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 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. (referred to throughout this document as “LDIC” or “LDIC Inc.”) is a registered Portfolio Manager and an Investment Fund Manager under applicable securities regulations in Canada. Founded in 1998, LDIC’s focus is committed 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. Additionally, we manage two proprietary funds which may be applied in the management of client accounts.

The Firm’s success stems from a disciplined approach and prudent management. LDIC’s investment philosophy is value investing in individual companies while keeping abreast of global influences across various 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 growth for our clients through all market cycles.

 

What financial products and services does LDIC Inc. provide?

LDIC Inc. provides portfolio management services to clients and also acts as a portfolio manager, investment fund manager and distributor of a pooled fund. Detailed information about the funds is available on our web site www.ldic.ca.

If you have engaged LDIC to manage your 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 and to put your interest first. 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 in 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 essential 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 restrictions if any. 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 acts as the custodian for your account holdings.

The benefit of this arrangement is that your securities are recorded in your name and not co-mingled with those of other managed account clients. Additionally, the correspondent broker is directly responsible to you for trade settlement, record keeping and tax reporting. Your account at the custodian may also be protected by the Canadian Investor Protection Fund (CIPF) and other insurance coverages offered by the firm. For more information on these protections, please contact your appointed custodian directly.

LDIC has been granted discretionary authority over the account(s) held at your appointed custodian, for the purpose of trading in securities. However, LDIC does not have the authority to withdraw or transfer account holdings. This arrangement allows us to fulfill our obligations under the managed account agreement we have executed with you. However, transactions will be made in your account without your prior knowledge, approval oversight or control.

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 track record of investment performance
• Stability and depth of personnel
• Dedicated and experienced in-house research team
• Segregated private account management
• Independent firm with no corporate affiliations
• Commitment to protecting minority shareholder rights

 

How does LDIC Inc. provide these services?

The LDIC’s philosophy is founded upon disciplined, time-tested 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 remained consistent throughout the history of the firm.

We employ a disciplined approach toward the management of both equities (stocks) and fixed income (debt) investments. By focusing on 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 provides the best source of long-term growth for a portfolio, while bonds deliver stable income to meet current income requirements. LDIC employs several risk management practices 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 a strong emphasis on fundamental research. The firm follows a bottom-up investment process, focusing on companies that are regional or global leaders in their

industries. To be considered for purchase, each investment candidate must meet four criteria:

• 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. These meetings are supplemented by comprehensive internal research and advanced database tools, enabling us to maintain a robust and informed investment process.

 

What types of portfolios 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 managed by a dedicated team of professionals. The day-to-day operations are overseen by the leadership of CEO Michael B. Decter, supported by a skilled team including the President & Portfolio Manager, CFO, client relations specialists, portfolio managers, and the finance, operation and compliance departments. The firm’s activities are further guided by its Board of Directors, ensuring strong governance and oversight.

 

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.

We encourage clients to provide the name of a trusted contact person with whom we can discuss any concerns regarding instructions received on the account and/or obtain contact information of the client’s legal representative.

 

If a trusted contact person is provided, we recommend that the client notify this individual, so they are aware that an LDIC representative may contact them if necessary.

 

In case where we believe a client may be vulnerable to financial exploitation whether by a family member, a caregiver, a Power of Attorney or another individual – or if we suspect the client lacks the capacity to make independent financial decisions, we may place a temporary hold on the account to safeguard their financial interests. The temporary hold will be subject to review every 30 days and remain in effect until it is lifted.

 

Where a temporary hold has been placed, the client and/or the trusted contact person will receive a written notice explaining the reason the hold was placed, its terms and contact details of the LDIC representatives who can provide further information.

 

Conflicts of Interest

LDIC has structured its business with the intention of avoiding conflicts of interest with its clients. We believe that clients are entitled to unbiased advice in the management of their investment portfolios. LDIC is an independent firm and is not affiliated with any third-party brokers. Nevertheless, certain types of conflicts are inherent to the investment industry. We outline the following conflicts of interest:

 

Managed Account Fees

The fees LDIC charges to the accounts under management present a conflict as it reduces the overall returns to the client.

LDIC addresses this conflict through disclosure. The managed account fee is disclosed in the Investment Management Agreement that the client must execute. Additionally, clients must receive a minimum 60 days written notice of any fee increase, allowing them sufficient time to decide whether to continue with the managed account arrangement.

Investment in Connected Funds

Certain managed accounts are invested in pooled and mutual fund, managed and administered by LDIC. These funds provide an efficient way to offer the client access to a specific investment exposures.

The use of proprietary funds in place of individual securities ensures that clients with similar investment needs are treated fairly while also reducing transaction costs. This approach is integral to LDIC’s business model and aligns with our commitment to serving clients’ best interests.

As LDIC exercises full management control over the funds, it has the ability to influence fund valuations, which determine management fees. The firm also decides the fees and expenses charged to the funds.

To ensure fair and accurate fund valuations, LDIC engages a third-party fund administrator to calculate the Net Asset Values (NAVs) of the funds. The fund administrator also reviews the reasonableness of management fees and expenses charged to the funds.

At year-end, the funds undergo an independent audit in accordance with auditing standards as applicable in Canada. This audit includes a review of the reasonableness of security valuations and fund expense policies.

 

Client Directed Brokerage

LDIC has clients that were introduced by an CIRO firm. LDIC does not pay a referral fee for the introductions.

However, the CIRO firm custodies the client’s portfolio and as a result many of their accounts’ transactions will be executed through the CIRO firm for ease of settlement and administrative purposes.

 

This arrangement may create an inherent conflict because the CIRO is financially benefitting from the introduction by earning a commission on the transactions.

LDIC addresses this inherent conflict by providing notice in the investment management agreement that by mandating their trades be executed through the IIROC firm, they may be forfeiting best execution.

LDIC has also reviewed the commission schedule charged by the IIROC firm and has determined that it is generally in line with market practice.

 

 

Staff Compensation:

Advising Representatives, including the CEO, receive a bonus tied to the absolute performance of portfolios under their management as well as their performance relative to a benchmark. The percentage applied in determining this bonus can vary within a range based on individual performance and firm profitability and is determined by the management. Other staff members receive a salary, and a bonus tied to their performance as well as the overall profitability of the firm.

The compensation model as described above, may present a material conflict, as it could incentivize staff to take greater risks with portfolios, potentially conflicting with their obligation to act in the clients’ best interests. LDIC addresses this conflict by implementing robust portfolio risk management controls, including, Regular Monitoring of Risk Metrics (e.g., diversification, and asset allocation limits) and formal Oversight by the Chief Investment Officer to ensure compliance with risk tolerances.

 

Staff Participation in the LDIC Managed Account Program

Staff may participate in the LDIC managed account program alongside clients.

This could create a potential conflict if there is a perception that staff accounts are given preferential treatment over clients’ accounts.

To address this concern, LDIC has implemented a Fair Allocation Policy to ensure all accounts under management, whether (staff or client) are treated fairly. Details of the policy outlined in the section titled, “Fair Allocation of Investment Opportunities”.

 

Staff Personal Investing Activities

LDIC staff and related parties are permitted to maintain investment accounts at other registered firms.

However, if staff and related parties make independent personal investment decisions, it may create a perception of conflict with the interests of portfolios under management. For example, there could be concerns about staff engaging in front-running account or fund orders or misusing information obtained through their roles at LDIC.

To address these risks, LDIC has implemented a Personal Trading Policy applicable to all staff. This policy requires pre-approval for all personal trades, except for those involving instruments specifically exempted under the policy. Additionally, the firm conducts regular reviews of staff account statements to ensure compliance with these rules.

These procedures are designed to reasonably prevent staff from:

• Trading ahead of orders placed for portfolios under
• Trading based on non-public knowledge of portfolio trading
• Engaging in personal investment activities that conflict with the interests of the firm, its clients, or funds under management.

 

This policy reinforces LDIC’s commitment to maintaining the highest standards of integrity and fiduciary responsibility.

 

Staff Outside Activities

Staff are permitted to engage in activities outside the firm including:

• Holding directorships or other decision- making roles at other
• Engaging in commercial activities outside of
• Maintaining significant ownership of active

While permitted, these outside activities may present potential conflicts of interest. For example, a staff member’s financial interests could conflict with those of LDIC or its clients, or such activities could impair the staff member’s ability to act in the clients’ best interests. Additionally, outside activities may create a perception of conflict, causing clients to question the impartiality of the staff member’s decisions.

 

 

What are LDIC’s fees?

LDIC earns fees solely for investment management, calculated based on the value of your portfolio. Recognizing that fees directly impact the long-term performance of your portfolio, LDIC strives to keep them as competitive as possible.

Management fees for managed account services are billed monthly and calculated as 1/12^th of the annual management fee, as outlined in the investment management agreement you executed with LDIC.

If your managed account includes units of an LDIC fund, no management fee will be charged on that portion of the portfolio. The value of LDIC funds held in your account is excluded from the calculation of your account management fee.

However, investments in LDIC mutual fund are subject to the fund’s management fees and operational costs, which include expenses such as legal, audit, accounting, administration, and technology services related to the fund’s maintenance. These costs are borne indirectly by your account. For a detailed breakdown of these charges, please refer to the fund’s offering memorandum. If you have not received this document, please contact your LDIC representative (see the section below titled, “Who are My Contacts at LDIC?”).

The total fund administration and management fees, expressed as a percentage of the fund’s total assets, are referred to as the Management Expense Ratio (MER). The most recent published MERs for LDIC mutual funds are available through sources such as SEDAR+, The Globe and Mail, Fundata.com, or by contacting LDIC Inc. directly at 416-362-4141.

Management fees reduce the overall return on your portfolio. For example, if your managed account is valued at

$10,000 at the end of a month and the annual management fee is 1%, a $8.34 fee (plus applicable taxes) will be deducted at following month-end. This deduction not only reduces your monthly return by $8.34 but also eliminates potential future compounding returns that could have been earned by reinvesting the amount.

LDIC is committed to ensuring transparency and providing you with all necessary information to make informed decisions about your investment management fees.

 

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 LDIC and compensation earned by the firm 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. The 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, however, 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 aggregate orders across the portfolios under its management. When orders are bundled, the resulting trade executions are allocated to each portfolio based on the average fill price, net of commissions. If the entire

 

order is not completed, the executed volume will be distributed pro-rata to each participating portfolio based on the relative size of their initial order, net of commissions. However, odd lot fills may be rounded up or down to ensure that only normal lot amounts are allocated to each portfolio.

For orders executed over multiple days, LDIC may allocate each day’s execution to the portfolios, net of commissions, following the methodology outlined above. Alternatively, LDIC may instruct the broker to aggregate the executions in a holding account and provide an average price and executed volume for the entire order, net of commissions. In such cases, the total execution will be distributed to the portfolios based on the relative size of their orders and at the average price, net of commissions.

Securities obtained through new issue distributions will be allocated to the portfolios under management on a pro- rata basis, following a process similar to that described above.

 

 

Soft Dollar Arrangements

A soft dollar arrangement is an agreement between a firm and an executing broker in which commission dollars are used to pay for order execution or research services, provided these services offer a reasonable benefit to the portfolios relative to the commissions paid and are beneficial to all portfolios that effectively contribute to these costs. LDIC Inc. currently maintains a soft dollar arrangement with executing brokers.

The types of goods and services paid for through commission dollars include:

 

 

Vendor	Service Detail
Refinitiv Canada Holdings Limited	Market data
NYSE Market	Network fee
TSX Inc.	TSX data information fee
Bloomberg	Bloomberg terminal

 

Details about specific brokerage arrangements and third-party vendors providing these goods and services are available upon request by contacting your LDIC representative (refer to the section titled, “Who are my Contacts at LDIC Inc.?”).

LDIC employs the following process to select third-party brokers and to make an initial and ongoing good-faith determination that the portfolios under management receive reasonable benefits in exchange for the commission dollars directed toward the above goods and services.

For each of the goods and services listed, LDIC maintains a record of the commission dollars paid throughout the year. Annually, the Chief Investment Officer evaluates whether the portfolios under management derive a reasonable benefit from these goods and services relative to the commission dollars spent. This evaluation is based on the following factors:

 

1. Frequency of Use
2. Cost-Effectiveness
3. Relevance and Value

This process ensures that the use of commission dollars is aligned with the interests of the portfolios under management and complies with LDIC’s commitment to fairness and transparency.

 

 

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 either 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 typically taxed at a higher rate than dividends earned from equities. We recommend consulting your tax advisor to understand the marginal income and dividend tax rates applicable in your province of residence.

Capital gains taxes are incurred when you sell an investment at a price higher that your original purchase price. However, only a portion of the gain is subject to tax. LDIC primarily follows a “buy and hold” strategy, which aims to allow your portfolio holdings to appreciate over time without the impact of paying interim capital gains taxes.

For example, consider a stock that grows consistently over six years. By holding the stock for the entire period, your portfolio’s ending value would be higher, all else being equal. This approach avoids interim capital gains taxes, keeping your portfolio fully invested, and reduces the brokerage commissions that would otherwise result from frequent trading.

 

What do I do if I have a complaint?

If you have any concerns or complaints, we encourage you to bring them directly to LDIC Inc. so that we can address the issue to your satisfaction. Complaints may be directed to LDIC’s Chief Compliance Officer as follows:

Michael Decter

Phone: (416) 362-4141

Email: Decter@ldic.ca

We will acknowledge your complaint in writing, investigate the matter, and provide you with a written response. If you are dissatisfied with the outcome of your complaint or if we have not formally responded to it within a reasonable timeframe (i.e., within 90 days), you may choose to have the complaint mediated by the Ombudsman acknowledgment and response letters related to your complaint.

 

Types of investment risks to consider Risk-return trade-off

Risk and return are inherently linked to achieve a higher return; you may need to accept a higher level of risk. Portfolios with higher risk are generally less stable and tend to fluctuate more in value. Additionally, higher-risk investments come with a greater potential for 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 due to changing economic conditions, market dynamics as well as company-specific news; therefore, the value of any portfolio’s securities may go up or down over time. 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 the following risks, which are most likely to impact LDIC Inc. clients. Please do not hesitate to 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 provide readers with a basis for understanding a portfolio’s historic performance in relation to comparable investments or the market segment in which the 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, 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 PRIVACY POLICY APPLIES ONLY TO CLIENTS THAT ARE INDIVIDUALS.)

The Consumer Privacy Protection Act and privacy acts in the Provinces of Alberta, British Columbia and Quebec. (Alberta Personal Information Protection Act (“Alberta PIPA”), British Columbia Personal Information Protection Act (“BC PIPA”)) regulates the way private sector organizations collect, use and disclose personal information. It does not apply to either corporate or not-for-profit organizations.

The Act’s main objective is to ensure personal information collected from clients is used for their stated purpose and to safeguard such information.

“Personal Information” is defined as information about an “identifiable individual”. This includes such things as income, assets, education, home address, phone number and age. It does not cover general contact information such as name, title, business address, business phone number…etc.

Information that LDIC has collected for completion of the Investment Policy Statement and Correspondent Broker documents is subject to the requirements of the Act.

LDIC recognizes the importance of privacy and the sensitivity of personal information received in the conduct of its business. Our privacy policy has been prepared with this objective in mind.

The need for Personal Information

We have collected Personal Information from clients to meet certain regulatory requirements and to help us establish an appropriate investment objective, risk tolerance and asset mix for your managed account(s). This information will necessarily include your personal information and, in certain cases, information about other individuals (e.g. spouses, other individuals with trading authority or beneficial interest.)

Collection and Disclosure of Personal Information

LDIC will try to collect personal information directly from you or our appointed agent. We may also collect personal information from publicly available sources. We will only collect personal information necessary for the purposes stated in the section titled, “The Need for Personal Information.”

Such information may be shared with third parties including the correspondent broker to facilitate your investing activities.

We may have to disclose personal information to a securities regulator or other regulatory authorities with jurisdiction over (LDIC), if required in the course of a review or other investigation.

Personal information may also be disclosed to comply with the terms of a court order or other legal obligation.

Your Consent

By retaining LDIC for investment management services, we consider that you have consented to our collection, use and disclosure of personal information to the extent necessary to provid this financial service. We further consider you have consented to our sharing such information with third party service providers that assist us in providing the financial offering (See “Collection and Disclosure of Personal Information” above.)

 

You may withdraw your consent for the use and/or disclosure of personal information at any time, by contacting a representative at the firm and specifying the personal information you no longer wish the Firm to use or disclose. However, this request is subject to legal or contractual restrictions and reasonable notice.

If you withdraw consent, you will be informed of the implications including the potential closure of your managed account.

Notwithstanding the above, your consent is not required where there is a legitimate interest for retaining the information, that outweighs any potential adverse of doing so without your consent and:

 

• You would reasonably expect the collection or use of the information for that purpose; and
• The personal information is not collected or used for the purpose of influencing your behaviour or

 

When using this exception, we will identify and document any potential adverse effect and take reasonable measures to reduce or mitigate those. A Legitimate Interest would include use of information, to provide a requested financial product or service, to undertake due diligence to prevent or manage commercial risk or, for security and safety purposes, where obtaining consent would be impracticable.

Security of Personal Information

We take our professional and legal obligations, to protect your personal information seriously.

LDIC has implemented policies and procedures to secure your personal information against unauthorized access, collection, use, disclosure, copying, modification, disposal or destruction.

Requests for Access to Personal Information

Subject to the terms of the Act, you may submit in writing a request for:

 

• a record of your personal information under our custody or control;
• the purpose for which such personal information is being used by us; and
• the names of persons to whom your information may be disclosed and, the circumstances under which this will occur.

 

We will respond to such requests in the time allowed under the Act, and will make a reasonable effort to respond as accurately and completely as possible. Requests may be subject to certain fees in accordance with the provisions of the Act.

Your ability to access your personal information is not absolute. The Act provides that we must not disclose personal information where:

 

• disclosure could reasonably be expected to threaten the safety or physical or mental health another individual;
• the disclosure would reveal personal information about another individual and their consent is not obtained; or
• the disclosure would reveal the identity of an individual who has, in confidence, provided us with information or an opinion and they do not want disclosure of their identity.

 

The Act further provides that we may choose not to disclose personal information where:

 

• the personal information is protected by any legal privilege;
• the disclosure of the information would reveal confidential commercial information, and it is not unreasonable to withhold that information;
• the personal information was collected by us for an investigation or legal proceeding;
• the disclosure of the personal information might result in similar information no longer being provided to us when it is reasonable that it would be provided;
• the personal information was collected or created by a mediator or arbitrator in the conduct of a mediation or arbitration for which he or she was appointed to act under an agreement, under an enactment, or by a court; or
• the personal information relates to or may be used in the exercise of prosecutorial

 

The above examples are not exhaustive, and you are encouraged to examine the provisions of the Act for a complete list.

 

 

Requests for Correction of Personal Information

You may also submit a written request to correct errors or omissions in your personal information that is under our custody or control. When provided with a written request, LDIC may either:

 

• correct the personal information and, if reasonable to do so, send correction notifications to any other firm or service provider to whom we previously disclosed such information; or
• decide not to correct the personal information but annotate the personal information that a correction was requested but not made.

 

Requests to Dispose or Transfer Personal Information

You also have the right to ask that your personal information be disposed of or transferred in a prescribed form to other firms. However, such requests must be provided in writing.

If we receive a written request for the disposal of personal information, we may refuse the request if:

• Disposal would cause personal information about another individual that is not severable (e.g. joint account), also being disposed;
• The information is necessary for the expected ongoing provision of a financial offerings to the individual (unless the information is in relation to a minor)
• There are valid legal or contractual reasons to retain the information such as Firm’s obligation under securities or anti-money launder regulation to maintain client information for certain minimum time periods;
• The information is necessary for the establishment of a legal defense or in the exercise of other legal remedies by the firm; or
• The request is vexatious or made in bad

 

In such cases, you will receive written notification, explaining, the reasons for the refusal and any recourse you may have.

Contacting or Communicating with Us

If you have questions about how your personal information is handled, or if you wish to request access to, or a

 

correction of, your personal information under our care and control, please contact LDIC’s Chief Compliance Officer. Contact details are set out under section above titled ‘What do I do if I have a complaint?’.

 

 

If you are dissatisfied with our handling of your personal information, we invite you to contact our Chief Compliance Officer in writing, setting out the reasons for your concern. If you remain dissatisfied, you may wish to contact the Office of the Information and Privacy Commissioner.

 

 

The contact information for the Office of the Privacy Commissioner and a copy of the Act can be obtained from the following link: https://www.priv.gc.ca/en/

To view the full Privacy Policy, please visit LDIC Inc. website at http://www.ldic.ca/privacy-policy.