Conflict of Interest Disclosure Statement
Heward Investment Management Inc. (“Heward”) is registered as a portfolio manager, investment fund manager and exempt market dealer with applicable securities commissions.
Heward is a company duly incorporated under the Canada Business Corporations Act, having its registered office at 2115 rue de la Montagne, in the City of Montreal, Province of Quebec, H3G 1Z8.
Heward Investment Management Inc. is a privately held company controlled by the Heward family.
Since 1981, Heward Investment Management Inc. has offered professional global investment management and advisory services. The firm is 100% owned by the principals of the firm, assuring its continued independence. We manage approximately $735 million for private investors, family trusts, estates, holding companies, and charitable foundations in Canada and abroad. Our products include Global Equity, Balanced and Fixed Income mandates in segregated accounts as well as, two Pooled Funds; the Heward Fund and the Heward Canadian Dividend Growth Fund.
The purpose of this Conflicts of Interest Disclosure Statement is to provide Heward clients with a description of the conflicts of interest Heward may encounter as a registrant firm with roles as portfolio manager, investment fund manager and exempt market dealer.
2. Relationships with Related or Connected Parties
“Related issuer” means, in respect of Heward, an issuer of securities over which Heward exercises a controlling influence (for example, through the ownership of, or direction or control over voting securities) or an issuer of securities that exercises a controlling influence over Heward In this context, the term “influence” means having the power, directly or indirectly, to exercise a controlling influence over the management and policies of the company, whether alone or in combination with one or more other persons or companies. In some jurisdictions, some connected issuers may be considered related issuers.
“Connected issuer” means, in respect of Heward an issuer that has, or any related issuer of which has, any indebtedness to, or other relationship with (i) Heward (ii) a related issuer of Heward, or (iii) a director, officer or partner of Heward or (iv) a director, officer or partner of a related issuer of Heward that, in connection with a distribution of securities of the issuer, is material to a prospective purchaser of the securities. Accordingly, an issuer is “connected” to Heward if, due to indebtedness or other relationships, a prospective purchaser of securities of the connected issuer might question the independence of Heward from the issuer.
The list of related or connected issuer(s) of Heward under Canadian securities legislation is as follows:
The Heward Fund and the Heward Canadian Dividend Growth Fund
The Heward Fund and the Heward Canadian Dividend Growth Fund (collectively the “Funds” and individually a “Fund”) are open-ended investment trusts originally created pursuant to trust indentures under the laws of the Province of Quebec dated December 8, 2004 (as amended by amendments dated December 7, 2007, August 31, 2012 and May 31, 2013) for the Heward Fund and dated June 30, 2009 (as amended by amendments dated August 31, 2012 and May 31, 2013) for the Heward Canadian Dividend Growth Fund. Such trust indentures as, where applicable, amended and/or consolidated and/or restated, as amended are collectively referred to as the “Indentures” and individually the “Indenture”. As of August 31, 2012, the services of the former trustee of the Funds (RBC Dexia Investor Services Trust) were terminated and Computershare Trust Company of Canada was appointed as the new trustee of the Funds (the “Trustee”). At that date, Heward Investment Management Inc. (the “Manager”) entered into an amended and restated trust agreement with the Trustee, which amended and restated in its entirety the Indentures (the “Trust Agreement”). The Trust Agreement was further amended on May 31, 2013.
Heward provides the services as both an investment fund manager and portfolio manager for its Funds.
3. Referral Arrangements with Third Parties
Heward has in place referral arrangements with third parties who are not connected or related. Our referral arrangement is designed to compensate the referrer for having facilitated client introductions to our firm.
Clients must sign a Schedule A “Disclosure Concerning Referral Arrangements”. This form addresses the following matters but is not limited to; name of each party to the referral arrangement, registration status, purpose and material terms of the referral arrangement, conflicts of interest, referral fees and client acknowledgement.
Heward pays the Referrer, out of its investment management fees which are charged to client accounts on a quarterly basis. The Referral fee shall continue to be paid to the Referrer for as long as the client(s) directed to Heward by the
Referrer remains with Heward, and shall cease at such time as the client(s) ceases to do business with Heward or should the client(s) revoke their acceptance of the fee sharing agreement.
Client will receive a written notice if and when there are any changes to the fees.
Heward conducts all the activities arising from the referral, which require registration with the various provincial regulatory authorities in Canada.
4. Outside Activities
All officers, directors, portfolio managers and employees must make a formal request to compliance regarding outside activities including but not limited to; officers or directors of public companies. Compliance will review each case on an individual basis and once satisfied that it will not be a conflict of interest, will approve the request. Compliance will maintain a list of all outside activities. All officers, directors, portfolio managers and employees must advise Compliance of any changes.
5. Principal Transactions and Cross Trading Securities
Under Canadian regulations, Heward is subject to certain restrictions from engaging in principal transaction with or on behalf of its Clients and from cross trading securities between Client accounts. In particular, without exemptive relief from regulatory authorities, Heward will not knowingly cause any Client investment portfolio managed by it (including the Funds), to purchase or sell securities from or to (i) Heward, (ii) any directors, officers or employees, or (iii) any investment funds managed by them (including the Funds sponsored by Heward).
6. Best Execution and Soft Dollars
One element of Heward’s fiduciary duty is the obligation to obtain best execution for clients’ securities transactions. Heward will take all reasonable steps to achieve best execution and obtain, on a consistent basis, the best possible result for the executions. This does not always mean the lowest price for a purchase or the highest price for a sale, but rather takes into consideration a range of different factors.
When placing orders on behalf of clients’ accounts and its Funds, Heward’s policy on best execution is to exercise the same standards and operate the same processes across all the different markets and financial instruments in which we trade. However, the diversity in those markets and instruments means that different factors will have to be taken into account when Heward assesses the nature of the execution policy in the context of different financial instruments and different markets.
Where a client provides specific instructions as to execution, the order will be executed in accordance with those instructions. This may prevent Heward from taking the steps designed and implemented in the Heward policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions.
Subject to applicable regulation, Heward directs some brokerage transactions involving client brokerage commissions to a dealer in return for the provision of order execution goods or services or research goods and services by the dealer or a third party which are to the benefit of clients.
7. Marketing, Promotion and Sale of Heward Funds
Heward’s services as portfolio manager and investment fund manager are integrated and generally not separable from each other when it acts as dealer on the trade in the Funds. In such circumstances, Heward does not receive any separate compensation for acting as a dealer on the trade. Heward’s interest is in the fees paid to it by the client of the Fund for its management and advisory services. Heward may from time to time solicit orders from its clients for trades in the Funds. Heward does not receive any commission or similar selling compensation for acting as a dealer on such trades for its Funds.
8. Fair Allocation
Fair treatment of investors is a fundamental policy of Heward. Heward fully acknowledges its fiduciary duty to treat all its clients with fairness in the allocation of investment opportunities. Heward ensures that where investment opportunities are consistent with the investment objectives and constraints of more than one client, and where those opportunities are considered at or about the same time, those opportunities are allocated equitably amongst the clients of Heward.
Heward’s policy is to ensure fair treatment of all clients in situations where two or more client accounts participate simultaneously in a buy or sell program involving the same security or in an IPO. This is accomplished by allocating securities to the accounts involved on a pro rata basis, at the time that the order entry is made and at the average execution price. When an order is partially filled, it is allocated across the accounts involved as per the original pro rata allocation. The method used to allocate commission is the same as described above.
Heward recognizes that a single inflexible rule will not always result in a fair and reasonable outcome and it may therefore be desirable in certain situations to consider alternatives. However, the principle involved will always remain consistent – to be fair and reasonable to all clients based on their objectives and policies and to avoid favouritism or discrimination amongst clients.
9. Management Fees and Costs Associated with Your Account
In return for the portfolio management services rendered to you by Heward, you are charged fees that are calculated according to the Portfolio Management Agreement. Heward’s portfolio management fees are determined according to either a sliding scale based on the value of the portfolio or as agreed to by all parties. These fees are generally charged on a quarterly basis and calculated as a percentage of the market value of the client’s account.
As it may be permitted in the investment management mandate, some clients may hold units of the Funds. You will not pay any purchase or redemption fees. Each fund pays brokerage and trading fees, and pays administration fees to Computershare Trust Company of Canada and SGGG Fund Services Inc. to cover the expenses relating to the operation of the Funds, including record keeping, custody of securities, accounting, production of fund-related documents and auditing.
If you have an account that holds individual securities, you will assume the brokerage fees applicable to these individual securities transactions in your account.
The fees and expenses indicated above are subject to applicable federal and provincial taxes.
10. Pricing and Account Errors
Heward has adopted a policy and procedure for the management of errors. Material trading errors should be corrected in a manner deemed appropriate by Heward depending on the specific facts and circumstances of the error while respecting Heward’s fiduciary duty to act in the best interest of their clients.
11. Proxy Voting and Other Corporate Actions
Heward has a fiduciary duty to act in the best interests of its clients.
Heward’s Proxy Voting Policy aims at ensuring that all votes in respect to securities held by clients are exercised in accordance with the best interests of its clients. Heward is required to follow the guidelines set forth in the Proxy Voting Policy.
Heward subscribes for a proxy voting services from a third party and maintain records of how they vote securities.
12. Personal Trading, Gifts and Business Entertainment
Heward employees are required to put the interests of clients ahead of their own personal interests and must comply with the Personal Trading Policy. The purpose of monitoring and restricting employee personal trading is to ensure that employees do not take advantage of their knowledge of confidential client trading information or their position with Heward to unfairly profit through their personal trading activities. Directors, officers, portfolio managers and employees owe a fiduciary duty to clients and in this position of trust, they must always place the best interests of the client ahead of their own personal interests and avoid any actual or perceived conflict of interest.
Heward’s Personal Trading Policy consists of a strict set of rules which includes, but is not limited to, trade and reporting restrictions, prohibited activities, restricted securities, pre-approval and supervision.
Gifts and entertainment:
Heward has established written standards for the provision and acceptance of gifts and business entertainment to or from persons or entities with which the firm has an existing or potential business relationship and regularly monitors employees’ adherence to such standards. When employees of Heward give or accept gifts or businesses entertainment of more than a nominal value in connection with services provided to clients of the Funds, there is also a perceived or potential conflict of interest.
13. Outside Business Activities
All employees wishing to undertake outside business activities must make a request to firm’s senior management and compliance for approval. The following information must be included in the request for approval; name and nature of the business, number of hours devoted to the outside activity and any potential conflicts of interest. Employees must advise Senior Management and compliance of any material changes to significant aspects of the activity. Senior management and Compliance will review each request on a case by case basis. Once permission is granted, employees will need to renew their requests annually
14. Investment Performance Benchmarks
Comparing your portfolio performance to that of an appropriate benchmark is a useful exercise for monitoring purposes. Benchmark comparisons can help you determine if your investment approach is delivering the desired results, or whether changes might be called for. Investment benchmarks are also helpful for developing realistic expectations about returns your portfolio can generate over the long term.
Investment benchmarks usually provide a broad measure of the return generated by specific asset classes over a given period. They are often referred to as reference indices since the most common form of investment benchmark is an index- such as a stock or bond index. A benchmark must replicate the security or portfolio you are monitoring as closely as possible for the comparison to be meaningful. Examples of the benchmarks would include the S&P TSX for Canadian Stocks. For a portfolio composed of securities from several different asset classes, the appropriate benchmark would a blend of indices weighted according to the portfolio’s asset mix.
For more information about comparing your portfolio’s return to a benchmark, please don’t hesitate to contact your portfolio manager.
Heward will document and, in a manner that a reasonable investor would consider fair and effective, respond to each complaint made to the registered firm about any product or service offered by the firm or a representative of the firm.
Heward’s clients may contact and use the dispute resolution or mediation services which are provided to them. Clients are primarily directed to contact the AMF at www.lautorite.qc.ca or by calling 1-877-525-0337 or to contact the OBSI at OBSI.ca or by calling 1-888-451-4519.
This document is kept current and is posted on our external website at www.heward.com or you may contact us for the most recent version.
Dated: July 2016
Heward Investment Management Inc. is registered as a Portfolio Manager, Investment Fund Manager and Exempt Market Dealer registered with all appropriate Securities Regulatory Authorities as required in the Provinces of; Quebec (AMF), Ontario (OSC), British Columbia (BCSC), Alberta (ASC) and New Brunswick (FCNB).
As our client, you are entitled to know how we protect your personal information and how we limit its disclosure.
The knowledge and consent of the individual are required for the collection, use and disclosure of personal information, except where legally inappropriate. You provided this consent at the time you opened your account(s) with us.
We collect personal information about you from the following sources:
- Information we receive from you on our client Memorandum of Agreement form, the Schedule 3 Form (know your client “KYC” form) and Investment Policy Statement (IPS), agreement letters and other forms.
- We also collect personal information during both formal and informal meetings, as well as during our telephone conversations with you.
- This personal identifying information includes, but is not limited to, your name, address, date of birth, driver’s license or passport number, assets, income and any changes in your personal situation; as well as information about your transactions with us, your custodian and others, such as account balances and parties to transactions.
Heward will be vigilant with respect to the initial and ongoing accuracy of the personal information we collect and asks that you keep us up to date by promptly notifying us of any changes such as your mailing or email address or phone number, employment status or income needs.
Collecting personal information about you is essential to our being able to provide the personalized services that best meet your (our Client’s) needs. While the personal information we collect may come directly from you, it may also be provided by your financial institution.
Personal information may be used:
- To understand and assess your ongoing needs and to adjust your portfolio if warranted;
- For client communication, service and administration including invoicing and accounting purposes;
- For internal, external and regulatory audit purposes;
- To comply with legal and regulatory requirements;
- To facilitate investment transactions with other financial intermediaries;
- In compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Please note that if you provide personal information about others (such as employees, dependants, etc.); we assume that you have obtained their consent.
Limiting Use, Disclosure, and Retention
We do not disclose your personal information to anyone, except as permitted or required by law. This means, most importantly, that we do not sell client information, whether it is your personal information or the fact that you are our client to anyone. Instead, we use your personal information primarily to complete transactions on your behalf. Here are the details:
- To complete certain transactions or account changes that you request, it may be necessary to provide identifying information to non-affiliated third parties, such as trustees or custodians and broker-dealers.
- We will release your personal information if we are required by law to do so or in other limited circumstances permitted by law for example, to protect your account from fraud, or if you give us the permission to do so.
- Should you wish us to share your personal information with a third party such as your accountant, auditor or consulting firm, we require written instructions describing the type of personal information you wish us to share as well as the name, address, phone, fax number and email address of the third party.
Legislation and Regulations
The Personal Information Protection and Electronic Documents Act (PIPEDA) and An Act Respecting the Protection of Personal Information in the Private Sector (Quebec) require organizations to obtain your consent to collect, use or disclose information about you.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires Heward to comply with certain client identification, recordkeeping, reporting and internal compliance measures. This includes reporting suspicious transactions to Canada’s financial intelligence unit, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
What happens if you close Your Account?
If you decide to close your account(s), we will adhere to the privacy policies and procedures described in this notice. Heward is subject to legislative requirements with respect to retention periods.
Who has Access to Your Personal Information?
Disclosure of your personal information is restricted to individuals who need access in order to provide services to you.
We maintain physical, electronic and procedural safeguards that comply with Canadian regulations to protect your personal information.
Openness, Access, Recourse
Heward will make available information about its policies and practices relating to the management of personal information upon request.
You may obtain access to the personal information we hold about you at any time to review its content and accuracy. Please provide us with specific information in writing, to permit a comprehensive search through our files. Heward will respond to written requests within 30 days.
If you require more information, or have concerns, please contact our Privacy Officer at email@example.com.
Heward may update this policy from time to time. When we change the policy in a material way, an updated Policy will be available on the website.
National Instrument 24-101 – Trade Matching and Settlement
To: All trade-matching parties providing trade orders to, acting on behalf of, or executing a trade with Heward Investment Management Inc.
This Trade-Matching Statement is being provided in accordance with National Instrument 24‑101 – “Institutional Trade Matching and Settlement” and Companion Policy 24-101CP [the “National Instrument”]. It applies to all trades that are subject to the National Instrument.
We confirm that we have established, maintain, and enforce policies and procedures designed to achieve matching in accordance with the National Instrument.