Statement of Policies

Tower Asset Management Inc. (Tower) has been registered as an Investment Counselor & Portfolio Manager (an advisor) with the Ontario Securities Commission (OSC) since 2003. In December 2005, Tower purchased Alexander Gluskin Investments Inc. (AGII) and, as a consequence of that transaction, applied for and obtained registration with the OSC as a Limited Market Dealer (a dealer) and as Trustee on the Funds it offers to Qualified Investors.

The OSC believes that any company registered both as an adviser and a dealer may be subject to conflict of interest. In the case of Tower, the conflict arises when Tower advises its client to purchase the units of its funds because Tower receives financial compensation for managing these funds. As adviser, Tower must select the investments that it believes are best suited for the clients' needs and objectives. Tower believes that this conflict of interest is mitigated by the fact that it does not offer clients any investments other than its funds. However, Tower does not offer a broad selection of funds with which to satisfy the needs and appetites of all investors.

Another type of conflict of interest arises due to the fact that different funds offered by Tower pay management and performance fees at different rates. This may influence Tower to recommend the funds that pay higher fees instead of those that pay lower fees, which may be more appropriate for the client's needs. Furthermore, more promising investment opportunities may be allocated to the pooled funds paying the highest level of fees.

In order to minimize such conflicts of interest, the OSC requires every company registered both as a dealer and an adviser to adopt appropriate policies and procedures. It also requires such companies to disclose to clients in writing, before placing the first trade or providing advice, the details of their registration and the policies and procedures adopted to minimize the potential for conflict of interest.

Policies and Procedures to Minimize
Conflicts of Interest

To the best of its ability, Tower will ensure that it recommends to its clients only such funds that are appropriate relative to the client's financial position, financial objectives and risk tolerance, based on the information provided to Tower by the client.

Tower will further ensure that all investment opportunities are allocated to those funds for which they are appropriate on a fair and equitable basis.

Tower and its employees have no trading or personal accounts that could conflict with the interests of the Tower family of funds.

Tower and its employees have material investments in the funds, thereby aligning their interests directly with those of their clients.

Tower and its employees pay fees equal to those of their clients and participate in the returns of the funds on an identical basis with their clients.

At present, Tower's activities as a Limited Market Dealer are restricted to offering the units of the Tower pooled funds. The only compensation Tower receives is through management and performance fees on its funds as a portfolio advisor.

Voting of Proxies

In principle, Tower does not vote the proxies for the companies whose securities it owns.

It is the policy of Tower to sell the securities of the companies whose management decisions or practices it considers materially conflicting with the best interests of the shareholders or bondholders (investors). At times, Tower may vote proxies when hoping to influence management in favour of investors. If the outcome of that vote is unfavourable to investors, or the implementation of the investors' decision is not immediately forthcoming, Tower will sell the securities of the company.

The rationale for this policy is the following. Voting the proxies does not guarantee the outcome desired or preferred by Tower. Thus the decisions with which Tower disagrees may still be implemented by the corporate management on the basis of a majority vote, or their interpretation of a vote that they find unfavourable. By contrast, the sale of the securities provides a full guarantee that the decisions that may unfavourably affect the investors in the corporation in question would not have any impact on the clients of Tower.