in writing of any changes to the administration or service fees we charge in respect of the administration of your account (such fees do not include interest charged to your account or commissions charged for executing trades). We may deduct from your account the administrative fees, costs and other charges applicable to your account. We may receive compensation or earn revenue in other forms in addition to, or in substitution for, direct payments by you. For example, you and your HollisWealth Advisor may discuss purchasing mutual funds on a basis where you pay no up-front commission and we are paid commission directly by the mutual fund 5

7 issuer. HollisWealth may also receive periodic trailer fees from the mutual fund issuer, regardless of whether you or the issuer pays the up-front commission. Related entities of HollisWealth may be an issuer of mutual funds and receive commission or other forms of compensation in relation to such proprietary mutual funds. HollisWealth may receive commission or other forms of compensation from an issuer for sales under a prospectus offering. 1.7 Other Costs of Making, Holding and Selling Investments Investment in securities involves various costs, such as commissions, taxes (e.g. sales taxes and withholding taxes and/or other taxes applicable to securities of non-canadian issuers), and custody and accounting charges (including charges per trade in certain markets). Deferred Sales Charges: Certain securities, such as some mutual funds, may be sold subject to fees commonly referred to by terms such as Deferred Sales Charge or DSC. Such fees are normally payable by you if you sell or redeem the securities within a specified period of time after the purchase. When selecting a DSC sales option, you should consult the relevant prospectus or other offering document in order to determine precisely how this feature may affect you. 1.8 Suitability Assessments We have an obligation, to assess whether a purchase or sale of a security in your account is suitable for you. This obligation is part of our broader obligation to deal fairly, honestly and in good faith with each of our clients. Our suitability analysis starts at the time of account opening by ensuring that the account type (e.g. margin, options) and the fee basis for the account (e.g. commission based or fee based) are appropriate for you given your circumstances. Our suitability assessment obligation also includes ensuring that the order type, trading strategy and method of financing the trade recommendations are also suitable for you Suitability assessment for an advisory account If you have an advisory account relationship with us, we will assess whether a purchase or sale of a security is suitable for you prior to making a recommendation to, or accepting trade instructions from, you. We will also assess the suitability of investments in your advisory account upon the occurrence of the following: (i) (ii) if securities are transferred or deposited into your account; if there is a change in your HollisWealth Advisor or HollisWealth Portfolio Manager responsible for your account; and (iii) if there is a material change in your KYC information. Given the long-term nature of investing for most clients, we do not automatically review the suitability of the investments in your account(s) when there are market fluctuations, even large fluctuations. Your HollisWealth Advisor is ready to discuss the effect of market fluctuations on your portfolio with you when you request. We encourage you to speak with your HollisWealth Advisor, especially if you anticipate the need to convert your assets to cash in the near future (for example, for a major purchase such as a house), if you are considering changing when you would like to retire, or if you experience a significant life event. It is your responsibility to review the suitability of the investments in your advisory account whenever significant market events occur. If at any time you have questions or concerns about your account you should contact your HollisWealth Advisor to request a review of your account(s) Suitability assessment for a managed account If you have a managed account relationship with us, we provide ongoing suitability assessment in your account as part of the managed account service. How we meet our suitability obligation To meet our suitability obligation we start by: 6

8 (i) (ii) At the time you open your account with us we collect information from you about your circumstances, referred to as know-your-client or KYC information. We update this information on a regular basis through discussions between you and your HollisWealth Advisor on an annual basis; and Ensuring that we have an understanding of the structure, features and risks of each of the investment products that we offer. We then use the KYC information we collect from you and our knowledge about the investment products we offer to assess whether an investment product is suitable using various parameters such as asset allocation, risk and diversification. Up-to-date, accurate and complete KYC information is important to ensure that we can accurately assess suitability for you. Therefore it is important that you notify us whenever there is a material change in your circumstances so that we may update your KYC documentation. We will provide you with a copy of the KYC information that we collected and documented from you at the time your account with us was opened, and whenever that information is updated. If our documented information about you is inaccurate or out-of-date, we may not be able to ensure the suitability of our investment recommendations. You are responsible for promptly advising us of any inaccuracy or change in your KYC information including your Investment Objectives, Risk Tolerance or Overall Investment Knowledge, any restrictions regarding trading in securities for your account, any material change in your circumstances or any other matter that could affect the administration of your account. We are not responsible for any losses you may incur as the result of your failure to do so or if you failed to act reasonably to inform us about the relevant changes in your situation. If we determine that an investment product is not suitable for you, your HollisWealth Advisor will discuss this with you and may recommend that you: Not invest in the product Sell a product Make other changes within your account designed to ensure suitability of your account overall If you decide to proceed with an investment that we determine to be unsuitable for you, we will, on a caseby-case basis, determine whether we will proceed with the transaction. 1.9 Understanding KYC Information Your KYC information is about you, your personal circumstances and current financial situation, and includes, but is not limited to, your: Age Annual Income the approximate annual income of you and your spouse combined Net worth calculated as your and your spouse s fixed assets less estimated liabilities plus your and your spouse s liquid assets less estimated liabilities Investment knowledge and experience your understanding of investments and your practical experience with investing Investment objectives what you would like to achieve from your account Risk tolerance the degree to which you are willing to accept fluctuations in value of your investments The following explains these concepts in more detail. It is important to read and understand the information we collect and how we use it in administering your account. 7

9 1.9.1 Investment Knowledge and Experience In order to make suitable investment recommendations, your HollisWealth Advisor needs to understand your level of investment knowledge and experience. This assists your HollisWealth Advisor in assessing your ability to understand the investment recommendations we may make to you, and the extent you may be relying on us to explain it to you. Investment knowledge and experience encompass an understanding of the characteristics of various types of securities, experience in investing in those securities, and experience holding investments in various market cycles. Your level of investment knowledge and experience may change over time. Investment knowledge and experience levels can be described as follows: Poor/Nil: Individuals with no investment knowledge and no investment experience. Limited: Individuals who have only limited investment knowledge and experience and may not have a full understanding of the basic characteristics of the various types of securities or of the degree of risk associated with trading these securities. Good: Individuals who have either traded in or have some knowledge of the basic characteristics of fixed income securities, common shares and mutual funds, and who also have a basic understanding of the degree of risk and reward inherent in trading these types of securities. Sophisticated: Individuals who have traded in most types of investment securities. This would include knowledge of options, commodities, speculative and short selling strategies and an appreciation of the risks and rewards involved in trading these securities Investment Objectives Your investment objectives are account specific and define what you want to achieve from your account. There are three basic types of investment objectives income, growth and aggressive growth which are described below. For your account, you may have only one objective or any combination of the three objectives. While we require you to assign percentages for Investment Objectives, these percentages are intended as a source of general guidance about your preferences and not as precise mathematical measures. Income: Your primary goal is to generate regular income from your account, even if that means little or no opportunity for capital appreciation. An individual with an income investment objective generally includes in his or her account securities whose primary characteristics are regular income with little potential for capital gain, and a more limited risk of capital loss than other securities e.g. cash and cash equivalents, as well as high quality fixed income securities and preferred shares. Higher-yielding securities, including dividend paying common shares and income trust units, could, but would not normally, be included in an account unless the account holder has a corresponding higher level of risk tolerance. There is a wide range of income producing securities, including certain structured products that provide income but which may be higher risk in nature and securities which provide a return of your original invested capital as income. Growth: Your primary goal is to grow the value of your account over time through capital gains and other long term strategies. An individual with a growth investment objective would generally include in his or her account, securities whose primary characteristic is the potential for long term capital gain, but with a greater risk of capital loss than those found in the Income category. We view long term as an investment time frame of five years or more, meaning that you are willing to hold your investments for at least that long and are willing to withstand fluctuations in value over that period. This objective would normally include securities such as the common shares of established companies that have a reasonable period of operating history, including a history of profitability. Aggressive Growth: Your primary goal is to obtain high investment returns through high risk investments and/or aggressive investment strategies such as active trading. 8

10 An individual with an aggressive growth objective would generally include in his or her account, common shares or other equity related securities of junior companies or securities considered higher risk than those under the Growth category. Trading activity in warrants or stock options would also typically be included in this category. This category would also encompass securities otherwise normally included under the Income or Growth categories if the investment time frame was more short term oriented and the intended trading activity was, therefore, of a more frequent nature, and/or a significant percentage of margin will regularly be utilized in the account Investment Time Frame When assessing suitability, we will consider your time frame, being the period over which you plan to be invested. Your investment time frame is reflected on your New Client Application Form. One way of thinking about time frame is to consider the various ways in which you expect or contemplate you may need to access some or all of the funds in your account. For instance, if you are younger and in the early stages of your financial life you may plan to grow your investments over time, with occasional withdrawals to fund various major life events with the ultimate goal of accumulating sufficient assets to fund your retirement plans. On the other hand, if you are retired you may want to focus on preservation of capital with the goal of generating income. For many people, it is not possible to define in advance all of the possible uses and related timing for their investments. However, it is important for you to think about whether you are sufficiently long-term in your investment time frame to be able to weather short-term and medium-term investment fluctuations and market cycles. If you do know or anticipate you will need funds at a specific time, you should make sure that you have clearly explained that to your Advisor, who can reflect that intention in recommendations made and suitability assessments performed Risk Tolerance Understanding risk and knowing your level of comfort with risk (i.e. your risk tolerance) is an extremely important part of investing since investment risk and return are inextricably connected. The higher the potential return, the higher the risk you must be prepared to accept, including the risk that you may experience a loss of some or all of your invested capital. Risk can be defined as the likelihood of a future investment loss or gain, including the prospect of losing some or all of your investment. Investment risk is a relative concept and there is a continuum between riskfree investments (i.e. almost no risk of capital loss) to highly speculative investments (i.e. a very real risk that the entire investment may be lost). Between these extremes there is no clear demarcation point between low risk and medium risk investments or medium risk and high risk investments. Risk Tolerance is specific to each of your accounts and is the level of risk you are prepared to assume in order to achieve your investment objectives for the account. An individual s risk tolerance may be influenced by a number of factors, including any or all of the following: age; family situation (e.g. marital status, number and ages of dependants, etc.); net worth and income; expectations for future net worth and income; investment time frame; insurance coverage and cash reserves. Your ability to tolerate a decline in the value of your investments is a critical consideration, whether such a decline is the result of a temporary fluctuation or permanent impairment. This includes your financial ability to withstand losses as well as your emotional ability to cope with uncertainty, market fluctuations and actual losses. Risk Tolerance is characterized as low, medium or high. You can assign 100% of your account to one level of risk tolerance or select any combination of tolerance levels that add up to 100%. While we require you to assign percentages for risk tolerance, these percentages are intended as a source of general guidance about your preferences and not as precise mathematical measures. Low Risk: Preservation of invested capital is your primary consideration and you want investments with a low likelihood of capital loss recognizing the impact this may have on potential investment returns. Low risk investments may preserve invested capital in nominal dollar terms but may not protect against the risk that the purchasing power of your investments will not keep pace with inflation when measured in real dollar terms or that your investment returns will not be sufficient to meet your goals. 9

11 Medium Risk: You want the potential for higher investment returns than are available to low risk tolerance investors and you are prepared to assume a moderate level of investment risk and fluctuations in the value of your investments, including the possibility of losing some of your invested capital, as part of that. High Risk: You are prepared to assume a high level of investment risk and volatile fluctuations in the value of your investments and accept that there is also a significant risk of losing some or all of your invested capital. Your Risk Tolerance guides us in making investment recommendations that we believe may be appropriate for you. However, matching risk tolerance to actual investment risk requires subjective assessments by both you and us. It is your responsibility to understand your personal willingness to accept investment risk and make sure we are kept fully informed at all times in that regard. In an advisory account, you are responsible for understanding the risks associated with the recommended investment or transaction and ensuring that you are willing to bear those risks. If you do not fully understand the risks and/or are uncomfortable with the risks, then you should not authorize the relevant transaction. Alternatively, if you are not prepared to invest your time to achieve a full understanding of the risk of each specific security, you should consider alternatives such as a managed account. Most securities fluctuate in value (referred to as volatility) due to market risks and security-specific risks. Assessing and categorizing risk is challenging and involves a subjective assessment which encompasses the uncertainty associated with trying to predict future events. Remember that past performance is not necessarily indicative of future performance. Also, the risk associated with a particular security can change over time. Some of the key considerations for assessing and categorizing risk are described below. Market risks are those to which all investors are subject, irrespective of the specific securities they own. For example, most investments are subject to the risk of a general market decline in response to political developments and changing conditions in the domestic or global economy. These market-wide changes can be unpredictable and beyond anyone s ability to forecast. Further, interest rate changes affect the value of fixed income securities and an increase in interest rates will result in a drop in the market value of a fixed income security. Another example is foreign exchange rate changes that affect the value of investments denominated in a foreign currency. An additional consideration is the risk that inflation will reduce your future purchasing power and your real investment returns. Security-specific risks arise from the characteristics of a particular type of security and factors or events that affect the issuer of the security. For example, different types of securities have different risk profiles. Alternatively, some securities might have a very low risk of capital loss if held to maturity, but might be difficult or impossible to sell before maturity without losing some or all of your investment. In addition, the investment performance of securities of companies in the same industry might vary significantly based on factors such as the quality of management. The risk of individual investments should be considered in the context of all of your investment holdings. This is often referred to as security specific risk versus portfolio risk. Diversification of your holdings across various asset classes, geographic regions, economic sectors and individual securities can reduce the overall risk of your total investment portfolio. Conversely, concentration increases risk. Also, active trading strategies and the use of leverage can increase the risk associated with any specific investment or portfolio. Also, trading and leverage involve costs and fees which can further increase risk and reduce investment returns. Offering documents (such as prospectuses), financial statements, continuous disclosure reports, credit ratings, research reports and other such information often contain descriptions of the risks associated with a particular security. You should ensure you obtain and read such documents carefully in order to satisfy yourself that you fully appreciate the risks associated with an investment. This applies before you make an investment decision and on an ongoing basis afterwards. Please do not hesitate to bring any questions or concerns to the attention of your HollisWealth Advisor. Ultimately, you are the only one who can assess your willingness to accept investment risk and whether any particular investment, strategy or portfolio is consistent with your risk tolerance. 10

12 Please ensure that you have a full and frank discussion with your Advisor in order to gauge your risk tolerance and that you thereafter regularly consult your Advisor to ensure you have a full appreciation of the relevant investment risks Changes in Investment Objectives and Risk Tolerance You may request a change in your Investment Objectives and Risk Tolerance at any time. This may be due to life changes such as retirement, loss of employment, change of marital status, the birth of a child, unexpected health or other expenses, an increase in salary or unexpected windfall. Even aging can have an impact on your risk profile, as you may feel you are less financially able to recover from setbacks such as investment losses. Establishing or changing your Investment Objectives and Risk Tolerance can have implications for existing holdings. For instance, you might need to sell existing investments at a loss in order to purchase other securities which correspond to your new criteria. You should discuss the need to change your Investment Objectives and Risk Tolerance and an associated transition plan with your Advisor should such a situation arise Leverage/Margin Risk Disclosure Statement The use of leverage may not be suitable for all investors. Using borrowed money (whether through a margin account or any other method of borrowing) to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. In the case of a margin account, you are also required to satisfy margin calls as required by the terms of the margin agreement. The use of leverage can result in investment losses which exceed the amount of your invested capital Investment Performance Benchmarks You may assess the performance of your investments by comparing them to an investment performance benchmark. Benchmarks show the performance over time of a select group of securities. There are many different types of benchmarks. When selecting a benchmark, care must be taken to choose a benchmark that reflects your investments. For example, the S&P/TSX Composite Index follows the share prices of the largest companies listed on the Toronto Stock Exchange. The S&P/TSX Composite Index would be a good benchmark for assessing performance of a Canadian Equity fund that only invests in large Canadian companies. It would not be an appropriate benchmark if your investments are diversified in other products, sectors or geographical areas. Your HollisWealth Advisor has access to a range of benchmarks against which to compare your portfolio s performance. You may wish to discuss the use of benchmarks with your HollisWealth Advisor How We Report to You about Your Accounts We will report to you about your accounts on an ongoing basis in the form of trade confirmations and account statements. Trade confirmations: If you have an advisory account with us, you will receive a trade confirmation from us promptly upon completion of each trade that occurs in your account e.g. a purchase, redemption or transfer of a security in your account. The trade confirmation will contain details about the trade including: (1) the quantity and description of the trade; (2) the consideration for the trade; and (3) the commission paid, if any, in respect of the trade. If you have a managed account with us, we will not provide you with trade confirmations if you have provided your consent. 11

13 Account statements: You will receive an account statement from us on a quarterly, and on an annual basis. You will also receive an account statement from us at the end of a month if during the month, a transaction was effected in the account. The account statements that we provide to you will detail the transactions that occurred within your account during the reporting period, and will include the following information: The opening and closing balance of the account; All debits and credits in the account during the period; The quantity and description of each security purchased, sold or transferred and the dates of each transaction; and The quantity, description and market value of each security position held for the account. It is your responsibility to review each trade confirmation, account statement and other information about your account that we send to you, and to inform us in a timely manner if you believe there is an error, omission or if you otherwise do not agree with the information shown in these documents. For further information, see Section 1.17 Complaints and Dispute Resolution Referral Arrangements Referral arrangements may exist from time to time within the Scotiabank group of companies. Referral arrangements are arrangements in which an existing or prospective client is referred to or from a registrant within Scotiabank, and compensation is provided to or by a registrant in respect of the referral. You may have been referred to HollisWealth by another member of Scotiabank. Or you may have been referred to another member of the Scotiabank group of companies that is qualified and registered to offer you products or services not offered by HollisWealth. The purpose of these referrals is to introduce you to experts within Scotiabank who are best suited to help you achieve your financial goals. A referral fee may be paid or received, directly or indirectly, by a registrant member of Scotiabank. 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 HollisWealth, and fees paid or received in respect of its referral arrangements, are available from your HollisWealth Advisor. Our goal is to ensure that you have a positive experience working with us and that our services are tailored to your needs. Policies and procedures have been adopted by the Scotiabank group of companies to assist in identifying and addressing any conflicts of interest that may arise from these referral arrangements. Further information can be found in the Statement of Policies provided to you along with this document, which can also found on All services resulting from a referral arrangement relating to your account which require registration under applicable securities legislation will be provided by the registrant receiving the referral Conflicts of Interest Throughout this document we have identified conflicts of interest that arise in the ordinary course of our business. Some of these conflicts are inherent in the business model that we use. We seek to avoid or minimize conflicts where reasonably possible. However, some conflicts cannot be avoided. We have policies and procedures in place to manage the conflicts of interest that we believe are sufficient to protect the interests of our clients and fulfill our obligations to our clients. HollisWealth provides a broad range of retail client services and products and Scotia Capital Inc. also provides corporate finance and institutional trading. Therefore, we have inherent conflicts of interest since we may regularly represent both sides to a transaction; namely the buyer and the seller. An issuer of securities is related to us if, through ownership, or direction and control over voting securities, we exercise a controlling influence over that issuer or that issuer exercises a controlling influence over us or the same third party exercises a controlling influence over both us and the issuer. An issuer is connected to us if due to indebtedness or other relationships, a reasonable prospective purchaser might question if that issuer and we are independent of each other. 12

14 In the course of our relationship with you, we may with respect to securities of related issuers, and in the course of a distribution, securities of connected issuers of us: (a) exercise discretionary authority to buy or sell these securities for your accounts; (b) make recommendations regarding these securities to you; and (c) sell securities issued by pooled funds, or other similar collective investment vehicles, established, managed and distributed by us to clients. These services will be carried on by us in the ordinary course of our business in accordance with our usual practices and procedures and in accordance with all applicable disclosure and other regulatory requirements. It is our policy to comply fully with all applicable securities laws and to make all required disclosures. More detail in respect of securities of related or connected issuers and others is available in the Statement of Policies which can be found on The general types of conflicts of interest which can arise are: Conflicts of interest between you and us; Conflicts of interest between you and our other clients, and Conflicts of interest between us and our related and associated companies. As an investment dealer, we are a financial intermediary. As is the common practice in the brokerage industry, sometimes we may be the party on the other side of the transaction (referred to as a principal trade) where we own the security we sell to you. On other occasions, we simply facilitate a transaction between you as our client and a third party on the other side of the transaction through an agency trade where we have no ownership interest in the security traded. In other cases, we advise an issuer of securities on how to best raise funds by selling securities while contemporaneously recommending that our clients buy those same securities. In general, we deal with and manage relevant conflicts as follows: Avoidance: This includes avoiding conflicts which are prohibited by law as well as conflicts which cannot effectively be managed. Control: We manage acceptable conflicts through means such as physical separation of different business functions and restricting the internal exchange of information. Disclosure: By providing you with information about conflicts, you are able to assess independently their significance when evaluating our recommendations and any actions we take. The following information is intended to assist you in understanding and assessing material potential and actual conflicts of interest, including how we address them. This is an overview of a complex subject. Despite that, we believe the simplest control is the most effective your continued satisfaction and patronage. If you ever have any questions or concerns, whether they involve conflicts of interest or anything else, you should never hesitate to say so and ask your HollisWealth Advisor for more information and an explanation. The Scotiabank Guidelines for Business Conduct documents our core values and standards, including general standards for how we deal with conflicts of interest. You should also refer to the Statement of Policies. You can obtain a copy of both documents from your HollisWealth Advisor on request or from our website: Scotiabank Guidelines for Business Conduct: Statement of Policies: More up-to-date information describing some of the conflicts of interest we may face and the methods we have for responding to those conflicts can be found at 13

15 1.15 Related and/or Connected Mutual Funds Canadian securities regulations (in particular, National Instrument Mutual Fund Sales Practices) require that we disclose to clients any equity interest that we or our associates have in any member of the organization of a mutual fund before we sell any such mutual fund to our clients and obtain the prior written consent of our clients before effecting any trades for them in such funds. National Instrument Registration Requirements, Exemptions and Ongoing Registrant Obligations also requires us to disclose our relationships in respect of related or connected issuers before we recommend to buy, sell or hold such security to our clients. Information on our related and connected issuers and related registrants is available in the Statement of Policies. Scotiabank is the parent of Scotia Capital Inc. ( SCI ) and 1832 Asset Management L.P. ( 1832 L.P. ). In addition, Tangerine Investment Management Inc. is an indirect wholly-owned subsidiary of Scotiabank. Consequently, SCI, 1832 L.P. and Tangerine Investment Management Inc. are affiliated to each other and to Scotiabank. HollisWealth is a division of SCI L.P. is the manager of various investment funds and products, including ScotiaFunds, Scotia Private Pools, Pinnacle Portfolios, Dynamic Funds, Marquis Portfolios, Lincluden Private Trust, Diversified Private Trust, and Growth and Income Diversified Private Trust. Tangerine Investment Management Inc. is the manager of the mutual funds known as the Tangerine Balanced Income Portfolio, Tangerine Balanced Portfolio, Tangerine Balanced Growth Portfolio, and Tangerine Equity Growth Portfolio (the Tangerine Funds ). Scotiabank owns less than 10% of CI Financial Corp. ( CI Financial ). CI Financial is the parent company of CI Investments Inc. ( CII ) which is the manager of families of mutual funds known as the CI Funds, Black Creek Funds, Cambridge Funds, Harbour Funds, Portfolio Select Series, Portfolio Series, Signature Funds, Red Sky Funds, Synergy Funds, CI Corporate Class, CI Life Cycle Portfolios, Lawrence Park Funds, CI Guaranteed Retirement Cash Flow Series and Marret Funds (the CII Funds). HollisWealth may from time to time offer to sell you units of the ScotiaFunds, Scotia Private Pools, Scotia Portfolios, Pinnacle Portfolios, Dynamic Funds, Marquis Portfolio, Lincluden Private Trust, Diversified Private Trust, Growth and Income Diversified Private Trust, the Tangerine Funds and the CII Funds. You hereby consent to investing in such funds in accordance with any instructions that you may from time to time provide us with or under any discretionary authority granted by you to us Our Trading and Brokerage Practices Best Execution When we buy and sell securities on your behalf, we diligently pursue the execution of your securities orders on the most advantageous terms reasonably available in the circumstances (commonly referred to in securities regulation as the best execution obligation). In discharging our best execution obligation to you, we may consider a range of factors relevant to the execution of your trade, including but not limited to the price at which the trade would occur on different marketplaces; the speed of execution available; the certainty of execution available; and the overall cost of the transaction. We may also consider the available liquidity displayed on the different marketplaces relative to the size of the client order; the extent of exposure to settlement risk in making the trade; and the applicable foreign currency exchange rates in effect. The Canadian securities marketplace continues to evolve and has expanded to include a number of alternative trading systems (ATSs). Securities which are listed and traded on The Toronto Stock Exchange or the TSX Venture Exchange may also trade on these ATSs. In addition, these securities may be listed and traded on certain foreign markets (e.g. a U.S. organized regulated marketplace, such as the New York Stock Exchange.) Using both third party and proprietary smart order routing technology, Scotia Capital Inc. will diligently pursue the best execution of each client order on the most advantageous terms reasonably available under prevailing market conditions. In certain circumstances, we may make the determination to route all or part of your order for execution to a foreign marketplace such as a U.S. marketplace, in order to achieve 14

16 best execution. As appropriate, we will modify and enhance our order routing practices to the benefit of our clients. In executing your trades, we incur certain costs and, in seeking the best execution of your trades, we may achieve certain trade efficiencies that result in a lowering of our costs to the benefit of the firm. We also earn revenue such as trade commissions in executing your trades. Depending on the market or marketplace to which your orders may be routed, we may receive remuneration for directing orders to a particular broker-dealer or market center for execution and revenue from a conversion of currency in respect of the trade. Hours of operation for trading in publicly listed Canadian securities is between 9:30 a.m. and 4:00 p.m., Eastern Standard Time ( EST ), Monday through Friday, not including statutory Canadian holidays. Day orders received after 4:00 pm will not be booked on any market. Orders received after midnight and prior to 9:30 am will be entered into the trade execution systems in accordance with the trade instructions. After-hours and pre-market facilities are available in limited situations. Investors should contact their HollisWealth Advisor for further details. Handling of Orders (A) Orders received prior to the 9:30 am: Will be entered to the pre-opening session of a marketplace with trading hours of 9:30 am to 4:00 pm unless otherwise specified by the investor. (B) (C) Orders received after 4:00 pm: Will be entered the next business day to the preopening of a marketplace with market hours from 9:30 am to 4:00 pm unless specified by the investor for execution in the after-hours markets. Order treatment and routing: Orders are valid between the hours of 9:30 a.m. and 4:00 p.m. EST. Orders received after the open of a Marketplace, will be routed to the marketplace with the best available price through the use of smart order router technology. Unfilled orders will expire on the marketplace where the order was last routed. In the event a marketplace is not available, orders will be re-routed to other marketplaces on a best-efforts basis. Day orders booked prior to 4:00 pm on markets utilizing an after-hours facility may execute up to 5:00 pm that day. Special Order Types For information regarding special order types please contact your HollisWealth Advisor Complaints and Dispute Resolution Our goal is to provide quality service to every customer. We value your business and are dedicated to building strong relationships with our customers. However, should you have a complaint concerning our services or products, the following summarizes our complaint handling procedures. We will also provide you with a copy of an IIROC approved complaint handling process brochure at the time you open your account(s) with us. A complaint is your expression of dissatisfaction, either verbally or in writing, and should be submitted directly by you or by someone who is authorized to act on your behalf Service Related Matters If the complaint is deemed to be service related it will be handled directly by the responsible HollisWealth Branch Manager or their designate. Service related complaints are those matters which are not subject to any regulatory rules or policies of a securities or financial services regulatory or self-regulatory organization in any jurisdiction either inside or outside of Canada; or any legislation or law concerning securities or exchange contracts of any jurisdiction either inside or outside of Canada. You may forward your complaint directly to the Branch office where your account is maintained or you may contact the Branch and speak with the Branch Manager directly. 15