MD Exo^® Direct Relationship disclosure

MD Management Limited (MD Management or MD) believes the best way to help you meet your financial goals, and for us to keep serving you as a valued client, is to provide you with access to advice and investments in a way that best suits your needs. We want to help you save and invest in the way that is most comfortable for you in the changing environment in which we live. We think we can do this most successfully if we each know what to expect from the other. For this reason, we would like you to have a good understanding of the services we offer, the features of your MD ExO® Direct Account and how it operates, and our responsibilities to you.

We also want you to understand how your input through the account documentation you complete is critical to our meeting your expectations. We believe in promoting active client participation for a mutually successful relationship.

The MD ExO Direct Program (the Program) allows us to offer you the convenience of having your investments managed through a discretionary managed account, with ease of online set-up and monitoring through a dedicated secure portal on our website. With MD ExO Direct, you provide authority to MD, or a third party hired by MD, to make investment decisions for you on a continuing basis. This authority is granted through the Managed account agreement you sign as part of opening your MD ExO Direct Account (the Account). MD’s authority to make investment decisions is limited to stated ranges set out in an Investment Policy Statement, which will be generated as part of your Account set-up.

You will always have access to qualified investment professionals. You can call our professionals toll-free at 1 800 267-2332, click to chat online or video conference with us, or email mdexodirect@md.ca. Otherwise, you are free to set up your Account by logging into My MD. Find more information on the Program by visiting mdm.ca/investing/md-exo-direct.

As part of the MD ExO Direct Program:

An Investment Policy Statement is developed for you after you complete the Risk profile questionnaire and other necessary “know your client” (KYC) forms as part of the online account opening associated with the Program. These documents will provide us with a detailed understanding of your goals and your personal and financial circumstances and the purpose of your portfolio, as well as any constraints or unique circumstances.
Your Investment Policy Statement is an important part of your Account. Its purpose is to establish and define the investment parameters of our relationship with you. Our goal is to work with you to determine your investment objectives, and to achieve them by providing professional advice based on a well-reasoned and realistic set of investment policies.
We will follow a portfolio strategy specific to you and diversified across asset classes, investment styles and geographic regions in managing your Account.
Investments in specific MD mutual funds will be made for your Account in accordance with your Investment Policy Statement and portfolio strategy. Those mutual funds will be certain mutual funds managed by our affiliate, MD Financial Management Inc., and advised on by another affiliate, 1832 Asset Management LP. You will invest in a separate series of these mutual funds, known as Series F2, which are available only to MD ExO Direct Account holders. Cash balances in your Account will be invested according to your Investment Policy Statement once the total cash balance exceeds $25. Your investments will be redeemable without restrictions.

Changes to your Investment Policy Statement may be made as your goals evolve and your personal and financial circumstances change. Your investments will be changed for you automatically if your Investment Policy Statement changes.

We may, in the future, decide to fulfil your Investment Policy Statement and portfolio strategy using a range of other investment products, including:

cash and equivalents
fixed income and debt securities
equities
exchange-traded funds
investment funds managed by entities other than MD Financial Management Inc.

We will offer new services and products as they are developed. You can find out about new offerings, and whether they are appropriate for you, by speaking with the MD ExO Direct team at 1 800 267-2332 or by emailing them at mdexodirect@md.ca, visiting our website (md.ca) or reading information included with your statements or in other communications.

Opening your MD ExO Direct Account

You will be asked to complete, online, our Risk profile questionnaire and our new Account application (sometimes referred to as a KYC form), both of which will allow us to understand your personal and financial circumstances and your investment goals. Understanding these circumstances and your goals allows us to develop your Investment Policy Statement and recommend a portfolio strategy. Your Investment Policy Statement will be based on our assessment that the proposed investment strategy is suitable for you according to your personal and financial circumstances, your investment needs and your goals.

The factors that guide us in our decision as to an appropriate Investment Policy Statement and investment strategy include what we understand to be your current:

Personal circumstances: We will consider your date of birth, civil status or family situation, number of dependants, employment status and occupation, and other personal circumstances as part of our recommendation.
Financial situation: What financial assets (deposits, investments) and liabilities (debt, mortgage) you have and the sources and amount of your income. We will consider the overall value of your net financial assets (assets minus liabilities) as part of our recommendation.
Investment knowledge and experience: Whether you consider yourself, or we understand you to be, a novice investor, an investor with some knowledge and experience, or an investor who understands some of the new, more complex financial products and has experience investing in such products.
Investment objectives: What you tell us are your specific financial goals. This will help us determine how to balance the desire to keep your money safe (not lose principal), earn income and increase your capital through growth in the market value of the holdings in your Account.
Time horizon: When you expect to need your financial assets — for example, to buy a house, pay for education or enter retirement, and the length of time that you expect to fund your retirement. In retirement, this may also include consideration of tax requirements to withdraw minimum amounts.
Risk profile: We consider both your capacity for taking on risk by objectively reviewing your personal and financial situation and time horizon, among other factors, and your risk tolerance.
Tolerance to risk of loss: Risk tolerance is an important factor making up your risk profile. Risk tolerance means whether, even if you have many years to earn and save, you feel comfortable with the possibility of experiencing a decline in the market value of your investments in some years.
Risk capacity: How much risk you can comfortably take on given your personal and financial circumstances. This takes into consideration your investment time horizon, income and cash flow needs.
Investment portfolio composition and risk level: How the purchase or sale of particular securities affects holdings in your Account(s) in terms of allocation of holdings between debt, equity and other classes, and the riskiness of the assets held.

Our understanding of your profile is critical. Some of the above factors are relatively easily summed up with a “yes” or “no” or an assigned number (within a range). However, some are more complex, particularly your risk profile (risk tolerance and risk capacity). A combination of these factors that make up your profile will help us suggest the Investment Policy Statement and portfolio strategy that is suitable for you and puts your interests first.

We will also ask you to provide us with the name and contact information of a trusted contact person, who is an individual we may contact in accordance with your written consent. You may appoint a trusted contact person, decline to appoint a trusted contact person, or revoke or change a previously appointed trusted contact person, by completing a Trusted Contact Person (TCP) – Consent Form. We may contact your trusted contact person and/or disclose information about you or your Account to your trusted contact person in one or more of the following circumstances:

If we are concerned about your possible financial exploitation. Financial exploitation means the use or control of, or deprivation of the use or control of, a financial asset of an individual by a person or company through undue influence, unlawful conduct or another wrongful act.
If we are concerned about your mental capacity as it relates to your ability to make decisions involving financial matters.
To obtain the name and contact information of your legal representative, if any.
To obtain your contact information, if we are unable to communicate with you using the information we have on file.

When you provide us with a name of a trusted contact person, you confirm to us that you have the consent of that person to provide us with their name and contact information and that the person knows you are naming them as your trusted contact.

You will receive a username and set up a password as part of the My MD online registration prior to opening an Account. If, during your account opening process, we identify any concerns, we will call you to discuss them with you. Otherwise, we will simply open your Account. Once your Account has been opened, we will be available to answer questions and we encourage you to keep your profile up to date so we can be sure that your Investment Policy Statement and investment strategy remain suitable for you. It is our responsibility, as discretionary manager of your Account, to ensure your investments remain suitable for you on an ongoing basis.

It is your responsibility to notify us whenever there is a significant change in your personal or financial circumstances so that we can update this information. We will also reach out to you periodically to remind you to notify us if there have been any significant changes to your profile. We also endeavour to review your profile information and the suitability of your account with you on an annual basis.

We will provide you with a copy of the information that we collect from you at the time your Account is opened and anytime you notify us of a significant change to this information. We will ask you to confirm this information at such times.

Given the long-term nature of investing for most clients, significant market fluctuations will not lead us necessarily to recommend changes to your Investment Policy Statement or your investment strategy. Our investment professionals will be ready to discuss the effect of market fluctuations on your portfolio with you when you request such a discussion. We encourage you to speak with our investment professionals, especially if you expect to need to convert your assets to cash in the near future (for example, for a major purchase such as a house), if you want to change your time of retirement or in the case of other significant changes to your investing profile.

A copy of your Managed account agreement, your Investment Policy Statement and your Risk profile questionnaire (and any updates you make to your profile), as well as other information about your Account, will be available for you at all times through your online secure portal that is an integral part of MD ExO Direct.

Fees

As part of the MD ExO Direct Program, you will be charged a managed account fee (the Managed Account Fee) which will cover services such as advice and administrative costs associated with your Account. The Managed Account Fee will be disclosed to you before you agree to open your Account. The Managed Account Fee will be based on the total combined market value of your Accounts, calculated upon the average monthly market value of your Account, and is payable monthly (through deductions from your Account). We will keep a portion of your Account in cash so that the Managed Account Fee can be deducted when due. We reserve the right to pay you interest on any cash in your Account; interest, if payable, will be calculated based on the current Bank of Canada prime rate less a specified factor. Please contact MD Exo Direct at 1 800 267-2332 for current rates. The MD Family of mutual funds in which you will be invested also pay a management fee to MD Financial Management, as manager of those funds.

Your Managed Account Fees and the fees payable by the above-noted mutual funds in which you are invested are set out in the Fee Schedule to your Account Agreement.

You should recognize that each mutual fund pays a management fee to its manager (MD Financial Management Inc. in the case of the mutual funds managed by MD Financial Management Inc., known as the MD Funds and the MDPIM Pools) as compensation for the management and other services provided by the manager to the specific fund. Each mutual fund also pays other operating charges, which, when combined with the management fees paid by the mutual fund equals the management expense ratio for the fund.

You should note that every dollar taken out to cover fees is one dollar less to invest in your account. The impact of these fees compounds over time as a deduction to the overall value of your account, and over larger periods of time, this impact increases. Your MD Advisor^* can answer any questions you may have about the fees and expenses payable by each mutual fund in which you invest.

We will provide you with at least 60 days’ written notice of any new fee or change in charges in connection with your Account. We will provide you with an annual fee and compensation report that will provide a summary of all fees and charges paid to MD or any of its affiliates, including both the Managed Account Fee and Investment Management Fee referred to above.

You also may be subject to other costs relating to services that you use that are not our service offerings. For example, there may be charges levied by third parties (e.g., your bank) for services that help you save more quickly and securely, such as for pre-authorized transfers. There may be registered plan costs and penalties related to the early withdrawal from certain registered accounts.

Other account reporting

You will receive account statements from us on at least the following basis: monthly, if we have initiated a transaction in your account or we have modified the balance of securities or cash in your account, unless the entries refer to dividends or interest; otherwise, quarterly, at the end of the quarter. Your quarterly account statement will confirm all activity in your Account, including purchases and sales of securities, contributions and withdrawals, dividends, interest earned and paid, transfers and any other transactions that occurred in your Account over the previous period. These statements also list your current holdings, your book cost, and the net value of your portfolio as of the date on the statement.

As we have discretionary authority over your Account, MD will not provide you with separate trade confirmations, unless you ask us to provide these to you.

Please note: We do our utmost to avoid errors; however, misunderstandings and mistakes can happen. Please let us know within 45 days if you see any transactions that appear unusual or if you identify any errors.

We will also provide you with information about your return on your investments over various periods. Account percentage return information will be available through your secure online account and on your annual performance reports. The performance of your Account will be displayed using a money-weighted rate of return, and we will include charts to outline your net deposits/withdrawals and the change in market value of your Account. Please note that you may earn more or less than others have on the same investments or that you may read in market commentary due to differences in when you set up your Account and when your investments are made.

You may assess the performance of your Account by comparing it with an investment performance benchmark. Investment performance benchmarks illustrate the performance over time of a select group of securities. There are many different benchmarks, and if you are interested in comparing your investment performance with a benchmark, it will be important to select one that is comparable to the investments you hold. We do not provide benchmark comparisons in our account reporting. Please speak to the MD ExO Direct Team at 1 800 267-2332 if you have any questions about the performance of your account.

Temporary hold

We may place a temporary hold on the purchase or sale of a security on your behalf or on the withdrawal or transfer of cash or securities from your Account, where we reasonably believe one or more of the following:

You might have an illness, impairment, disability or aging-process limitation that places you at risk of financial exploitation, and your financial exploitation has occurred, is occurring, has been attempted or will be attempted.
You do not have the mental capacity to make decisions involving financial matters.

If we place a temporary hold on your Account in either of these situations, a notice of the temporary hold and the reasons for the temporary hold will be provided to you as soon as possible after we place the temporary hold. Unless the hold is revoked, we will provide you with a notice of the decision to continue the hold and the reasons for that decision, within 30 days of our placing the temporary hold and within every subsequent 30-day period. We may also contact your trusted contact person in these circumstances.

Conflicts of interest

Actual, potential and perceived conflicts of interest arise where an action or decision by someone has the effect of benefiting an individual or a group of people at the expense of others. Such conflicts exist in almost all human interactions and will arise from time to time:

between you and our firm, as well as between you and our investment professionals who monitor your Account and interact with you.
between you and our other clients: we act for many clients, offering different types of accounts and must allocate investment opportunities among all of them fairly, so as not to favour intentionally one client over another.
between us, you and our related or associated companies.

Canadian securities laws require us to take reasonable steps to identify and respond to material conflicts of interest in your best interest. We are also required to tell you about them, including how the conflicts might impact you and how we address them in your best interest.

We have policies and procedures in place to address material conflicts of interest in your best interest.

To help you assess actual and potential conflicts of interest, we have prepared a more detailed explanation of our material conflicts and how we manage them in your best interest. To find out more, please review the MD Conflicts of interest disclosure that accompanies this Relationship Disclosure.

Qualification to open an MD ExO Direct account

Qualified Investors include Canada’s physicians and non-physician employees of provincial and territorial medical associations and certain other qualified associations, and their immediate families. For further details, please contact your MD ExO Direct Team or MD Client Services at 1 800 267-2332.

Registered plans

The following account types are available for the MD ExO Direct Program:

an individual registered retirement savings plan (RRSP) account, an individual locked-in RRSP or locked-in retirement (LIRA) account, an individual registered retirement income fund (RRIF) account
a registered education savings plan (RESP) account
a spousal RRSP account and a spousal RRIF account
a tax-free savings account (TFSA)

If you are opening a registered retirement savings plan (RRSP) for contributions to your RRSP before the transfer to your RRIF, you are the account holder and all investment instructions must be given by you. You must also complete a Retirement Savings Plan Application.

If you are opening a RRIF, you must also complete a Retirement Income Fund Application.

If you are opening an RESP, you must also complete an Educational Savings Plan Application.

If you are opening a TFSA, you must also complete a Tax-Free Savings Account Application.

All registered plans for MD ExO Direct are opened by our carrying broker, Fidelity Clearing Canada. Your signature on the applicable forms authorizes Fidelity Clearing Canada to set up and register your plan in accordance with your instructions and with the Declaration of Trust in the registered plan application.

Payments to third parties

Except where legal requirements demand it, we will not accept any new instructions to make payments to anyone other than the individual(s) or entity(ies) whose name(s) appear(s) on the Account.

Pre-authorized contributions

A pre-authorized contribution (PAC) plan can be established by completing a PAC authorization form and be used to make regular contributions to your Account. With a PAC, your bank account will be debited automatically on the day of the contribution.

If you have authorized us to electronically debit or credit your bank account, which includes starting a PAC, you warrant that everyone who has signing authority on your account has signed the application to authorize withdrawals from, and deposits to, the account. By giving us this authorization, you have also, in effect, given authorization to the financial institution indicated on the application. You may revoke this authorization at any time. In doing so, you must inform us, in writing, a minimum of 10 business days prior to the date you want to terminate your PAC or terminate your authorization to electronically debit or credit your bank account.

Your financial institution may need longer notice before the termination can take effect.

If you revoke this authorization, it has no bearing on any existing contract for goods or services between you and us. Your authorization applies only to the method of payment.

You are solely responsible for any service fees your bank may charge for electronic debit or credit operations.

You must inform us, in writing, of any change in the bank account information provided in this authorization, a minimum of 15 business days prior to the next pre-authorized withdrawal date. Your financial institution may require longer notice before the changes take effect. Your financial institution is not required to ensure that withdrawals are made according to the particulars of this authorization, including the amount or frequency of payments. You acknowledge that your financial institution is not required to verify that we are fulfilling any particular purpose with these pre-authorized payments as a condition toward honouring a pre-authorized withdrawal issued or caused to be issued by us on your account.

A pre-authorized debit may be disputed if:

an authorization was never provided to us;
the debit was not made according to this authorization; e.g., if we failed to provide prior notification in case of variable amounts; or
the debit was posted to the wrong account because we supplied invalid or incorrect information.

If you want to be reimbursed, you must, up to 90 days after the item in dispute was posted to your account, present to your financial institution (as indicated in your application) a signed declaration that a), b) or c) took place. Your financial institution will immediately reimburse the amount to you.

If it is after 90 days, you agree that a claim on the basis that this authorization was revoked, or for any other reason, must be resolved solely between you and us.

A bank account includes an account opened to deposit and withdraw money with a member of Payments Canada.

Systematic withdrawal plans

You can set up a systematic withdrawal plan (SWP), under which withdrawals from your Account are made on a regular basis, to provide you with an income. The following terms and conditions apply:

You must complete the SWP form required to set up the SWP. Proceeds will generally be transferred to your bank account within two business days of the settlement of the redemption.

If you have not indicated a termination date on the SWP form, the SWP will remain in effect until the holdings in your account are depleted. You can change your SWP at any time by emailing mdexodirect@md.ca, phoning 1 800 267-2332 or clicking to chat online.

To obtain more information about your right to cancel, or your recourse rights, such as the right to receive reimbursement for any debit that is not authorized or is inconsistent with the terms of this form related to PACs or systematic withdrawal plans (SWPs), please contact your MD ExO Direct team at 1 800 267-2332, or visit the Payments Canada website at https://payments.ca.

MD Management’s relationship with Fidelity Clearing Canada

MD Management has appointed Fidelity Clearing Canada as its carrying broker (and our agent) for trading, clearing and settlement for transactions conducted by MD Management in your Account.

We will update this Relationship disclosure document when there are material changes to it by posting the updates to your secure portal on our website.

If you later have any questions related to the contents of this document, or need to change your account information, please contact us by following the instructions on your online portal.

Complaints

At MD Management, we pride ourselves on the quality of the products and service we deliver to our members. However, instances may arise where there are problems with your Account or your requests. When a problem occurs, the earlier you contact us, the faster we can begin working on a solution. In order to facilitate resolving your concern, we recommend you follow these suggestions:

Gather all supporting documents and relevant information regarding your concern.
Pay special attention to the dates of the occurrence and the names of the employees involved.
Clearly define what action you would like us to take.
Please keep in mind that requests that you wish us to formally address or correct must be in writing.

If you are having difficulty finding the appropriate person or company you should be addressing your concern to or need further information to contact the individual, you can contact MD Client Services for assistance at 1 800 267-2332.

MD complaints procedures

Our goal is to be able to resolve all client issues and concerns through our own internal escalation processes. However, should a situation not be resolved to your satisfaction through those means, you can refer the matter to the Customer Complaints Appeals Office for review. Should the situation still not be resolved to your satisfaction, we have also included information for external dispute resolution resources.

Please let us know when we have not met your expectations so that we can improve our products and services to meet your needs.

For any complaints, please contact MD Client Services for assistance at 1 800 267-2332.

You can also contact:

Mr. James Rudderham
Designated Complaints Officer
MD Management Limited
1870 Alta Vista Dr., Ottawa ON K1G 6R7
1 800 267-4022 ext. 1291

If a situation is not resolved to your satisfaction, you can contact:

Customer Complaints Appeals Office
44 King St. W., Toronto ON M5H 1H1
Tel: 1 800 785-8772 | Fax: 1 866 787-7061
ccao@scotiabank.com

If you are still not satisfied, you can contact one of the external complaint resolution resources listed below.

You should deliver your complaint to us as soon as possible. We will acknowledge your complaint, in writing, typically within five business days of receiving your complaint. We may ask you to provide clarification or more information to help us fully understand your complaint. Please reply promptly if we ask you for more information.

We will normally be able to provide our decision for addressing your complaint within 90 days after receipt of your complaint. We will provide a summary of the complaint, the results of our investigation and our decision to either offer to resolve or deny the complaint, along with an explanation. If we need more time to consider your complaint, we will send you an explanation and provide a new date for providing our decision.

You may be eligible for the Ombudsman for Banking Services and Investments’ (OBSI’s) free and independent dispute resolution service (or, if you are a Quebec resident, you may consider the free mediation service offered by the Autorité des marchés financiers). You are eligible for OBSI’s service if (1) your complaint relates to an advisory activity of our firm or one of our representatives; (2) you bring your complaint to us within six years from the day that you first knew, or ought to have known, about the act or omission that caused or contributed to your complaint; (3) either (a) we do not provide you with our decision within 90 days after you made your complaint and you thereafter notify OBSI that you wish to have OBSI consider your complaint, or, (b) you are not satisfied with our decision and you file your complaint with OBSI within 180 days after we provided you with the decision; and (4) your claim does not exceed $350,000.

Keep in mind that OBSI’s dispute resolution service does not restrict your ability to take your complaint to a dispute resolution service of your choosing at your own expense.

Furthermore, you always have the right to seek independent legal advice at your own expense. However, there are time limits for legal action so delays could limit your options and legal rights.

To file a complaint with OBSI, you can either call them at 1 888 451-4519 or 416-287-2877 in Toronto, or email them at ombudsman@obsi.ca. OBSI works confidentially and in an informal manner. It is not like going to court, and you do not need a lawyer. During its investigation, OBSI may interview you and representatives of our firm. We are required to cooperate in OBSI's investigations. Once OBSI has completed its investigation, it will provide its recommendations to you and us. OBSI’s recommendations are not binding on you or us. OBSI can recommend compensation of up to $350,000. If your claim is higher, you will have to agree to that limit on any compensation you seek through OBSI. If you want to recover more than $350,000, you may want to consider another option, such as legal action as noted above, to resolve your complaint.

For more information about OBSI, visit www.obsi.ca.

Canadian Investment Regulatory Organization (CIRO)
Suite 2000, 121 King St. W.
Toronto ON M5H 3T9
1 877 442-4322

Ombudsman for Banking Services and Investments (OBSI)
P.O. Box 896, Station Adelaide
Toronto ON M5C 2K3
1 888 451-4519

Quebec residents (additional external complaint resolution resources)
Autorité des marchés financiers (AMF)
Place de la Cité Tour Cominar 2640, Laurier Boulevard, bureau 400
Québec (Québec) G1V 5C1
1 418 525-0337 | www.lautorite.qc.ca

Privacy-related concerns
Chief Privacy Officer
MD Management Limited
1870 Alta Vista Dr., Ottawa ON K1G 6R7
1 800 267-4022 privacy-md@md.ca

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec).

MD ExO® is a trademark of The Bank of Nova Scotia, used under licence.

MD ExO® Direct is an investment solution brought to you by MD Management Limited.

MD Management Limited – Member – Canadian Investor Protection Fund

MD Exo® Direct Relationship disclosure