Conflicts of Interest Disclosure Statement

Introduction
Sionna Investment Managers Inc. (“Sionna” or the “Firm”) is an independent investment management company incorporated under the laws of Canada. Sionna is entirely owned by senior members of staff and the Firm’s only office is located in Toronto, Ontario.

The firm is registered under the category of Portfolio Manager (PM) within the provinces of Ontario (principal regulator), Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Quebec, Yukon Territory and Saskatchewan. Furthermore the Firm is registered under the category of Exempt Market Dealer (EMD) in the provinces of Ontario and Newfoundland and Labrador, and finally registered under the category of Investment Fund Manager (IFM) in the provinces of Ontario and Quebec.

Sionna is in the business of providing investment advisory services to its clients (“Clients”). Sionna manages the Sionna Pooled Funds (the “Pooled Funds”) and may use the Pooled Funds to manage some Clients’ accounts under fully discretionary investment management agreements. Additionally, a Client may subscribe on its own to purchase units of a Pooled Fund directly, through execution of a subscription agreement. Sionna also provides advisory services for separately managed Client accounts that invest directly in a portfolio of securities and other investments.

Sionna is registered as a Portfolio Manager to provide discretionary portfolio management services to its Clients. Sionna is also registered as an Investment Fund Manager, as Sionna is responsible for the day-to-day business and affairs of the Pooled Funds, which are sponsored by Sionna. Lastly, while Sionna is not in the business of trading securities generally, it has been registered to enable Clients to invest in the Pooled Funds managed by Sionna whether the Pooled Fund is selected by Sionna under its discretion or by the Client.

Under securities regulations, Sionna, in each of its registrant roles, is required to identify material conflicts of interest which would be expected to arise between Sionna (including each individual, acting on its behalf) and its Clients. Further, if a reasonable investor would expect to be informed of the nature and extent of an identified conflict of interest, Sionna must do so. The purpose of this Conflicts of Interest Disclosure Statement is to provide Clients with a description of such conflicts as a registrant firm with roles as advisor, investment fund manager and dealer might encounter and the measures Sionna has taken to prevent, avoid, and mitigate such conflicts.

 

Referral Arrangements with Affiliated Managers and Third Parties
Sionna has no referral arrangements with other parties and does not pay or receive referral fees.

 

Investments in Related or Connected Issuers
A related issuer means a person or company that influences or is influenced by, through ownership or direction and control over voting securities, another person or company. Sionna is an independent firm, owned entirely by senior members of the company and is not influenced by any other person or company. A person or company is connected to another person or company if, due to its relationships with such person, a prospective purchaser of securities of the person or company might question the other person or company’s independence from the first person or company. Clients may invest in the Pooled Funds for which Sionna serves as manager; as such, the Pooled Funds may be ‘connected issuers’ of Sionna. If Sionna is recommending a Pooled Fund to a Client, Sionna will disclose its relationship or connection to such Pooled Fund or other connected issuer to the Client and receive the Client’s written consent to the investment.

 

Investments in Certain Other Issuers
If any of the partners, directors, officers, employees or agents of Sionna (“Employees”) are also partners, directors or officers of an issuer, Sionna will not cause an investment portfolio managed by it, including the Pooled Funds, to invest in securities of such issuers without the prior written consent of the Clients to do so after disclosure of that fact has been made in the discretionary investment management agreement.The Pooled Funds are strictly prohibited from investing in any issuer in which any officer, director or substantial shareholder of Sionna owns a significant interest in that issuer (i.e., 10% or more outstanding shares).

 

Principal Transactions and Cross-Trading Securities
Under Canadian regulations, Sionna is subject to certain restrictions from engaging in principal transactions with or on behalf of its Clients and from cross trading securities between Client accounts. In particular, without exemptive relief from regulatory authorities, Sionna will not knowingly cause any Client investment portfolio managed by it (including the Pooled Funds), to purchase or sell securities from or to (i) Sionna, (ii) any directors, officers or associates of Sionna, or (iii) any investment funds managed by them (including the Pooled Funds).

 

Best Execution and Soft Dollars
When placing orders for and on behalf of Clients’ accounts, Sionna will select those brokers and dealers from whom they reasonably expect to obtain the best execution (after considering all transaction costs and research or other benefits). Sionna utilizes a limited soft dollar policy, which allows for the procurement of 3rd party investment research using a portion of brokerage commissions for payment, which is valuable to the investment decision-making process, and adheres to the regulations stipulated by securities regulators. A copy of the best execution and soft dollar policies of Sionna may be obtained upon request.

 

Marketing, Promotion and Sale of Sionna Pooled Funds
Sionna’s services as advisor and dealer are integrated and generally not separable from each other when it acts as dealer on the trade in the Pooled Funds. In such circumstances, Sionna does not receive any separate compensation for acting as a dealer on the trade. Sionna’s interest is in the fees paid to it by the Client or the Pooled Fund for its management and advisory services. Sionna may from time to time solicit orders from Canadian Clients for and trade in the Pooled Funds. Sionna does not receive any commission or similar selling compensation for acting as a dealer on such trades for the Pooled Funds. Sionna does not search for or recommend investment funds which are not sponsored or managed by Sionna. The Firm has a strategic alliance with Brandes Investment Partners & Co., who operates under the trade name Bridgehouse Asset Managers, for the provision of portfolio advisory services to mutual funds. By virtue of the agreement, the Firm is entitled to a share of the profit/loss from the operation of the Brandes-Sionna mutual funds in addition to investment management fees.Sionna markets, promotes and offers to its Clients the investment advisory services of sub-advisors. It does so by appointing Lorica Investment Counsel Inc. as a sub-advisor to the Sionna Canadian Balanced Pooled Fund (and may do so to its other Canadian

 

Fair Allocation Amongst Clients
Sionna has adopted trading policies which are designed to ensure fair allocation of securities amongst Client accounts. Sionna is engaged to act as an advisor by several Clients. Sionna may aggregate orders for a number of Client accounts for the purchase of a particular security. A conflict of interest can arise when selecting which Clients’ accounts to participate in the allocation.In general a participating Client will receive a percentage of the executed portion of the order based upon its percentage of the entire order (rounded to the nearest whole trading lot when possible, 100 or 1,000 shares). This rule applies to all Clients that are participating in the execution on the same trading terms (i.e., price limits, approximate time of entry, etc.). All allocations will be made at the average execution price. The basic purpose of this process is to ensure fair treatment of all Clients and to avoid the appearance of favoritism or discrimination among Clients. There may be times, however, where strict application of this process does not lead to a fair and reasonable allocation. In such circumstances, allocation by a method other than this rule will be permitted where such allocation produces a fairer and more reasonable result. A Co-CIO and COO will be advised of any such circumstances for approval. As an overlying control, all order executions must satisfy the Clients objectives and suitability/restrictions.

 

Fees of Sionna
Sionna typically charges its Clients a fee for its advisory services calculated as a percentage of the market value of the Client’s account. Where Sionna appoints a sub-adviser to assist with managing Client accounts, Sionna is responsible for payment of the sub-advisory fees so that there is no duplication of fees charged to the underlying Client.

 

Allocating Expenses Among Funds and Within a Fund
Each Pooled Fund is responsible for paying for all routine and customary expenses relating to the Pooled Fund’s operation, including registrar and transfer agency fees and expenses, custodian fees, auditing, legal and accounting fees, communication expenses, printing and mailing expenses, all costs and expenses associated with the sale of units including private placement report fees, if any, expenses related to providing financial and other reports to Clients and convening and conducting meetings of Clients, all taxes, assessments or other governmental charges levied against the Pooled Fund, interest expenses and all brokerage and other fees relating to the purchase and sale of the assets of the Pooled Fund. In addition, each Pooled Fund is responsible for paying for expenses associated with ongoing investor relations and education relating to the Pooled Fund. The amount of these expenses will vary from time to time but will be disclosed in the financial statements of the Pooled Funds. Sionna may in its sole discretion, elect to absorb certain on-going expenses of the Fund. Currently, Sionna pays for certain operating expenses of the Pooled Funds. These expenses include audit and legal fees, custodian and transfer agency fees, costs attributable to the issue, redemption and change of units, including the cost of the Client record-keeping system, expenses incurred in respect of preparing and distributing prospectuses, financial reports and other types of reports, statements and communications to Client fund accounting and valuation costs, and filing fees, including those incurred by Sionna. In return for Sionna paying these expenses, each Pooled Fund pays Sionna an administration fee of up to 0.10% of the respective Pooled Fund’s assets. The administration fee is subject to applicable taxes including HST.

 

Pricing and Account Errors
Sionna may have a potential conflict of interest when determining when, and how, to deal with a pricing error or other type of unitholder account error, due to the time, processing cost and reimbursement of investors involved. Sionna uses third party service providers to calculate net asset values of the Pooled Funds and to record unitholder transactions. Sionna’s Error Policy establishes standards for the correction of discrepancies in the calculation of net asset value in a consistent manner across the Pooled Funds and in accordance with industry guidelines.

 

Proxy Voting and Other Corporate Actions
Sionna usually has discretion in voting the portfolio securities purchased on behalf of Clients, including the Pooled Funds. A perceived conflict arises given the opportunity to vote securities in its own interest or agree to certain corporate actions, including for the purpose of getting or maintaining certain issuers as Clients. To minimize such conflicts, Sionna subscribes to proxy voting recommendation services from a third party and maintain records of how they vote securities. Sionna does not invest in securities of issuers for the purposes of exercising control over, or participating in management of issuers. Sionna has established policies and procedures on how it handles material conflicts of interest that may arise between Sionna and a Pooled Fund.

 

Personal Trading, Gifts and Business Entertainment
Sionna has a Code of Ethics & Conduct that sets forth standards of business conduct intended to prevent possible conflicts of interest, diversions of corporate opportunity or appearances of impropriety and has established policies and procedures for monitoring personal trades of Employees who have access to information regarding the portfolios of Clients and the Pooled Funds. When individual portfolio managers and other personnel of Sionna invest in the same securities as Clients of Sionna, including the Pooled Funds, there is a perceived or potential conflict of interest that the portfolio manager or other personnel may benefit from opportunities at the expense of Clients and the Pooled Funds. Sionna’s personal trading requirements are covered in its Personal Trading Policy. When Employees give or accept gifts or business entertainment of more than minimal value in connection with services provided to Clients or the Pooled Funds, there is also a perceived or potential conflict of interest. Sionna has established written standards, in its Gifts & Entertainment Policies & Procedures, for the provision and acceptance of gifts and business entertainment to or from persons or entities with which the Firm has an existing or potential business relationship and regularly monitors Employees’ adherence to such standards.

 

Outside Business Activities
Sionna has developed policies and procedures that govern Employees’ outside business activities and to which all Employees must adhere. Further, Sionna has implemented a notification and pre-approval process to restrict any outside business activity that would interfere or give the appearance of interfering with an Employee’s ability to act in the best interests of, or perform work for, Sionna and its Clients.

 

December 2018.