Statement of Policies

Manitou Investment Management Ltd. (Manitou) is registered with Canadian securities regulators as an advisor, investment fund manager and an exempt market dealer. The intent of this Statement of Policies is to not only disclose specific information required of Manitou as a registrant, but also reflect what we would expect if our client-fiduciary responsibilities were reversed.

Related Party Policies

Manitou Investment Management Ltd. (Manitou) will disclose any potential conflict of interest in a company that falls under the category listed below, and obtain the appropriate authorizations should a client have an economic interest in such companies:

  • Any company over which Manitou or its officers may exert management control
  • Any company that may exert management control over Manitou
  • Any company that has a direct or indirect relationship with Manitou or its officers, directors or employees that, if disclosed, might cause a reasonable investor to (i) conclude it was material to the decision to invest; or (ii) question whether Manitou or its officers were independent of the issuer.

Manitou is associated or affiliated with the following entities:

Manitou Dividend Growth Fund
Manitou Equity Fund
Manitou Income Fund
Pooled funds managed by Manitou for Manitou clients only. Units issued by Manitou to Manitou clients.
Manitou Investment Management
General Partner Ltd.
100% owned subsidiary of Manitou

Constellation Software Inc. (Constellation) is a public company owned by Manitou clients. Stephen Scotchmer, who is a director of Manitou is also a director of Constellation.

Any purchase for client accounts of investee companies in which Manitou employees, directors or spouses are directors must first be unanimously approved by Manitou’s board of directors. The same holds true in cases where a Manitou employee, director, or spouse are directors of a company that may hold a substantial position or have influence over a company in which Manitou may wish to invest on behalf of clients.

Before any employee or director of Manitou accepts any directorships to serve on any publicly traded company’s board they must first seek approval from Manitou’s board of directors.

In the event that other relationships with “related” or “connected” issuers are established in the future, Manitou will maintain a list of such issuers and will make such list available to its clients upon request.

Manitou performs investment advisory services for various accounts other than the Accounts of the Client. The services of Manitou are not exclusive and, subject to the following, nothing in this Agreement shall prevent Manitou or any affiliate of Manitou, from providing similar services to other clients (whether or not their investment objectives and policies are similar to those of the Accounts of the Client) or from engaging in other activities. Manitou may give advice and take action concerning its other clients, which may be the same as, similar to or different from the advice given, or the timing and nature of action taken, concerning the Accounts of the Client. Manitou shall not be obligated to purchase or sell for the Accounts any security or other property which Manitou purchases or sells for any other account if, in the sole discretion of Manitou, such transaction appears unsuitable, impractical or for any reason undesirable for the Accounts of the Client.

Allocation of Investment Opportunities

Under applicable securities legislation, we are required to maintain standards ensuring fairness in the allocation of investment opportunities among our clients. Set out below is the current statement of our policy:

In the course of managing discretionary accounts on behalf of our clients, occasions may arise where the quantity of a security available at a specified price is insufficient to satisfy the requirements of every account for which the security would be suitable. Occasions also arise where the quantity of a security to be sold for two or more accounts is too large to be completed at the same price. Similarly, the allotment by an underwriter or dealer for an issuer of a new or secondary issue of a security to us may be insufficient to satisfy the requirements of all accounts for which such securities would be suitable.

Under such conditions, it is our firm’s policy to allocate, insofar as it is possible, such purchases or sales pro rata based upon the interest of each account for which such purchase or sale would be suitable in relation to the interests of all other participating accounts. The price and commission used for each account’s allocated purchase or sale are calculated based on the average price and average commission for the total purchase or sale. Where it is impossible or not practicable to do so, every effort will be made to otherwise allocate in a manner which we consider fair in the circumstances.

Use of Client Brokerage Commissions

We comply with the NI 23-102 which stipulates:

An adviser must not direct any brokerage transactions involving client brokerage commissions to a dealer in return for the provision of goods and services by the dealer or a third party, other than order execution goods and services, and research goods and services.

While this policy permits the provision of a fairly extensive array of goods and services, our internal practice is strictly related to specific company research. This includes research reports on individual companies and/or meetings with industry analysts or company management either coordinated or sponsored by a specific brokerage company. Face-to-face meetings typically take place in our office, the company’s offices/locations, brokerage company’s offices or at conference locations. Any transportation or lodging costs associated with such meetings is borne directly by Manitou. While all client portfolios are tailored to their specific requirements, we practice a highly correlated approach to selecting securities. As a result of our homogenous process, all clients benefit from brokerage paid research.

The following further delineates our policy and practice and most specifically further expands upon what we do not classify as “research goods and services” (most of which are considered valid under NI 23-102).

  • No subscription based research services involving software (e.g. Capital IQ, Thomson Reuters, Compustat, etc.);
  • No subscription based research services involving hardware (e.g. Capital IQ, Thomson Reuters, etc. terminals); or
  • No subscription based research services involving periodicals, newsletters, industry trade publications, etc.

Similar to custody and safekeeping fees, we see brokerage commissions as a necessary cost of delivering our services to our clients. As with any cost against our performance, they reduce the size of available assets under management from which we derive our compensation. Accordingly, to obtain the best value possible, we are incented to manage these costs effectively. The commission usually ranges from $0.01 to $0.05 per share.

Proxy Voting and Corporate Actions

Proxies are received with the annual reports for our client holdings. These proxies are reviewed by the respective Portfolio Manager / Analyst. For all significant or contentious issues Manitou will direct the custodian how to vote on behalf of our client holdings.

Corporate Action notification is received from the custodian. The action is given to the respective Portfolio Manager / Analyst for review and after review by the Chief Investment Officer a decision is made in the best interest of the client.

Personal Trading

Manitou strictly prohibits transactions between directors, officers or employees and clients of Manitou.

Any trades in Manitou securities by Manitou employees must be executed either concurrently with client orders or pre-clearance must be obtained in order to ensure there are no conflicts with client orders. All client transactions receive priority over employee trades – ie no employee trades will be filled until all client orders are filled.

Gratuities From Suppliers

It is recognized that social occasions may occur where the staff of Manitou are the beneficiaries of suppliers either directly or indirectly – ie tickets to hockey games, lunches, etc. All such benefits must be disclosed immediately to management. Management will use its discretion to determine whether such benefits, either because of their value or frequency, present a conflict of interest. Notwithstanding the foregoing, gifts or value in excess of $250 singly or cumulatively in any one year from any one supplier, will be returned to the supplier.

Pricing and Account Errors

Manitou will act in a timely manner when an error is detected to ensure clients are treated fairly. With respect to its pooled funds, Manitou abides by the error correction guidelines as recommended by the Investment Funds Institute of Canada. Should any material error result in the client being penalized, Manitou will compensate the client.

Know Your Client Information

We are required to obtain information from clients that allows us to establish their identity and to assess the suitability of Manitou’s investments for their accounts. This information forms the basis of each client’s Investment Policy Statement and is maintained on file and updated as required.

This information is necessary as we are responsible for ensuring the suitability of all trades in the client’s Manitou accounts.

Investment Considerations (Risks)

There are a number of risks that clients should be aware of when investing in securities.

Stock market volatility (especially over the short-term) can be expected. The market value of securities will fluctuate with the financial performance of the issuers of the securities and general economic conditions in debt, equity or commodities markets, currency rates, political, economic or social developments or instability in the relevant capital markets.

The value of bonds and other fixed income investments are directly affected by changes in the general level of interest rates. As interest rates increase, the price of these investments may fall and vice versa. Fixed income securities like bonds are also subject to credit risk or the risk that the government or company issuing a fixed income security will not be able to pay the interest as required or pay back the original principal. Securities that have a low credit rating have high credit risk and vice versa.

Foreign securities carry currency risk and foreign market risk. The value of investments denominated in a currency other than Canadian dollars is affected by changes in the value of the Canadian dollar in relation to the value of the currency in which the investment is denominated. When the value of the Canadian dollar falls in relation to foreign currencies, then the value of foreign investments rises. When the value of the Canadian dollar rises, in relation to foreign currencies, the value of foreign investments falls.

There may also be risks associated with the use of derivatives. Although the use of derivatives for hedging or other purposes can be effective in reducing loss of capital or mitigating volatility, derivatives also have certain risks. For example, there is no guarantee that the use of derivatives for hedging will be effective. Hedging also does not prevent changes in the market value of an investment or prevent losses if the market value of the investments falls. Hedging can also prevent a gain if the value of the underlying security, currency, commodity or market index rises, or if interest rates fall.

Benchmark

The primary objective of Manitou mandates is to generate positive absolute returns. Secondarily, as active managers, it is our objective to outperform our relative benchmarks over time. The benchmarks we use to compare performance results are relevant, in light of the composition of each mandate. It is important to note that benchmarks do not include operating charges and transaction charges as well as other expenses related to the Account’s investments, which may affect its performance. The following is a summary of the benchmarks Manitou uses to evaluate performance:

The S&P/TSX Composite Index and the S&P500 Index, are equity indexes of Canadian and U.S. large-cap companies.  The TSX Composite Dividend Index is an index of Canadian dividend paying equities. These indices are widely-known and provide a means of comparison between a mandate’s investment strategy and the broader market.

The DEX Short Term and Mid Term Bond Indices contain both government and corporate bonds with short terms (maturing within 1 to 5 years) and mid-terms (maturing within 5 to 10 years). On a term and holdings basis, the use of this benchmark is consistent with the Manitou Income Fund’s own exposures.

Manitou mandates may not necessarily invest in any securities listed on any of the aforementioned indices. The percentage mix between asset classes and sectors may differ from that of the benchmark.

Privacy Policy

Protecting Clients’ Privacy

At Manitou protecting our clients’ privacy and the confidentiality of their personal information is fundamental to the way we do business.  We recognize that we must be transparent and accountable in how we treat the information clients share with us.

How Do We Define Personal Information?

Personal information refers to information that specifically distinguishes clients as individuals and is provided to or collected by us.  It includes, for example, name and address, age and gender, social insurance number, banking information, as well as investment and financial information.

How and Why Do We Ask for Personal Information?

We obtain most of our information about clients directly from them.  This information is gathered, primarily through our detailed Client Profile form and your Investment Policy Statement which we use in managing clients’ account(s).  This information is necessary for a number of reasons, including:

  • To fully understand clients’ investment needs and objectives in order to manage clients’ investment portfolios and to ensure suitability of investments
  • To verify clients’ identity and protect against fraud
  • To establish custody accounts that clients’ have requested for the safekeeping of the securities that we manage
  • To comply with the regulatory obligations of the securities industry
  • To comply with the Canada Revenue Agency’s income reporting requirements.
  • To comply with Canadian legislation aimed at the prevention of money laundering.
  • To comply with FATCA (Foreign Account Tax Compliance Act)

We limit the information we collect to what we need for these purposes, and we use it only for these purposes. In order to provide our products and services to clients we may provide information to other persons:

  • Where we have client consent
  • Where the other parties are agents or suppliers who assist us in serving our clients (e.g. custodians)
  • Where we are required or permitted to do so by law (e.g. CRA and IRS)

Specifically, we are required to advise clients that we will be disclosing client name, address and details of pooled fund purchases to the applicable provincial securities commissions.  This information is collected by the various securities commissions under the authority granted to them in securities legislation for the purposes of the administration and enforcement of the securities legislation.  If clients have any questions about the collection of this information they may contact the Administrative Support Clerk at the Ontario Securities Commission at 416-593-3684.

How We Protect Clients’ Information

We protect client information with appropriate safeguards and security measures.  We have security standards to protect our systems and clients’ information against unauthorized access and use. All of our employees, agents and suppliers, as part of their agreements with Manitou, are bound to maintain client confidentiality and may not use the information for any unauthorized purpose. We monitor and review our procedures and security measures regularly to ensure that they are being properly administered and that they remain effective and appropriate. We make every reasonable effort to keep clients’ information accurate and up-to-date.  We retain clients’ information for only as long as we require it for the reasons it was collected.  When it is no longer required we will destroy or delete it in an appropriate manner.

Questions or Concerns

If clients have any questions or concerns about the privacy and confidentiality of personal information, or if they would like access to the personal information that we have on file they may contact Deborah O’Reilly, Privacy Officer of Manitou Investment Management Ltd. at 416-628-6523.

Dispute Resolution

If you have an issue that you have not been able to satisfactorily resolve with Manitou, you may also use the services of the Ombudsman for Banking Services and Investments (OBSI) as an independent dispute resolution and mediation service.  There is no cost to you for this service.  Additional information about this service is available at www.obsi.ca.