Distribution Policy

Dividends are declared and paid monthly on the Class C Shares substantially equal to the dividends received and interest earned by the portfolio less administration and operating expenses. For historical dividend amounts, please see distribution information.

Retraction Rights

The following provides a summary of the retraction rights available to shareholders. Please refer to the prospectus for complete details.

Unlike most mutual funds the Class C Shares are listed allowing holders to exit by selling their Shares. In addition, they are also retractable at any time. Because of the manner in which the retraction prices are calculated, investors are almost always better off selling their Shares on the market rather than retracting them. It should be noted that all the retractions listed below constitute a taxable disposition of the Company’s Shares at the time of the retraction whether the retraction is received in the form of cash or portfolio shares.

Regular Retraction

Class C Shares may be surrendered for retraction at any time for payment on the 7th business day following the 9th day of each month. Class C Shareholders are entitled to receive 95% of the net asset value less $1.00.

Special Annual Retraction

The special annual retraction payment date occurs on the 7th business day following May 9th of each year. On that date Class C Shareholders are entitled to receive the net asset value per Class C Share. If the holder tenders 10,000 or more Class C Shares such holder may instead choose to receive a pro rata interest in the portfolio securities held by the Company.

Redemption

The Company is scheduled to wind up on or about May 21, 2013, and at that time, the Class C Shares will be redeemed by the Company. The redemption values of these shares will be calculated in the same manner as in the Special Annual Retractions.

Taxation

Dividends received by individual Class C Shareholders will be subject to the normal gross-up and dividend tax credit rules applicable to dividends received on shares of a taxable Canadian corporation.

The amount of any capital gains dividend received by a holder of Class C Shares will be considered to be a capital gain in the taxation year in which the capital gain is received.

The Company qualifies as a “mutual fund corporation” and a “financial intermediary corporation” as defined in the Income Tax Act (Canada). As a result thereof and after deduction of expenses in computing its income, the Company does not anticipate that it will be subject to any material non-refundable income tax liability.

Directors and Officers

The following are the names, office(s) held and principal occupations of the directors and officers of the Company:

Name	Office(s) Held	Principal Occupation
Donald W. Paterson	Chairman and Director	President, Cavandale Corporation
Robert C. Williams	Director	Chief Executive Officer, Headwater Investments Ltd.
Michael K. Warman	Chief Financial Officer, Secretary and Director	Chief Financial Officer, Scotia Capital Inc.
Stanley M. Beck	Director	President, Granville Arbitrations Ltd.
Brian D. McChesney	Director	Managing Director, Scotia Capital Inc
John B. Newman	Director	Chairman, Multibanc Financial Holdings Limited