As a portfolio manager, ETFCM may occasionally face conflicts between its own interests and those of its clients, or between the interests of one client and the interests of another. ETFCM has adopted certain policies to minimize the occurrence of such conflicts or to deal fairly where those conflicts cannot be avoided. In no case will ETFCM put its own interests ahead of those of its clients.

If the availability of any particular investment security is limited and that security meets the investment objectives of more than one of ETFCM’s clients, such security will be allocated on an equitable basis having regard to whether the security is currently held in any of the relevant investment portfolios, the relevant size and rate of growth of the various accounts and any other factors which ETFCM considers reasonable.

To ensure fairness in the allocation of opportunities among clients, ETFCM will ensure:

1. where orders are entered simultaneously for execution at the same price, fills are allocated proportionately and equally on the amount of equity of each client’s fund;
2. when transactions are executed at different prices for a group of clients, fills are allocated on an average price basis;
3. in the case of hot issues and IPO’s, participation is split equally between clients based proportionately on the equity in each account;
4. 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 is made on a pro rata basis. However, if such prorating should result in an inappropriately small position for a client, the allotment would be reallocated to another account. Depending on the number of new issues, over a period of time, every effort will be made to ensure that these prorating and reallocation policies result in fair and equal treatment of all clients; and
5. trading commissions are allocated on a pro rata basis, in accordance with the foregoing trade allocation policies

The negotiation of commissions on brokerage transactions executed on behalf of ETFCM of a portfolio or fund is governed by the general obligation of ETFCM to act in the best interest of its clients (including the beneficiaries of the funds managed by ETFCM).

In selecting brokers to carry out portfolio trades on behalf of clients, ETFCM may select brokers who have agreed to provide services at no cost to ETFCM. These services are limited to order execution services and investment decision-making services. These arrangements are known as soft dollar arrangements and are intended to reduce some of ETFCM’s administrative costs. These savings are generally indirectly shared by all of ETFCM’s clients. ETFCM shall strive to ensure that, over all; its clients are treated equally in this regard, and will never enter into a soft dollar arrangement which will knowingly prejudice one client to the benefit of another. Personal Trading

ETFCM has adopted a policy intended to restrict and monitor all personal trading by the employees of ETFCM in order to ensure that there is no conflict between such personal trading and the interests of the investment funds managed by ETFCM and ETFCM’s other clients. Referral Arrangements

ETFCM may enter into referral arrangements whereby it pays a fee for the referral of a client to ETFCM or to one of the funds it manages. No such payments will be made unless the referred investors are first advised of the arrangement and all applicable securities laws are complied with. Related and Connected Issuers

The securities legislation of Ontario requires securities dealers and advisers, when they trade in or advise with respect to their own securities or securities of certain other issuers to which they, or certain other parties related to them, are related or connected, to do so only in accordance with particular disclosure and other rules. These rules require dealers and advisers to inform their clients of the relevant relationship and connections with the issuer of the securities prior to trading with or advising them. Clients should refer to the applicable provisions of such legislation for the particulars of these rules and their rights or consult with a legal adviser.

In Ontario, ETFCM is both a limited market dealer and an investment counsel/portfolio manager (ICPM). As a result, potential conflicts of interest could arise in connection with ETFCM acting in both capacities. As a limited market dealer, ETFCM intends only to sell interests in related limited partnerships and other pooled funds organized by ETFCM. Accordingly, there is no opportunity for a potential conflict to arise as there would be if, for example, ETFCM also sold or sought investors for, securities of unrelated issuers.

ETFCM may from time to time be deemed to be related or connected to one or more issuers for purposes of the disclosure and other rules of the securities laws referred to above. ETFCM is prepared to act as an adviser and as a dealer in the ordinary course of its business to and in respect of securities of any such related or connected issuer. In any such case, these services shall be carried out by ETFCM in the ordinary course of its business as an adviser and a dealer in accordance with its usual practices and procedures and in accordance with all applicable disclosure and other regulatory requirements.

In order to comply with Canadian legislation aimed at the prevention of money laundering, the General Partner and/or ETFCM may require additional information concerning investors.

If, as a result of any information or other matter which comes to ETFCM’s attention, any director, officer or employee of ETFCM, or its professional advisers, knows or suspects that an investor is engaged in money laundering, such person is required to report such information or other matter to the Financial Transactions and Reports Analysis Centre of Canada and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise.