Conflict of Interest Disclosure Information

1.       PURPOSE

HFI’s mandate is to serve others. Putting the interests of the clients and investors ahead of ourselves is a core value of HFI’s. HFI seeks to avoid actual conflicts of interest and strives to avoid the appearance of conflicts. Where conflicts exist and cannot be avoided, HFI will seek mitigation factors to ensure that the interests of clients and investors are sufficiently protected and then seek to balance the interests of other stakeholders.

In this document, we have identified conflicts of interest that arise in the ordinary course of our business. Some of these conflicts of interest are inherent in the business model that we use. Some conflicts of interest cannot be avoided and, although others could be avoided, we have chosen to manage them. We have policies and procedures in place to manage the conflicts of interest that we believe are sufficient to protect the interests of our clients and fulfill our obligations to our clients.

2.       Related, Connected, and Associated Issuers

For the purposes of this summary, (i) the word “connected” is intended to involve a state of indebtedness to, or other relationship with, us or those “related” to us that, in connection with a distribution of securities, would be material to a purchaser of the securities; (ii) the word “related” is intended to involve positions permitting, through ownership or otherwise, a controlling influence, and would include all companies under a common controlling influence; and (iii) the word “associated” is intended to involve positions where we own or control, directly or indirectly, voting securities carrying more than 10 percent of the voting rights attached to all outstanding voting securities of an issuer.

HFI may provide you with services related to the purchase or sale by you of securities of our funds or other issuers that are connected to us. In most cases, the connection to our funds will be obvious to you because the names of the funds will be sufficiently similar to our name. For example, most of our funds will include the word “Hoovest” as part of their name or “Hoovest” will be included in the fund’s disclosure documents. If we believe that the name of any fund or any other issuer is not similar enough to convey the fund’s or other issuer’s relationship to us, we will provide you with specific disclosure regarding that relationship at the appropriate time. We will only engage in these types of transactions where they are permitted under applicable securities laws and by applicable securities regulatory authorities, and where we believe they are in your best interests.

HFI may advise our clients (including our funds) with respect to the purchase or sale of securities of the related, connected, or associated issuers described above, or other issuers which may, from time to time, become related, connected, or associated issuers, but only if we are confident that such activities are in the best interests of our clients and are in compliance with all requirements imposed by applicable securities law.

Eon Labs:

The Hoovest Enigma Funds are co-sponsored and co-administered by Eon Labs. Eon Labs provides the funds with analytics and trading software and strategies to the Fund’s portfolio Manager. Eon Labs is a related and connected party to these funds. In addition, a portion of the management and performances fees of the funds is paid to Eon Labs or a connected and related entity of Eon Labs.

Intelli Group:

The Hoovest Intelli Atrium Senior Housing Income Fund is co-sponsored by Intelli Group and Atrium Health Inc. The fund may take recommendations on investment opportunities from Intelli Group and Atrium Health inc., which may include Intelli Group and Atrium Health Inc. development projects. Although the Manager retains the right to refuse investments recommended by Intelli Group and Atrium Health Inc., Intelli Group and Atrium Health Inc remains a related and connected party to the fund.

3.       Funds for which We act as a IFM or PM (including proprietary funds)

Hoovest CIFRS Fund II

Hoovest Core Fund

Hoovest Enigma Fund I

Hoovest Exactitude Fund

Hoovest Intelli Atrium Senior Housing Income Fund

Hoovest Intelli Senior Housing Income Fund II

Hoovest Liquidity Reserve Fund

Hoovest Private Securities Fund

Hoovest Securitization Bond Fund

Hoovest Smart Indexing Fund

Hoovest Venture Capital Fund

4.       Codes of Conduct

HFI follows the CFA Institute’s Code of Ethics and Standards of Professional Conduct which sets out certain expected standards of conduct of our team members. Moreover, our compliance policies and procedures include restrictions and controls on outside activities of our employees and on personal trading of our team members. These codes of conduct are designed to ensure that our directors, officers, and employees act in accordance with applicable Canadian securities laws and other applicable laws and in the best interests of clients. Further, they ensure that we avoid actual or potential conflicts of interest and do not engage in personal securities transactions that are prohibited by law, such as insider trading, or that negatively impact our clients.

5.       Personal Trading Activities

Each of our directors, officers, and employees put the interests of our clients first, ahead of our own personal self-interests. In particular, any individual who has, or is able to obtain access to, non-public information concerning the portfolio holdings, the trading activities, or the ongoing investment programs of our clients, is prohibited from using such information for our direct or indirect personal benefit or in a manner which would not be in the best interests of our clients. We must not use our position to obtain special treatment or investment opportunities that are not generally available to our clients or the public. These individuals are only allowed to make a personal trade if it falls within our personal trading policy or if our Chief Compliance Officer has determined that such trade will not conflict with the best interest of our clients.

6.       Referral arrangements

HFI may enter into referral arrangements from time to time pursuant to which we refer clients to another entity and receive a fee or another entity refers clients to us for which we pay referral fees.

The details of these referral arrangements, including the parties to the referral arrangement, the manner in which the referral fee for referral services is calculated and the party to whom it is paid, will be provided to you in writing when required (i.e., when we refer to a service provider for another service where we receive a referral fee, or when we pay a referral fee to a person who has referred you to us).

We ensure that clients are not disadvantaged due to being referred to us by a referral source. In particular, we ensure that:

  • the client is not disadvantaged by paying higher fees as a result of the referral;
  • the client is not restricted in appropriate product selection; and
  • the client is not deprived of a standard level of service.
7.       Trading in, recommending, or distributing proprietary products

HFI distributes a mix of proprietary and non-proprietary products. All investment recommendations, whether proprietary or non-proprietary in nature should be based on the quality of the security and uninfluenced by any associated internal or third-party compensation. Our advisors are prohibited from making biased recommendations towards proprietary products over non-proprietary products, irrespective of any internal compensation. In addition, when recommending or using proprietary product as part of our discretionary portfolio construction, we ensure that:

  • the investment is suitable for the client;
  • our advisors have a reasonable belief that the security is in the client’s best interests; and
  • we disclose the proprietary nature of our pooled funds and the funds managed or created by us (see section 3 “Funds for which We act as a IFM or PM (including proprietary funds)“).
8.       Third-party compensation

Receipt of third-party compensations are disclosed to affected clients, including the receipt of greater third-party compensation for the sale or recommendation of certain securities over others.

HFI’s commitment is to ensure recommendations are based on the quality and suitability of the security and that such recommendations are uninfluenced by any associated third-party compensation to reduce or eliminate conflicts in the best interest of the client.

9.       Internal compensation and incentive practices

Situations may arise wherein proprietary products may compensate differently from other similar products. HFI will endeavour to minimize or eliminate such discrepancies or conflicts wherever possible.

The account management fees for our discretionary management service do no discriminate between holding third-party or proprietary products. However, some of our Client Advisory team members also act as fund managers for our proprietary funds where their overall compensation would be higher as the proprietary funds gain more assets under management. We will ensure that if the proprietary fund is used, the client is not disadvantaged for holding the product at HFI compared to holding the same fund at a third-party advisory firm (i.e., we purchased the reduced fee class of units of our proprietary products for our discretionary clients to be comparable on a total fee basis as with holding the same funds via a third-party advisory firm). Moreover, the suitability requirements remain that proprietary products must be suitable for the client.

10.   Related entities as outsourced service providers

Some of our related, connected, and associated entities may act as service providers for our clients, our funds, and our firm. These situations present conflicts of interest that require mitigation and disclosure. We have outlined the following:

We outsource part of our accounting activities to a related entity Hoovest Enterprises Corp. that provides bookkeeping and fund accounting services to HFI and some of our funds. We make ongoing assessments to determine whether the costs of such service would have been the same or higher had we engaged other third-party service providers to provide similar services, and such services are essential to the respective operations. If a third-party service provider would be able to provide competitive pricing with superior service level and quality, we would make a determination to elect the service provider in the best interest of the funds’ unitholders.