Relationship Disclosure Document

What is the purpose of this document?
The Canadian Securities Administrators, who govern our registration, require that we deliver to each of our clients a disclosure document which details the nature of our relationship with the client, identifies the services we offer, discloses all of the costs to operate an account and describes the types of risks that a client should consider when making an investment decision. If you have questions related to any of the information contained herein, please do not hesitate to contact your LDIC Representative. (See the section below titled, “Who are my contacts at LDIC Inc.”.

Who is LDIC Inc.?
LDIC Inc. is a registered Portfolio Manager and an Investment Fund Manager. The Firm was founded in 1998. LDIC’s main focus was to be a highly disciplined and performance oriented firm offering a genuine investment planning service to its clients. Our clients are primarily high net worth individuals, trusts, estates, pension funds, corporations and institutions. We also operate a series of proprietary funds which may be applied in the management of client accounts. Some of the proprietary funds are mutual funds and are also available through other dealers and advisors.

The Firm’s success is the direct result of a disciplined approach and prudent management. LDIC Inc.’s investment philosophy is value investing in individual companies while keeping abreast of global influences different sectors and geographical regions.

We have positioned ourselves as providers of personalized investment counseling that pursue investment strategies designed to achieve notable wealth preservation and creation for our clients through all market cycles.

What financial products and services does LDIC Inc. provide?
LDIC Inc. is an organization which provides portfolio management services to clients and is also the portfolio manager, investment fund manager and distributor of a number of private and pooled funds. Details of these funds are provided on our web site.

If you have engaged LDIC to manage you portfolio on a discretionary basis this means LDIC Inc. has the authority to buy and sell securities within your account(s) without first asking your permission, provided we believe we are selecting investments which is in line with the investment objectives, risk profile and other conditions set out in your Investment Policy Statement. We have a regulatory obligation to ensure these conditions in the Investment Policy Statement are suitable for you. To that end, we spend time to get to know you, including your income requirements and your tolerance to risk. Much of this information is documented the Investment Policy Statement. Please speak to your LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”) if you have not received a copy of this document or would like to receive a secondary copy. It is very important you read and understand your investment policy statement as it also outlines the overall asset mix we will follow when managing your portfolio. It also lists the types of investments we may purchase and any restrictions you wish to put into effect. Please speak to your LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”) if you have not received a copy of this document or would like to receive a secondary copy.

For smaller accounts, the portfolio may be constructed entirely from units of the LDIC funds as it is not cost effective for smaller accounts to build a segregated or separately managed portfolio.

What is the role of my Correspondent broker?
As noted above, you have engaged LDIC to manage your investments on a discretionary basis through separately managed accounts.

Under this arrangement your appointed correspondent broker is the custodian for the account holdings and is responsible for trade settlement, record keeping and tax reporting. The custodian is directly responsible to you for performance of these services. Your account at the custodian may be covered by CIPF and other insurance protections that the firm makes available to its clients. Please contact or your appointed custodian for a description of these coverages or protections.

LDIC has been granted discretionary authority over the account(s) held at your appointed custodian, for the purpose of trading in securities, but LDIC does not have authority to withdraw or transfer account holdings.

To facilitate the above arrangement LDIC has entered into a services agreement with the custodian, which sets out each party’s respective roles as described above. It further sets out that LDIC will collect certain documentation on behalf of the custodian and that the custodian will obtain LDIC’s consent with respect to any instructions it receives on the account(s).

What are the advantages of investing with LDIC Inc.?
Disciplined approach and prudent management
Proven investment performance
Stability and depth of personnel
Experienced in-house research team
Segregated private account management Independent with no corporate affiliations
Commitment to minority shareholder rights
How does LDIC Inc. provide these services?
The LDIC’s philosophy is founded upon disciplined, time proven principles of fundamental investing. We aim to construct diversified, high quality portfolios that are designed to preserve the real purchasing power of our clients’ funds while seeking to minimize risk relative to our clients’ long-term investment goals. LDIC’s investment philosophy has not changed throughout the history of the firm. We employ a disciplined approach toward the management of both equities (stocks) and fixed income (debt) investments. Investing in proven, well-managed, high quality companies which are financially sound minimizes portfolio risk. This approach is reinforced through extensive in-house equity and fixed income securities analysis. The firm believes high quality equities are the best source of long-term growth for a portfolio, while bonds should provide income to meet current income requirements. LDIC Inc. uses a number of risk practices that seek to reduce volatility and preserve capital over the long term:

Emphasis on long term trends
Fundamentally based research
Focus on high quality stocks
Portfolio diversification
Medium to low portfolio turnover (reducing costs and promoting tax efficiency for taxable investors)
The foundation of LDIC’s investment approach is an emphasis on fundamental research. The firm follows a bottom-up investment process, focusing on companies that are regional or global leaders in their industries. Each investment candidate must meet four criteria to be considered for purchase:

Strong management
Sustainable growth in earnings and cash flow
Sound balance sheet
Reasonable valuations
The firm relies primarily on internal resources to develop strategy and generate investment ideas. Each year, our investment professionals visit many Canadian and International companies. We supplement this schedule of company visits with internal research and database services.

What types of portfolio does LDIC specialize in?
The firm constructs diversified balanced portfolios consisting of fixed income and North American equities. The objective is to add value through longer term asset mix positioning rather than short term trading. LDIC’s equity style emphasizes buying long-term growth at a reasonable price. Additional details regarding our investment philosophy as well as how the firm manages portfolios for high net worth individuals, are available upon request by contacting your LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”.

Who runs LDIC?
LDIC Inc. is an independent corporation. The firm’s day to day management is operated and by the founding member Michael B. Decter, and is overseen by a Board of Directors.

Who makes the decisions for my account?
LDIC Inc.’s Investment Management team is responsible for all key investment decisions at the firm. The investment process includes consideration of domestic and international macroeconomic factors, relative valuation levels of equity versus fixed income markets, as well as internal forecasts of interest rate trends, currency levels and corporate profits. Decisions of LDIC Inc.’s Investment Management team are promptly conveyed to all of the firm’s investment professionals. LDIC Inc. will make trading decisions for those client portfolios which mirror the firm’s Models. Clients whose portfolios do not directly follow the firm’s Models, either due to size or specific client constraints, are implemented according to each client’s investment objectives and guidelines.

Conflicts of Interest
LDIC has structured its business with the intention of avoiding conflicts with its clients. We believe that clients are entitled to unbiased advice in the management of their investment portfolios. LDIC is not affiliated with any third party brokers. Nevertheless certain types of conflicts are an inherent part of the investment industry. We wish to point out the following conflicts of interest:

“What are LDIC’s Fees?” – Discusses compensation and our fee arrangements with clients, and the impact of these charges on portfolio performance.
“Soft Dollar Arrangement” – Identifies LDIC’s use of portfolio commissions to pay for order execution and portfolio management services.
“Employee Accounts” – Discusses conflicts arising from management of staff trading accounts.
LDIC has established policies and procedures regarding staff participation in outside business or employment activities. Such activities are subject to management approval and will be allowed only if they do not conflict the staff person’s obligations to LDIC, its clients and the portfolios under management.
LDIC has established policies and procedures regarding the receipt of gifts. The Chief Compliance Officer must be notified of any gifts excess of a certain threshold and will ask that the gift be returned or donated to charity if its receipt is likely to create an actual or perceived conflict.
LDIC requires all staff to notify the Chief Compliance Officer of any matters that may create an actual or perceived conflict of interest. Officer of any matters that may create an actual or perceived conflict of interest. Staff are reminded of this obligation and the definition of a conflict, during annual internal compliance seminars.
The LDIC is a related issuer to the LDIC Funds in which your account(s) may be invested, as the firm exercises full discretion over the management of the fund portfolio and over the operation affairs of the fund
LDIC may pay a fee to other entities for the referral of client business. If a fee has been paid with respect to your account, a separate referral disclosure document will have been provided to you for your signed acknowledgement.

What are LDIC’s fees?
LDIC Inc. earns fees for investment management only, based on the value of in your portfolio. As fees will have a direct impact on the long term performance of your portfolio, we strive to keep them as low as possible. Fees are paid to LDIC Inc. quarterly for managed account services in an amount equal to 3/12 of the management fee, determined according to the specific fee options selected in the investment management agreement you executed with LDIC.

If units of an LDIC fund have been purchased for your managed account the account will not be charged a management fee on this investment. LDIC Inc. does not include the value of LDIC funds you own in the calculation of your account management fee.

However units of the LDIC mutual funds in which your account may have been invested, will indirectly bear fund management fees and other costs related to maintenance and administration of the fund. These costs include, legal, audit, accounting, administration and, technology costs related to the fund. Please refer to the applicable fund offering memorandum for a detailed list of these charges. Please speak with your LDIC contact (see the section below titled, “Who are my Contacts at LDIC”) if you have not received a copy of this document.

The fund administration costs and managements fees, when expressed as a percent of the fund’s total assets are referred to as the management expense ratio. The most recent published management expense ratios for the LDIC mutual funds can be obtained from SEDAR, theglobeandmail.com, funddata.com, or call LDIC Inc. 416-362-4141.
The above fees will reduce the return on your portfolio. For example, if the value of your managed account at the end of a quarter is $10,000 and the annual management fee for your account is 1%, $25 will be deducted from your account at quarter end. This will not only reduce that account’s return at quarter end by $25, but the account will forgo future compounding returns that it would have earned from re-investment of the $25.

Account Reporting
LDIC will provide you with a statement of account(s) holdings and activity on a quarterly basis. The quarterly statement will provide a summary of trade activity during the period as well as the cost and market value of all securities held in your account at the end of the quarter.

You will also receive, on an annual basis, a performance report that details the change in the value of your account (or family of accounts) during the year and since inception of the account. That report will also provide the percentage return you earned on the account (or family of accounts) for the year and other specified periods.

Finally you will receive, on an annual basis, as summary of all the fees charges to you by your Firm and compensation earned by the firm (including trailer fees) with respect to your account.

You may receive e-mail delivery of these reports and any notice that LDIC is obligated to send. Such electronic delivery will be made to the contact e-mail listed in the Investment Policy Statement. You will be required to advise LDIC if this address has changed, or is otherwise unable to receive e-mail communications or, does not have access to technology to read PDF documents sent to it.

You may request at no cost, a paper copy of any documents that have been delivered electronically by contacting the Chief Compliance Officer at the number or e-mail set out in this document. Your consent to receive such materials through e-mail may also be revoked or changed (including any change in the electronic e-mail address to which documents are delivered), at any time by notifying the Chief Compliance Officer. Her contact details are set out in the section below titled, “What to do if I have a Complaint.”

In addition to this reporting your appointed custodian will provide you with a separate reporting on your account(s) holdings, pursuant to their regulatory obligations. Please see the following section.

What services does LDIC Inc. not provide?
LDIC Inc. has been engaged by you solely for portfolio management services and hence does not provide other services including:

Custody
Brokerage
Tax Advice. Actuarial Advice or Financial Planning

The Custodian is the company which holds your portfolio assets. Their involvement provides clients with an extra layer of protection. Except for the pre-authorized payment of our fees, LDIC Inc. is not permitted to access client monies or to transfer funds from or to your account. The Custodian holds the official “book of record” for all tax and income reporting. You will receive monthly or quarterly holdings and transaction statements from your custodian in addition to the statements you receive from LDIC Inc. It is the custodian who issues tax slips and transfers funds to you when needed.

LDIC relies on brokers for the execution of trades for your account. Except where specifically directed by you, LDIC Inc. will select the broker to use each time we execute trades within your portfolio. Please refer to the section titled, “Best Execution” for further detail regarding our selection process.

LDIC does not purport to provide advice or guidance on your general financial needs or circumstances. The account has been opened solely for the purpose of exercising discretionary authority over the portfolios identified in the Investment Management Agreement.

LDIC Inc. will construct portfolios in the most tax efficient manner possible but we are not tax advisors. Pension clients may require Actuarial Advice to determine their funding obligations. We strongly recommend that you seek advice from these professionals as required.

What other fees can I expect to pay?
Your account may be held by a custodian that is either a brokerage firm or a trust company. Where the former acts as custodian it is referred to as a correspondent broker.

Both trust companies and correspondent brokers charge a fee based on the value of the portfolio held. The fee is agreed upon between you and the custodian within the terms of your contract with them. In addition to fees for custody, these custodian firms may levy other account or activity based charges such as fees for wire payments, changes for overdraft balances, etc. If you would like further details on these charges please contact you LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”) who will obtain a list of these fees on your behalf. A listing of the advantages and disadvantages of traditional custody vs. brokerage-held custody is also available upon request.

The fund administrator for the LDIC funds is responsible for keeping records of all units held by investors in the LDIC mutual funds. These records serve as evidence of your ownership of fund units. The Fund Administrator may levy additional charges if you require a physical investment certificate for your investment. You may also incur custodian and other related charges for safekeeping of physical certificates.

The Brokers, through whose fund orders are executed (including the correspondent broker, when it acts as broker on the transaction), will charge a commission or spread for this service. This cost is a part of the purchase price or proceeds of the trade and are ultimately reflected in the cost of securities held by the fund and, in the fund’s performance.

Best Execution
Trades for the portfolios under management may only be executed through approved brokers. Each trade must be executed through an approved broker who is likely to provide best execution for the order. However, for managed accounts, most transactions will normally be executed through the correspondent broker where the account is held, for ease of settlement.

Best execution will be based on factors such as the timeliness of execution, execution price, minimization of market impact of the order and, minimization of information leakage regarding LDIC’s trading activities.

Criteria that the firm may apply to initially approve brokers include; their reputation, the competitiveness of their fee schedule, the broker’s access to pools of liquidity, and the broker’s experience with the type of transactions that LDIC wishes to execute.

The Chief Investment Officer will maintain a list of all executing brokers that have been approved by the Firm and the commissions paid to each, on a quarterly and year to date basis.

The Chief Investment Officer will review this list on an annual basis and, approve or re-approve selected brokers, including the corresponding brokers, based on the quality of their trade executions, value of trading ideas presented to LDIC, and the factors considered when the Broker was initially approved. The Chief Investment Officer may also re-direct the allocation of aggregate commission dollars.

Fair Allocation of Investment Opportunities
LDIC may bundle orders for the portfolios under its management. Where orders have been bundled, the respective trade executions will be allocated to each respective portfolio, based on the average fill price, net of commissions. Where the entire order has not been completed, the executed volume must be allocated to each participating portfolio pro-rata, based on the relative size of their initial order, net of commissions. Notwithstanding the above, odd lot fills may be rounded up or down so that only normal lot amounts are allocated to each fund.

Where an order is to be completed over a period of more than one day, LDIC may allocate each day’s execution to the portfolios, net of commissions, using the above methodology. Alternatively, LDIC may ask the broker to accumulate the executions in a holding account and provide an average price and executed volume for the whole order, net of commissions. The accumulated execution will then be allocated to the portfolios, based on the relative size of their orders and on the average price, net of commissions.

The allocation of securities that have been obtained through a new issue distribution will be allocated to the portfolios under management on a pro-rata basis, similar to the method described above.

Soft Dollar Arrangements
A soft dollar arrangement is defined as an agreement between a Firm and an executing broker for payment of order execution or research services only, provided a reasonable benefit to the portfolios in relation to the commissions paid, and reasonably benefit all portfolios that effectively pay for these services. LDIC Inc. currently has a soft dollar arrangement in place with executing brokers.

The types of goods and services that will be paid for through commission dollars include: Thomson Reuters, NYSE Market, TMX Group, Bloomberg, MSCI, and Options Pricing Reporting Authority LLC.

Details on the specific brokerage arrangements and third party vendors through which the above goods and services are provided are available on request by contacting your LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”).

LDIC presently uses the following process to, select third party brokers and, make an initial and ongoing good faith determination that the portfolios under management receive a reasonable benefit in exchange for the commission dollars directed for payment of the above good and services.

For each of the goods and services set out above, LDIC will maintain an accounting of commission dollars paid in the course of the year. On annual basis, the Chief Investment Officer will make a good faith determination on whether the portfolios under management are receiving a reasonable benefit from these good and services in relation to the commission dollars paid. Factors he will consider include:

Frequency of use
Whether less expensive goods and services may reasonable, be used in lieu of the good or service
The extent to which the good or service is integral to or adds value to the portfolio management process
Whether the benefit of the good or service is reasonably shared between the various portfolios under management, in relation to the commission dollars that each portfolio pays towards the good or service.

Employee Accounts
Employees may elect to have their personal trading accounts managed by LDIC Inc. or independent of LDIC Inc. In a situation where an employee requests LDIC Inc. to manage his/her portfolio, LDIC processes it in the same manner as a non-employee portfolio. Therefore, the employees managed account orders are bundled with regular client orders. Investment objective and risk tolerance are taken into consideration to propose a suitable investment model. Therefore, LDIC employee having the same investment objective and risk tolerance may be invested in the same model as a non-employee client. Managed employee portfolios within the same investment mandates receive the same security opportunities, buy and sell prices and offer the same management fee options as all client portfolios.

LDIC will make best efforts to ensure an employee portfolio does not receive preferential treatment over a non-employee portfolio. Preferential treatment refers to receiving a better order fill of a security opportunity, a better price for the same security or a different management fee other than the standard selection available to all LDIC clients. In the unlikelihood of an error that negates this assurance, LDIC Inc. will correct the situation immediately at no cost to the employee or the non-employee account. LDIC Inc. treats all employee clients in the same manner as non-employee clients pursuant to LDIC’s written Policies and Procedures to Ensure Fairness in the Allocation of Investment Opportunities among Discretionary Accounts.

Employees are also allowed to operate investment accounts at other registered firms. LDIC has adopted a personal trading policy that applies to all officers, directors and other staff with access to information regarding the managed account. These polices are designed to reasonably prevent staff from trading in advance of orders for the portfolios under management or, trading on the basis of their knowledge of portfolios’ trading activities.

How do I access my cash or deposit additional monies. How much notice is required?
Whenever you wish to add or withdraw funds from your portfolio, you must communicate this to LDIC Inc. The best is to allow at least ten (10) days’ notice prior to the date cash is required to minimize untimely sale of a security to raise the funds. Deposits to your portfolio must be made payable to the custodian. For your protection, no LDIC Inc. employee is permitted to handle cash on behalf of client portfolios.

Who are my contacts at LDIC Inc.?
A client service team is assigned to ensure a direct line of communication and accountability. Our objective is to build long-term relationships with our clients through regular, direct contact. We encourage both formal and informal meetings to discuss investment policy strategy and capital market conditions. Your primary contact at LDIC Inc. is the client service team at 416-362-4141.

When should I contact you?
You should feel free to contact us at any time you have a question or concern regarding your portfolio, the economy or the markets. In order to be in the best position to make suitable investments on your behalf, please keep LDIC Inc. up to date with respect to any changes which might impact your Investment Policy. This includes letting us know if your personal or financial circumstances change or if any of the information which you provided in your Account Application form requires updating. These may include an address change, a job change, a change in your income requirement or tax situation, a change of authorized signatories for your account.

Why is the Investment Policy so important?
The Investment Policy is the document we use whenever we assess the suitability of a trade for your portfolio. This document has been drawn up to meet your specific investment objectives, income needs and risk tolerance. It outlines ranges of assets and the various types of investments which you have determined are acceptable to you and which we have determined are suitable to help you reach your goals.

How often should I hear from you?
We encourage clients to let us know how frequently they would like to meet or hold these discussions. However we will, on at least an annual basis, contact you to arrange an in person or phone meeting.

How do I read a performance report?
Performance returns represent a total return calculation of the growth of your investment portfolio which incorporates all dividend and interest income net of fees, and prior to the deduction of any taxes. Returns for periods greater than one year, the annualized or average annual return over the reported number of years is used to standardized annual time periods. Total portfolio returns list the performance of your overall investments and can be compared against an appropriate index benchmark or a benchmark of various market indices, calculated according to the target asset mix you have set for your account. Please refer to the section below titled, “Comparative Benchmark” for a guidance on how to interpret the performance of a portfolio when it is accompanied by returns of a comparative benchmark.

How do I buy and sell securities on my own?
The accounts LDIC Inc. manages on your behalf are discretionary which means that you have given us the authority to purchase and sell securities on your behalf, provided we believe the transaction to be suitable for your portfolio. Should you wish to invest a portion of your account on your own you can open a separate brokerage account for this purpose.

What do I do with Proxy, Corporate Action and class Action notices that I receive?
LDIC Inc. is responsible for handling any corporate action as well as proxy voting decisions with respect to securities held in your portfolio. Your custodian has been instructed to forward any materials with respect to these matters directly to our firm. If such materials are sent to you in error, please feel contact your LDIC representative (See section below titled, “Who are my contacts at LDIC Inc.?”), who will arrange to have these materials sent to us.

On occasion LDIC may receive notices of a class action lawsuit against an Issuer. On a best efforts basis and where we believe there is merit for a successful claim, we will review Class Action material we receive and endeavour to file these claims on your behalf if we, as manager, bought or sold the securities in question. If we believe your custodian already provides this service to their clients then we will not file a claim.

What are the tax Implications of my investments?
For taxable investors, the interest earned from fixed income investments is generally taxed at a higher rate than the tax for the dividends earned from equities. Please speak with your tax advisor regarding the marginal income and dividend tax rates in your province of residence. Capital gains taxes are owed once you sell an investment at a price higher than what you originally paid. However only a portion of this gain is subject to tax. LDIC primarily has a “buy and hold” strategy is intended to allow your portfolio holdings to grow in value over time without the drain of paying capital gains taxes. As an example, for a given stock which grows consistently over a 6 year period, the ending value of your portfolio would be greater, other things being equal, if we simply buy and hold the stock for 6 years as we would avoid capital gain taxes in the interim and keep 100% of your portfolio invested. We also save brokerage commissions that would otherwise be incurred by trading in and out of the security.

What do I do if I have a complaint?
If you have any concerns or complaints, we encourage you to raise these directly to LDIC Inc. so that LDIC Inc. can resolve the issue to your satisfaction. Complaints can be reported to LDIC’s Chief Compliance Office as follows. Written or verbal communications may be directed to Michael Decter (416) 362-4141 or decter@ldic.ca

We will acknowledge complaint in writing, investigate the matter and, provide you with a written response.

If you are dissatisfied with the outcome of your complaint or we have not formally responded to it on a timely basis (i.e. within 90 days), you may elect to have the compliant mediated by the OBSI. Details will be provided to you in the acknowledgement and response letter relating to your complaint.

Types of investment risks to consider Risk-return trade-off
Risk and return are closely related. To obtain a higher return, you may need to accept a higher level of risk. A higher risk portfolio is generally less stable and fluctuates more. Higher risk typically has a higher risk of loss.

What are the general risks of investing?
Your investment is not guaranteed; therefore, the greatest risk to you as an investor is that you could lose all or part of your investment. Portfolios own different kinds of investments depending on their investment objectives and risk ranking. The value of investments in any portfolio will fluctuate on a daily basis. Economic conditions and markets as well as company news; therefore, the value of any portfolio’s securities may go up or down. This means that the value of an investment when you sell it may be more or less than when you bought it. The following is a list of common risks which may affect your portfolio. We have listed those risks at the top, which are most likely to impact LDIC Inc. clients. Please contact LDIC Inc. should you wish to review the specific risks which relate to you.

Risks relating to concentration
If a portfolio invests a large proportion of its assets in securities issued by one issuer, in a single asset class or in a single sector, it will have risk relating to concentration. When a portfolio is not diversified, it could experience greater volatility and will be strongly affected by changes in the market value of these individual high concentration securities.

Risks relating to credit
The value of a fixed income security may decline if the issuer of a bond or other fixed income security cannot pay interest or repay principal when it comes due or if the perceived creditworthiness of the Issuers falls. This risk is higher if the fixed income security has a low credit rating or no rating at all. Fixed income securities with a low credit rating usually offer a higher yield than securities with a high credit rating but they also have the potential for substantial loss. These are known as “high yield securities”.

Risks relating to publicly traded securities
Market risk is the influence of a decline in the overall market (i.e. Equity, Bonds, etc.) on the value of your portfolio. Fluctuations in the overall market may be driven by changes in general economic conditions, interest rates and market sentiment. In addition the market value of individual securities will fluctuate according to the performance of the company that issued the stock or bond and other firm specific factors. Historically, equity securities are more volatile than fixed income securities. Securities of small market capitalization companies can be more volatile than securities of large market capitalization companies. Please refer to the section below titled, “Risks relating to small companies”.

Risks relating to interest rate fluctuations
The value of your portfolio of Bonds or treasury bills will be impacted by changes in the level of interest rates. As interest rates rise, bond prices will fall. Equities are also sensitive to this risk, to the extent that they affect demand for the firm’s goods or services or affect operating and financing costs.

Risks relating to currency
Currency risk is the risk of a decline in the value of securities held in a foreign currency, due to an appreciation in the value of the Canadian dollar. It also addresses the risk of a decline in the profits of a Canadian Issuer due to fluctuations in the value of currencies in which the Issuer transacts with customers or suppliers, or currencies in which the Issuer holds foreign assets.

Risks relating to liquidity
Liquidity refers to the speed and ease with which an asset may be sold at close to the market price. Most of the securities held by a portfolio may be sold easily at a fair price and thus represent investments which are relatively liquid. However, a portfolio may invest in securities which are not liquid, i.e., which may not be sold quickly or easily. Some securities may not be liquid because of legal restrictions, the nature of the investment or certain characteristics of the security. The lack of purchasers interested in a given security could also explain why a security may be less liquid. The difficulty of selling illiquid securities may result in a loss or a reduced return for a portfolio, in the event these securities have to be sold quickly.

Risks relating to small companies
Small companies can be riskier investments than larger companies. For one thing, they are often newer and may not have a track record, extensive financial resources or a well-established market. This risk is especially true for private companies or companies that have recently become publicly traded. They generally do not have as many shares trading in the market, so it could be difficult to buy or sell small companies’ stock when it needs to. All of this means their share prices can change significantly in a short period of time.

Risks of using borrowed money (leverage) to finance the purchase of a security
LDIC has neither arranged for nor recommended that you borrow money in order to invest. If the capital you propose to invest in the managed account(s) will be partly or fully obtained from borrowed funds, this creates greater risk than investing your cash resources only. If your investment in the managed account(s) is partly or fully financed from borrow monies, your responsibility to repay the loan and interest on the loan(s) will remain the same even if the value of your managed account(s) declines.

Comparative Benchmark
Certain materials that you receive from LDIC including revenue statements, account statements, newsletters and other marketing materials which contain performance presentation, may also show performance of a comparative benchmark.

Unless otherwise stated, the benchmark should reflect the general investment universe and risk profile of the portfolio to which it is compared. Performance of the portfolio will vary from that of the benchmark as the securities held by the portfolio and/or their relative composition will vary from the benchmark.

Benchmark returns provides readers with a basis for understanding a portfolio’s historic performance in relation to comparable investments or the market segment in which he portfolio is invested. However a portfolio’s past performance relative to a benchmark may not be reflective of the future performance.

In certain cases, the performance of a portfolio has been compared to returns of a general index such as the TSX/S&P, S&P500 and DEX indexes. These index returns are shown because they are widely quoted and are provided for general information purposes only. They may not be a fair comparison to the portfolio because the investment universe and risk profile of the portfolio differ from the index.

Benchmark returns have been obtained from sources believed to be accurate. However, LDIC has not taken any steps to verify their accuracy or completeness.

Risks relating to derivatives
What are derivatives?

Derivatives are investment instruments the investor does not own the underlying asset but, allows the individuals to buy or sell the option. There are many types of derivatives such as options, swaps, futures and forward contracts. The main risks associated with derivatives are market, counterparty, and liquidity and related party risks. (See section below titled, “Who are my contacts at LDIC Inc.?”), to discuss the risks associated with derivative in more detail.

Privacy Policy
The Personal Information Protection and Electronic Documents Act (the Act) provides guidance on the way private sector organizations collect, use and disclose personal information. It does not apply to corporate or not-for-profit organizations. Its main objective is to ensure personal information collected from clients is used for its stated purpose and to safeguard such information.

Information that LDIC has collected for completing its documentation is subject to the requirements of the Act. LDIC recognizes the importance of privacy the sensitivity of personal information received through the conduct of business. To view the full Privacy Policy please click here.