Desjardins Securities Inc. is the brokerage firm of Desjardins Group.

Desjardins Securities offers a wide range of products and services to individuals, businesses and institutional investors through its full service brokerage, online brokerage (under the name “Disnat, a division of Desjardins Securities), corporate financing, research, institutional sales, fixed income, and market maker divisions.

As an investment dealer, Desjardins Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada (IIROC), which operates under Recognition Orders from the Canadian Securities Administrators (Canada’s provincial and territorial securities regulators, e.g. the Autorité des marchés financiers - AMF - in Quebec and the Ontario Securities Commission).

For more information on the regulation of investment dealers, visit the “Investors” section of the IIROC website at brochure “www.iiroc.ca. You can also ask a Desjardins Securities representative for the Why IIROC Matters to You, the Investor.”

Desjardins Securities scrupulously complies with the regulations governing its activities. The primary objectives of these regulations are to protect clients and preserve financial market integrity.

It is important to Desjardins Securities that its clients be informed of existing or potential conflicts of interest which could arise in the course of its activities. A conflict of interest arises when the interests of different persons, e.g. those of a client and those of Desjardins Securities or one of its representatives (directors, officers, partners, employees, agents) are incompatible or divergent.

Desjardins Securities takes reasonable measures to identify any material conflicts of interest that exist or that it can reasonably expect to arise. It assesses the level of risk associated with each conflict and avoids any circumstances that involve a serious conflict of interest and any situation that may materially compromise market integrity. In any other conflict of interest situation, Desjardins Securities ensures that appropriate measures are put in place to effectively control the conflict.

The activities of Desjardins Securities and its representatives are governed by a Code of Ethics and Conduct and by a Compliance Handbook

Desjardins Securities hereby informs you of the nature and scope of the conflicts of interest that could affect the services it offers you.

Issuers related or connected to Desjardins Securities

As mentioned above, Desjardins Securities is a wholly owned subsidiary of the Fédération des caisses Desjardins du Québec. The entities listed below may be considered issuers related or connected to Desjardins Securities:

The list of these issuers related or connected to Desjardins Securities is updated on this website.

As part of its business activities, Desjardins Securities may buy or sell the securities of such issuers on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities. Desjardins Securities shall do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.

Desjardins Securities may also, as part of its business activities, be called upon to act as an underwriter or as a member of a selling group for the sale of the securities of such issuers. Its other divisions may at the same time recommend such securities.  Desjardins Securities shall do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.

Issuers unrelated to Desjardins Securities

Conflicts may also arise in the relationships between Desjardins Securities and other issuers that are neither related nor connected to it, for example, trusts, partnerships, special purpose vehicles, or conduits that issue asset-backed commercial paper.
In such a situation, the practices and procedures in force and in accordance with regulations will be applied.

Other companies related to Desjardins Securities

Desjardins Group
The complete organization chart of the companies belonging to Desjardins Group is available on the Internet at: http://www.desjardins.com/en/a_propos/qui-nous-sommes/organigramme/.

Desjardins Securities Financial Services Inc.
Desjardins Securities incorporated a wholly owned subsidiary, Desjardins Securities Financial Services Inc. (SFVMD), which is registered with the Autorité des marchés financiers (AMF) as a financial services firm and with the Financial Services Commission of Ontario (FSCO) as an insurance agency, so that some of its representatives can distribute life and health insurance.

Alpha Trading Systems Inc.
Alpha Trading Systems Limited Partnership (Alpha) is a marketplace in Canada for the trading of securities.

Desjardins Securities Inc. is a limited partner of Alpha Trading Systems Limited Partnership (registered as Alpha ATS L.P.) and a shareholder of Alpha Trading Systems Inc. (the general partner of Alpha Trading Systems Limited Partnership). The ownership interest of Desjardins Securities Inc. and certain other limited partners of Alpha is subject to a re-determination agreement which provides that the ownership interest of certain limited partners (including Desjardins Securities Inc.) will be adjusted on the first and second anniversary date of the launch of Alpha based on the market share of trades executed by the limited partner on Alpha.

Desjardins Securities Inc. may execute trades on your behalf on Alpha and may enter orders which are not immediately tradable into Alpha’s order book. Notwithstanding the ownership interest of Desjardins Securities Inc. in Alpha or any of its rights under the re-determination agreement referred to above, Desjardins Securities Inc. is subject to a number of regulatory obligations, including the requirement to diligently pursue best price and best execution of each client order on the marketplace, obligations which override any interest of Desjardins Inc. in Alpha.

Market Perspectives Inc.
Market Perspectives Inc., a wholly owned subsidiary of Desjardins Securities, is a company that works in the field of training intended for new investors.

Desjardins Securities / BODIAM Inc.
Desjardins Securities partnered with Bodiam Financial Inc. to create an entity in which each has a 50% stake. Its sector of activity is structured financing and asset-backed securities (securitization).

Desjardins Securities International Inc. (VMDI)
VMDI is a wholly owned subsidiary of Desjardins Securities. VMDI operates as a broker/dealer for American institutional clients in 30 jurisdictions in the United States and is registered with the Financial Industry Regulatory Authority, the Securities and Exchange Commission, and the Securities Investor Protection Corporation.

Activities of Desjardins Securities

As part of its business activities, Desjardins Securities may act in various capacities in respect of an issuer.

Desjardins Securities may, for a fee, act as a corporate financing advisor, an underwriter, or a member of a selling group in respect of issuers.

Desjardins Securities may express opinions or issue research reports with recommendations on issuers.

Desjardins Securities may buy or sell the securities of an issuer on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities.

Such securities may on occasion be owned or traded by Desjardins Securities and its representatives.

Desjardins Securities may act as a market maker.

Desjardins Securities has put in place all appropriate measures to effectively control existing or potential conflicts of interest that may arise in the course of its activities. The relationships between the different divisions of Desjardins Securities are subject to specific and effective policies and procedures, which are based on the regulations in force.

The activities of the research division of Desjardins Securities, which expresses opinions and issues research reports with recommendations on issuers, are subject to policies on disclosure of potential conflicts of interest. The complete list of company-specific disclosures may be consulted on the Internet at:
http://www.desjardins-securities.ca/Disclosures/English.aspx

Desjardins Securities is called upon to act as a dealer or as an agent when it buys or sells for or on behalf of its clients.

As part of the management of its clients’ discretionary accounts, Desjardins Securities may buy or sell or make recommendations in respect of:
(i) securities of an issuer which it or a person of its group owns;
(ii) securities for which it or a person of its group participates in the placement;
(iii) securities of a related or connected issuer;
(iv) securities of an issuer that has as an employee, agent, partner, director or officer an employee, agent, partner, director or officer of Desjardins Securities or of Desjardins.
Desjardins Securities will do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.
In the case described in point (iv) above, Desjardins Securities will not make any transaction involving such issuer, unless the client concerned has been informed of this fact beforehand and has expressly authorized such transaction in writing.

Desjardins Securities ensures that fair and reasonable policies exist and are implemented for the management of conflicts of interest specific to portfolio management activities, such as fair allocation of securities, soft-dollar payments, proxy voting, compensation and expense allocation practices, error correction, confidentiality of information, trade allocation and best execution.

Desjardins Securities representatives may, in the normal course of their duties, find themselves in situations where their personal interests conflict with those of one or more clients of Desjardins Securities.

Under the Code of Ethics and Conduct and the Compliance Handbook of Desjardins Securities, the interests of clients take precedence over those of Desjardins Securities and its representatives as a matter of basic principle.

The Code of Ethics and Conduct and the Compliance Handbook of Desjardins Securities set forth standards that guide the conduct of its representatives. These standards prohibit them from:

• using confidential information acquired in the course of or in connection with their duties, or exploiting a situation, for the purpose of obtaining an advantage of any kind;
• accepting or giving gifts, entertainment and compensation that could influence decisions to be taken in the course of performing their duties;
• engaging in outside activities that could interfere or conflict with their duties at Desjardins Securities;
• entering into financial transactions on a personal basis with clients of Desjardins Securities;
• giving trade orders which they know conflict with the interests of clients of Desjardins Securities;
• engaging in any activity or holding an interest in any business or participating in any partnership that may hinder or appear to hinder their independence of judgment in the best interest of clients of Desjardins Securities.

Desjardins Securities representatives must disclose to the clients concerned any conflict of interest and any personal interest in a security or other investment that can be expected to affect their capacity to advise them objectively and impartially.

Desjardins Securities representatives must disclose to their employer any situation that can be reasonably expected to hinder them in the performance of their duties or in their capacity to give objective and impartial advice.

Desjardins Securities ensures that its employee compensation practices are not inconsistent with its obligations to its clients.

Referral arrangements

In the course of its activities, Desjardins Securities has entered into fee-sharing agreements with the following business partners:

- member caisses of the Fédération des caisses Desjardins du Québec;
- member caisses of the Fédération des caisses populaires de l’Ontario;
- member caisses of the Fédération des caisses populaires acadiennes Ltée. (Services financiers Acadie Inc.).

These business partners are members of the same financial group, Desjardins Group.

According to the referral arrangements entered into between these business partners and Desjardins Securities, caisse employees may refer clients to Desjardins Securities, which will be able to offer them a discretionary portfolio management service. As mentioned above, Desjardins Securities is registered as a portfolio manager with IIROC.

In return for client referrals, these business partners receive, as intermediaries, compensation representing compensation based on the gross fees generated on each transaction made in a referred account, according to the following percentages:

In return for client referrals to the online brokerage division of Desjardins Securities, under the name “Disnat, a division of Desjardins Securities,” these business partners receive, as intermediaries, compensation based on the gross fees generated on each transaction made in a referred account, up to 30% in the first year following the opening of the account and up to 2% to 5% in subsequent years.

Other referral arrangements

Desjardins Securities may enter into arrangements whereby it pays or receives compensation for client referrals. The following information is communicated to the client in writing before the opening of the client’s account or, if the provision of services to the client by the person to whom the client is referred occurs earlier, before such provision of services:

• the name of each party to the referral arrangement;
• the purpose and material terms of the referral arrangement, including the nature of the services to be provided by each party;
• any conflicts of interest resulting from the relationship between the parties to the referral arrangement and from any other element of the referral arrangement;
• the method of calculating the referral fee and, to the extent possible, the amount of the fee;
• the category of registration of each registrant that is a party to the agreement, with a description of the activities that the registrant is authorized to engage in under that category and, giving consideration to the nature of the referral, the activities that the registrant is not permitted to engage in;
• if a referral is made to a registrant, a statement that all activity requiring registration resulting from the referral arrangement will be provided by the registrant receiving the referral;
• any other information that a reasonable client would consider important in evaluating the referral arrangement.

If there is a change to the information set out above, Desjardins Securities must ensure that written disclosure of that change is provided to each client affected by the change as soon as possible and no later than the 30th day before the date on which a referral fee is next paid or received.

This Statement of Principles on Conflicts of Interest will be updated if new conflict of interest situations arise. The most recent version of this Statement is available at all times on this website.

1. DESCRIPTION
   This policy from Desjardins Securities Inc. falls within the orientations and rules of the policy on protection of personal information established by the Desjardins Group to ensure the confidentiality and protection of all personal information collected, used or conveyed by the Desjardins Group and its components regarding their clients. Through this policy, Desjardins Securities and its subsidiaries wish to set rules that are particular to their area of activity.
   
   This policy explains how Desjardins Securities protects its clients’ personal information in the context of providing investment services. It also describes the principles applied and measures taken to protect its clients’ respective personal information in the exercise of its activities in Canada.



2. PURPOSE
   In addition to the fact that Desjardins Securities is concerned with respecting the law, it takes all matters related to protection of personal information very seriously, and it is committed to taking the necessary measures to ensure and preserve the accuracy, confidentiality, security and privacy of its clients’ personal information. Adoption of and compliance with a policy on the protection of personal information demonstrates this interest and should result in a greater sense of client confidence in Desjardins.



3. TERMINOLOGY
   For purposes of applying this policy, the following words and expressions shall mean:
   
   3.01 Collection: The act of gathering, acquiring or obtaining personal information from any source, including third parties, through whatever means.
   
   3.02 Desjardins Securities investment advisor: Designates such an investment advisor as well as an authorized representative of Disnat, the online brokerage division of Desjardins Securities.
   
   3.03 Consent: Willing agreement to what is done or suggested. Consent may be expressed or implicit. Expressed consent is given explicitly, either orally or in writing. Explicit consent is unequivocal and does not require the organization seeking a person’s consent to make any inferences. Implicit consent occurs when the actions or the inaction of a person provide reasonable grounds to deduce that there is consent.
   
   3.04 Components of the Desjardins Group: The Fédération des caisses Desjardins du Québec, its member caisses, the Caisse centrale Desjardins, any auxiliary member participating in the federation such as the Fédération des caisses populaires de l’Ontario ltée and its affiliated caisses, and any subsidiaries owned directly or indirectly by the Fédération des caisses Desjardins du Québec and its member caisses.
   
   3.05 Name list: A list of names, addresses or telephone numbers of physical persons, whether or not constituted from a common denominator.
   
   3.06 Direct marketing: Promotions targeting clients whose personal information reveals that an investment product or service is likely to interest them. Direct marketing includes telemarketing initiatives and mailings by post or e-mail but excludes regularly issued statements, inserts enclosed with statements, messages at Desjardins automatic teller machines, or advertising on electronic bulletin boards or websites.
   
   3.07 Client: A person who uses or intends to use a Desjardins Securities investment product or service.
   
   3.08 Desjardins Group: All components of the Desjardins Group taken collectively.
   
   3.09 Investment products and services: Encompass but are not limited to securities brokerage services, including online brokerage services, as well as investment management and financial planning services.
   
   3.10 Personal information: Any information in whatever form concerning an identifiable individual that this individual provides to Desjardins Securities or that has been generated by a component of the Desjardins Group or collected from a third party in compliance with this policy and applicable laws.
   
   3.11 Third party: An individual or organization other than a component of the Desjardins Group.



4. COLLECTION, USE AND COMMUNICATION
   
   4.01 Subject to requirements set out in applicable laws, Desjardins Securities collects, uses and conveys personal information on clients for the following purposes :
   
   

   a) respecting securities industry standards related to the “know your client” rule;
   
   b) understanding a client’s needs;
   
   c) appraising a client’s credit;
   
   d) taking security measures, if need be;
   
   e) determining if investment products and services to which clients subscribe in fact suit their needs;
   
   f) offering investment products and services that meet clients’ needs better;
   
   g) establishing and managing investment products and services to meet these needs;
   
   h) providing clients with current investment products and services;
   
   i) meeting the requirements of laws and regulations in general and of tax laws in particular, with the latter requiring mention of the social insurance number on tax slips prepared for purposes of applying the said laws, as well as of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act;
   
   j) meeting the requirements of foreign laws, where applicable;
   
   k) performing direct marketing activities.

   
   4.02 Desjardins Securities may use information related to a client’s deposits, credit, insurance products and other personal information it holds with respect to him/her, including how the client uses Desjardins Securities investment products and services, for the purpose of informing him/her further on the said Desjardins Securities investment products and services.
   
   4.03 Subject to legal or contractual restrictions and Article 8.01 of this policy, Desjardins Securities may share personal information on a client with other components of the Desjardins Group so as to be able to inform him/her directly on their financial products and services. This exchange of personal information will occur, however, only if the client has signed the Desjardins consent form and has read the accompanying leaflet entitled Desjardins consent: I benefit! To obtain copies of these documents, clients need only to contact Desjardins Securities or any other Desjardins Group component with which they deal.
   
   4.04 A client’s personal information may be passed on to Desjardins Securities agents or subcontractors, or to service providers, for services such as data entry, preparation or sending of statements, or processing of claims. In such circumstances, Desjardins Securities prohibits use of this information for purposes other than providing the service in question. These subcontractors and service providers must also agree to take all necessary measures to protect personal information when services are being provided. Where any agent, subcontractor or service provider is located abroad, Desjardins Securities demands contractual clauses related to protection of its clients’ personal information, though it remains subject to the constraints of foreign laws that could legally force the disclosure of this information.
   
   4.05 A client’s personal information may be passed on to self-regulatory organizations that regulate the firm’s activities, particularly in connection with market surveillance and monitoring of the activities of securities brokers.



5. CONSERVATION
   
   5.01 Desjardins Securities may, subject to applicable laws, conserve in its files a client’s personal information as long as required for the above-mentioned purposes, even if an individual ceases to be a client.



6. CONSENT
   
   6.01 Subject to exceptions found in or permitted by applicable laws, Desjardins Securities does not collect, use or pass on personal information on its clients for the purposes set out in Article 4 or for any other purpose except with each client’s prior consent. This consent is given by clients at various times when an investment service is provided, in particular in account opening applications and agreements with Desjardins Securities.
   
   6.02 If Desjardins Securities collects personal information from a third party or contacts it to verify or complete personal information, it does so, subject to applicable laws, only with the client’s prior consent.
   
   6.03 Except in the above-mentioned cases, each time Desjardins Securities passes on any information in compliance with this policy, it keeps in its records, where it is reasonable to do so, the nature of this information, the date on which it was sent and the identity of the third party or Desjardins Group component to which it was provided. Exceptions to this rule are personal information passed on for current operations, such as sending information to companies acting as proxies for Desjardins Securities, as well as the production of statements and other documents intended for Revenue Québec, the Canada Revenue Agency or their United States counterparts, and the updating of data with the authority concerned, or communications with third parties for non-sufficient-fund cheques.
   
   6.04 Subject to legal and contractual obligations, clients may refuse their consent for the collection, use or conveyance of their personal information or may withdraw consent at any time. If clients do not want Desjardins Securities to collect, use or convey their personal information for any purpose at all, they need only to contact their Desjardins Securities investment advisor or put a request in writing. If clients refuse or withdraw such consent, however, Desjardins Securities may not be able to provide or continue to provide them with certain products, services or information that is likely to interest them or that they have requested.



7. NAME LISTS
   
   7.01 Desjardins Securities may establish and pass on to third parties or to other components of the Desjardins Group name lists of its respective clients for purposes of commercial or philanthropic prospecting. Clients may at any time ask Desjardins Securities or other Desjardins Group components to strike them from such name lists.
   
   
8. DELETED INFORMATION
   
   8.01 Desjardins Securities may use and convey information on a client for purposes of statistical study, market analysis or segmentation, provided the client can in no way be identified and no link can be established between the client and the information used or conveyed.



9. ACCURACY OF INFORMATION
   
   9.01 Desjardins Securities makes every reasonable effort to ensure the updating, accuracy and integrity of personal information it holds on its clients. It is, however, the responsibility of each client to inform Desjardins Securities promptly of any change of name or address or of any other pertinent modification to be made to the personal information on the client.
   
   9.02 If a client believes that any personal information on him/her is inaccurate or erroneous, Desjardins Securities encourages the client to seek access to his/her file and check the accuracy of this information. This provides the opportunity to make any corrections or updates that may be required.



10. RIGHTS OF ACCESS AND CORRECTION
    
    10.01 Subject to applicable legal restrictions, a client may at any time ask to be informed of the existence, use or conveyance of his/her personal information. For a client to gain access to his/her own personal information, the client need only contact or write to his/her Desjardins Securities investment advisor. For security purposes, a client must provide proof of identity before gaining access to his/her personal information by demonstrating to the investment advisor a knowledge of particular personal information (date of birth, social insurance number, Desjardins Securities account number, personal identification number, etc.).
    
    10.02 Upon receiving a request for access, Desjardins Securities will convey to the client the information it holds on him/her within thirty (30) days of receiving the request, unless a further delay is granted in compliance with applicable laws as required. If fees are required for seeking information, the client is advised beforehand and may, if he/she wishes, withdraw the request or challenge whether the fees are reasonable.
    
    10.03 Any client with a sensory disability may have access, upon request to the Desjardins component with which he/she is dealing, to his/her personal information in a format enabling this information to be read or heard, if such a format is available. If such a format is not available, Desjardins Securities will convert the pertinent personal information into the required format if it is reasonable to do so.
    
    10.04 If a client’s request for access is denied, Desjardins Securities must, subject to applicable legislative restrictions, inform the client of the reasons for denying the request.



11. PROTECTIVE MEASURES
    
    11.01 Again with the aim of maintaining client confidence, Desjardins Securities has established measures to ensure and maintain the confidentiality, security and privacy of its clients’ personal information.
    
    11.02 Desjardins Securities employees must read this policy and agree to comply with it and to respect the privacy of personal information on clients.
    
    11.03 As mentioned above, subcontractors and service providers dealing with Desjardins Securities must agree to protect the confidentiality and privacy of personal information conveyed to them for purposes of the services they provide.
    
    11.04 Desjardins Securities has also established substantial security measures to protect its data systems. Only staff members authorized by Desjardins Securities have access to the internal installations where personal information is received, processed or conserved. Moreover, data systems and data handling procedures are subject to appropriate security measures such as passwords, data encryption, access controls to applications and databanks, firewalls, anti-virus systems and intrusion detection systems, continuously revised to guarantee the security of operations and the confidentiality of processed data.
    
    11.05 When Desjardins Securities considers that it no longer needs personal information for the purposes for which it was collected, it destroys or erases the information, subject to applicable laws and in compliance with Desjardins Securities’ policies on conservation and internal destruction.



12. QUESTIONS/COMPLAINTS/RECOURSE
    
    12.01 Clients must address Desjardins Securities directly with any question, suggestion, dissatisfaction or comment they consider important. More particularly, Desjardins Securities has designated a person in charge of answering questions from clients regarding any of their personal information that Desjardins Securities may hold or concerning the firm’s compliance with this policy. This person is also in charge of informing clients of the settlement procedure for applicable complaints.
    
    12.02 If a client is not satisfied with results obtained from Desjardins Securities or, as a final recourse, from the Desjardins Group ombudsman, he/she may contact the government authority responsible for the protection of personal information in his/her place of residence.



13. MODIFICATIONS TO THIS POLICY
    
    13.01 VMD se réserve le droit de modifier la présente politique en tout temps. Les nouvelles versions de la politique seront affichées sur le site Web : http://www1.vmd.ca/corpo/index2.htm et seront disponibles sur demande auprès de VMD. VMD encourage ses clients à consulter régulièrement son site Web afin qu’ils soient au courant, en tout temps, de la plus récente version de cette politique.



14. ADMINISTRATION OF THIS POLICY
    
    14.01 The measures in the Desjardins Securities Policy take precedence over those in any other general or special policy that may contradict them, unless such a policy states specifically that it applies despite the Desjardins Securities Policy.

This Information Statement is being provided as required by securities regulatory authorities in Canada to describe certain attributes of “strip bonds” and “strip bond packages”.

STRIP BONDS AND STRIP BOND PACKAGES

In this Information Statement, the term “strip bond” refers to an interest in (i) the amount payable on account of principal, and/or (ii) an amount payable on account of interest, in respect of “Underlying Bonds”. Underlying Bonds are certain government bonds which can be traded pursuant to an exemption from the registration and prospectus requirements of applicable securities legislation. For a trade in bonds not expressly exempted by the applicable securities legislation, an order or other form of acknowledgment may be sought from the applicable securities commission to proceed without complying with registration and prospectus requirements.

The following is a summary of certain government bonds which can be traded pursuant to an exemption from the registration and prospectus requirements of applicable securities legislation in particular provinces or territories (or in the case of the Yukon Territory, from the prospectus requirements only).

Canada, Provincial and Territorial Bonds

• In all provinces and territories, bonds issued or guaranteed by the Government of Canada or a province of Canada.


• In Alberta, British Columbia, New Brunswick, Nova Scotia, Newfoundland, Ontario, Prince Edward Island, Saskatchewan, the Northwest Territories, Nunavut and the Yukon Territory, bonds issued or guaranteed by a government of a territory in Canada.

Foreign Country Bonds

• In Alberta, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon Territory, bonds issued or guaranteed by the government of any foreign country or a political division thereof.


• In British Columbia and Saskatchewan, bonds issued or guaranteed by the Government of the United Kingdom, the Government of the United States of America, a state or territory of the United States of America, or the District of Columbia in the United States of America.
  
  
• In Manitoba, bonds issued or guaranteed by the Government of the United States of America or the Government of the United Kingdom.

A strip bond entitles the holder to a single payment of a fixed amount in the future without the payment of any interest in the interim. The purchase price or present value of a strip bond is determined by discounting the amount of the payment to be received on the payment or maturity date of the strip bond by the appropriate interest rate or yield factor. Strip bonds are therefore different from conventional interest-bearing debt securities and purchasers of strip bonds should be aware of the special attributes of strip bonds as described in this Information Statement. Strip bonds may be purchased in various different forms as described below under “Custodial Arrangements”.

In this Information Statement the terms “strip bond packages” refer to a security comprised of two or more strip bonds which are combined to make up a “bond-like” strip bond packages or an “annuity-like” strip bond packages. A bond-like strip bond package consists of a lump-sum payable at maturity, which is backed by an interest in a strip bond payable in respect of one or more Underlying Bonds, together with one or more interests in other strip bonds (usually interest payments) related to one or more Underlying Bonds, thereby creating an instrument that resembles, in its payment characteristics, a conventional bond. An annuity-like strip bond package differs from a bond-like strip bond package only to the extent that it does not include a lump-sum payment at maturity. Strip bond packages may be purchased in the form of several separate strip bonds or as one security in one of the forms described below under “Custodial Arrangements”.

PRICE VOLATILITY

As with conventional interest-bearing debt securities, the market price of strip bonds and strip bond packages will fluctuate with prevailing interest rates. Generally, the market price of conventional interest-bearing debt securities and of strip bonds and strip bond packages will fluctuate in the same direction: when prevailing interest rates rise above the yield of these instruments, their market price will tend to fall; conversely, when prevailing interest rates fall below the yield of these instruments, their market price will tend to rise.

However, the market price of a strip bond will be significantly more volatile than the price of a conventional interest-bearing debt security with the same credit risk and term to maturity. When prevailing interest rates rise, the market price of a strip bond will tend to fall to a greater degree than the market price of a conventional interest-bearing debt security with the same credit risk and term to maturity. Conversely, when prevailing interest rates fall, the market price of a strip bond will tend to rise to a greater degree than the market price of a conventional interest-bearing debt security with the same credit risk and term to maturity. The primary reason for such volatility is the fact that no interest is paid in respect of a strip bond prior to its maturity. There is, therefore, no opportunity to reinvest interest payments at prevailing rates of interest prior to maturity.

The table above compares changes in the prices of conventional interest-bearing debt securities and strip bonds. The table shows, on a hypothetical basis, the difference in price fluctuation as a result of fluctuations in prevailing interest rates between, on the one hand, 5-year and 20-year $100 face amount conventional bonds bearing interest at 6% payable semi-annually, and, on the other hand, 5-year and 20-year $100 face amount strip bonds priced to yield 6%. It will be noted that the longer the term to maturity of the bond or the strip bond, the more volatile its market price will be.

In contrast to strip bonds, the income stream received on a strip bond package prior to maturity or the final payment date may be reinvested at the then prevailing interest rates. Therefore, the market price of a strip bond package will not be as volatile as the market price of a strip bond with the same credit risk and term to maturity or final payment date. However, it may be more volatile than the market price of a conventional interest-bearing debt security with the same credit risk and term to maturity.

SECONDARY MARKET AND LIQUIDITY

Strip bonds, strip bond packages and Underlying Bonds do not trade in Canada in an auction market similar to that for shares listed on a stock exchange. Instead, strip bonds, strip bond packages and Underlying Bonds trade in dealer or over-the-counter markets similar to those for most conventional debt securities.

Certain strip bonds and strip bond packages that are available in Canada are offered by groups of investment dealers or financial institutions which may make markets for the strip bonds and strip bond packages they offer, although they are not obligated to do so. There can be no assurance that a market for particular strip bonds or strip bond packages will be available at any given time. In such circumstances, purchasers may have to hold their strip bonds and strip bond packages to maturity or final payment date in order to realize their investment.

The market for Underlying Bonds is more liquid than the market for strip bonds and strip bond packages. Total turnover in Canadian federal and provincial bonds totalled $3.6 trillion in 2000, with trading in Canadian federal bonds accounting for 92 percent of this amount. The average daily turnover of Government of Canada bonds amounted to $13 billion in 2000, in proportionate terms roughly equivalent to the average daily turnover of U.S. treasury bonds which is generally considered to be the most liquid market in the world.

Government of Canada bonds with 2, 5, 10 and 30-year maturities (i.e., the so-called benchmark issues) account for most of the trading activity in this market and are the most liquid Government of Canada securities. The benchmark issues trade with the tightest bid-offered spread, with spreads widening for securities with different maturities than the benchmark issues. The market for provincial and territorial government securities is less liquid than the market for Government of Canada securities. Securities issued by the larger provinces with significant borrowing requirements are more liquid than securities issued by the smaller provinces, or the territories.

CUSTODIAL ARRANGEMENTS

Purchasers may purchase strip bonds and strip bond packages in four forms:

• A book-entry position created by The Canadian Depository for Securities Limited (CDS) which represents an undivided interest in the relevant interest and/or principal payment(s) to be made in respect of one or more Underlying Bonds held by CDS. This is the most common form of ownership today.
  
  
• A deposit receipt or certificate issued by a custodian where the receipt or certificate represents an undivided interest in a pool of interest coupons or principal residues held by the custodian or in interest or principal payments to be made in respect of one or more Underlying Bonds held by the custodian (non alter-ego receipts).
  
  
• A deposit receipt or certificate issued by a custodian where the receipt or certificate represents the relevant segregated underlying interest coupon(s) or principal residue(s) held by the custodian (alter-ego receipt).
  
  
• In limited circumstances, physical delivery of the actual coupon(s) or residue(s) (in specie).

Each of these forms has different characteristics:

• Holders of book-entry positions and non alter-ego receipts are not entitled to take physical delivery of the underlying coupon(s) or residue(s), except in cases where specifically allowed by the rules of CDS or the custodial arrangements, as the case may be.
  
  
• Holders of book-entry positions, alter-ego receipts and non alter-ego receipts and holders of physical coupon(s) and residue(s), may be limited in their right to enforce the terms of the Underlying Bond(s) directly against the issuer. Further, such holders may have their rights under applicable custodial arrangements and in respect of the Underlying Bond(s) affected by a specified majority of such holders. Voting rights may be allocated to holders of strip bonds and strip bond packages based on a formula specified as part of the relevant custodial arrangement or as specified in the terms of the Underlying Bond(s). Each purchaser should review the relevant custodial arrangements and the purchaser’s rights thereunder.
  
  
• For non alter-ego receipts and alter-ego receipts, registered certificates may be available to the holder on request. Where registered certificates are not available, the holder should receive periodic statements showing the security position from his or her investment dealer or other financial institution.
  
  
• Alter-ego receipts may entitle the holder to take physical delivery of the underlying coupon(s) or residue(s). If the holder decides to take physical delivery, the holder should be aware of the risks (including the risk of lost ownership) associated with holding a bearer security which cannot be replaced. The holder also should be aware that the secondary market for physical strip bonds may be more limited than for other forms of strip bonds and strip bond packages, due to the risks involved.

The facilities of CDS are available for custody and settlement of strip bonds and strip bond packages for any CDS participant.

In some cases the Underlying Bonds are redeemable or callable prior to maturity. Purchasers of strip bonds or strip bond packages relating to interest payments to be made in respect of Underlying Bonds that are redeemable or callable should satisfy themselves that such interest payments do not relate to interest payment dates that may occur after the Underlying Bond’s earliest call or redemption date.

CANADIAN INCOME TAX SUMMARY

The Canadian income tax consequences of purchasing strip bonds and strip bond packages are complex. Purchasers of strip bonds and strip bond packages should consult their own tax advisors for advice relating to their particular circumstances. The following summary is intended to be a general commentary on the attributes of strip bonds and strip bond packages under the Income Tax Act (Canada) (“Tax Act”) and the regulations thereunder (“Regulations”) for purchasers who hold their strip bonds and strip bond packages as capital property for purposes of the Tax Act. The summary also comments on the attributes under applicable similar provincial or territorial taxation laws.

Qualified Investments
Strip bonds and strip bond packages relating to Underlying Bonds that are issued or guaranteed by the Government of Canada or issued by a province or territory of Canada are “qualified investments” under the Tax Act and are therefore eligible for purchase by trusts governed by registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), registered education savings plans (“RESPs”) and deferred profit sharing plans (“DPSPs”).

Annual Taxation of Strip Bonds
The Canada Revenue Agency has indicated that purchasers of strip bonds will be treated as having purchased a “prescribed debt obligation” within the meaning of the Regulations. Accordingly, a purchaser will be required to include in income in each year a notional amount of interest, notwithstanding that no interest will be paid or received in the year (see example opposite). Therefore, these instruments may be more attractive to non-taxable accounts, such as self-directed RRSPs, RRIFs, DPSPs, RESPs, pension funds and charities, than to taxable accounts.

In general terms, the amount of notional interest deemed to accrue each year will be determined by using that interest rate which, when applied to the total purchase price (including any dealer mark-up or commission) and compounded at least annually, will result in a cumulative accrual of notional interest from the date of purchase to the date of maturity equal to the amount of the discount from face value at which the strip bond was purchased.

For individuals and certain trusts, the required accrual of notional interest in each year is generally only up to the anniversary date of the issuance of the Underlying Bond. For example, if a strip bond is purchased on February 1st of a year and the anniversary date of the issuance of the Underlying Bond is June 30th, only five months of notional interest accrual will be required in the year of purchase. However, in each subsequent year, notional interest will be required to be accrued from July 1 of the previous year to June 30 of the subsequent year.

The table below sets out the income tax treatment of a taxable individual investor resident in Canada who purchases a $5,000 strip bond on February 1st, 2002 at a total purchase price of $3,742.96. The anniversary date of the issuance of the Underlying Bond is June 30th. The strip bond is due on June 30th, 2007 (i.e. 5 years and 149 days later) and the investor holds it to maturity. Thus, the effective annual interest rate on the strip bond for purposes of the interest accrual rules will be 5.5%. The investor’s marginal tax rate (determined after taking into account applicable provincial or territorial taxation laws) is assumed for illustrative purposes only to be 45%. Investors should determine their actual marginal tax rate after discussion with a professional tax advisor.

In some circumstances the anniversary date of the issuance of the Underlying Bond may not be readily determinable. In these circumstances individual investors may wish to consider accruing notional interest each year to the end of the year instead of to the anniversary date.

A corporation, partnership, unit trust or any trust of which a corporation or partnership is a beneficiary is required for each taxation year to accrue notional interest to the end of the taxation year and not just to an earlier anniversary date in the taxation year.

Disposition of Strip Bonds Prior To Maturity
Upon the disposition of a strip bond prior to maturity, purchasers will be required to include in their income for the year of disposition notional interest to the date of disposition. If the amount received on such a disposition exceeds the total of the purchase price and the amount of all notional interest accrued and included in income, the excess will be treated as a capital gain. If the amount received on disposition is less than the total of the purchase price and the amount of all notional interest accrued and included in income, the difference will be treated as a capital loss. As of the date of this Information Statement, a taxpayer was required to take into account one half of the capital gain or loss in determining taxable income.

The table below sets out the income tax treatment for the individual investor in the previous example where the investor sells the strip bond on September 30, 2004 for an assumed sale price of $4,361.31.



Strip Bond Packages
Because a strip bond package consists for tax purposes of a series of separate strip bonds, the interest inclusion rules will be satisfied if an annual notional interest inclusion is determined in respect of each separate strip bond as outlined above. However, the calculation of such annual notional interest inclusion may be very complex. In addition, the calculation may be impossible to perform for individual purchasers to the extent that the anniversary dates of the Underlying Bonds are unknown.

As an alternative, purchasers of strip bond packages may wish to consider accruing notional interest to the end of each year at the internal rate of return or yield of the strip bond package determined by reference to the total purchase price (including any dealer mark-up or commission) and on the assumption that each component of the strip bond package is held to maturity or final payment date. The use of this method may in some circumstances result in a marginally less favourable income tax result to an individual purchaser than the calculation of an annual notional interest inclusion in respect of each separate strip bond comprising the strip bond package.

Upon the disposition of a strip bond package prior to maturity, purchasers will be required to include in their income for the year of disposition notional interest to the date of disposition. If the amount received on such a disposition exceeds the sum of the total purchase price and the amount of all notional interest accrued and included in income, the excess will be treated as a capital gain. If the amount received on disposition is less than the sum of the total purchase price and the amount of all notional interest accrued and included in income, the difference will be treated as a capital loss. As of the date of this Information Statement, a taxpayer was required to take into account one half of the capital gain or loss in determining taxable income.

Non-Residents of Canada
Non-residents of Canada for the purposes of the Tax Act who purchase strip bonds or strip bond packages relating to Underlying Bonds issued or guaranteed by the Government of Canada or issued by a province or territory of Canada and which were issued after April 15, 1966 will not be liable for income tax in Canada (including withholding tax) on any amounts paid or credited with respect to the strip bonds or strip bond packages if such purchasers do not use or hold the strip bonds or strip bond packages in carrying on business in Canada and their sole connection with Canada is the acquisition and ownership of the strip bonds or strip bond packages.

IMPACT ON YIELD-TO-MATURITY OF DEALER MARK-UPS OR COMMISSIONS PAID ON STRIP BONDS

Dealer mark-ups or commissions on strip bonds are quoted as a fixed amount per $100 of maturity amount of the strip bond purchased. The commission charged is generally not affected by the purchase price of the strip bond. Thus, the commission remains the same for strip bonds with a longer term to maturity and lower purchase price. The commissions quoted by investment dealers for strip bonds generally range between 25 cents per $100 of maturity amount to $1.50 per $100 of maturity amount. Commissions are typically at the higher end of this range for small transaction amounts, reflecting the higher costs of processing a small trade. The commissions generally decline for larger transaction sizes.



The table above illustrates the after-commission yield to an investor in strip bonds with different before-commission yields and with different terms to maturity. All of the yield numbers are semi-annual. For example, a strip bond with a term to maturity of one year, a before-commission yield of 4.5% and a commission of 25 cents per $100 of maturity amount has an after-commission yield of 4.234%. The before-commission cost of this particular strip bond will be $94.72 per $100 of maturity amount while the after-commission cost will be $94.97 per $100 of maturity amount. Similarly, a strip bond with a term to maturity of 25 years, a before-commission yield of 6.5% and a commission of $1.50 per $100 of maturity amount has an after-commission yield of 6.204%. The before-commission cost of this particular strip bond will be $20.21 per $100 of maturity amount while the after-commission cost will be $21.71 per $100 of maturity amount.

The approximate reduction in annual percentage yield associated with the payment of a specific amount of commission or dealer mark-up may generally be calculated as follows:



where

MA is the maturity value of the strip bond;

PP is the purchase price of the strip bond including the amount of any commission or dealer mark-up required to be paid in order to acquire the strip bond;

CA is the amount of the commission or dealer mark-up required to be paid to the selling dealer at the time of purchase of the strip bond;

n is the number of days from the time of purchase of the strip bond to the time of maturity of the strip bond (determined excluding the day of purchase but including the maturity day and ignoring leap years).

A prospective purchaser or seller of a strip bond is invited to compare the yield to maturity of the strip bond, calculated after giving effect to any applicable dealer mark-up or commission, against the similarly calculated yield to maturity of a conventional interest bearing debt security. Prospective purchasers or sellers are invited to inquire about the dealer’s bid and ask prices for the subject strip bond.

Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.

This brief statement does not disclose all of the risks and other significant aspects of trading in futures and options. In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in futures and options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

FUTURES

1. Effect of “Leverage” or “Gearing”
Transactions in futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract so that transactions are “leveraged” or “geared”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.

2. Risk-reducing Orders or Strategies
The placing of certain orders (e.g. “stop-loss” order, where permitted under local law, or “stop-limit” orders) which are intended to limit losses to certain amounts may not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as “spread” and “straddle” positions may be as risky as taking simple “long” or “short” positions.

OPTIONS

3. Variable Degree of Risk
Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a future position with associated liabilities for margin (see the section on Futures above). If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.

Selling (“writing” or “granting”) an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavourably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin (see the section on Futures above). If the option is “covered” by the seller holding a corresponding position in the underlying interest or a future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.

Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.

ADDITIONAL RISKS COMMON TO FUTURES AND OPTIONS

4. Terms and Conditions of Contracts
You should ask the firm with which you deal about the terms and conditions of the specific futures or options which you are trading and associated obligations (e.g., the circumstances under which you may become obligated to make or take delivery of the underlying interest of a future contract and, in respect of options, expiration dates and restrictions on the time for exercise). Under certain circumstances the specifications of outstanding contracts (including the exercise price of an option) may be modified by the exchange or clearing house to reflect changes in the underlying interest.

5. Suspension or Restriction of Trading and Pricing Relationships
Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. the suspension of trading in any contract or contract month because of price limits or “circuit breakers”) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. If you have sold options, this may increase the risk of loss.

Further, normal pricing relationships between the underlying interest and the future, and the underlying interest and the option may not exist. This can occur when, for example, the futures contract underlying the option is subject to price limits while the option is not. The absence of an underlying reference price may make it difficult to judge “fair” value.

6. Deposited Cash and Property
You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be prorated in the same manner as cash for purposes of distribution in the event of a shortfall.

7. Commission and Other Charges
Before you begin to trade, you should obtain a clear explanation of all commissions, fees and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

8. Transactions in Other Jurisdictions
Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection. Before you trade you should enquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

9. Currency Risks
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

10.Trading Facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearing house and/or member firms. Such limits may vary; you should ask the firm with which you deal for details in this respect.

11. Electronic Trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all. Your ability to recover certain losses which are particularly attributable to trading on a market using an electronic trading system may be limited to less than the amount of your total loss.

12. Off-exchange Transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks.

Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules.

Desjardins Securities Inc., in cooperation with Desjardins Group’s Ombudsman, has established efficient measures for handling client complaints, in order to comply with the quality standards set out by the applicable regulations.

Desjardins Securities’ complaints handling procedures allow clients who allege they were victims of a misconduct relating to the treatment of their account(s) to appeal to an impartial review and investigation service for dispute settlements and to obtain a response within a clearly defined time limit.

Alleged misconduct includes: breach of confidentiality, theft, fraud, misappropriation or misuse of funds or securities, forgery, unsuitable investments, false or misleading information or unauthorized trading, other unauthorized financial dealings with clients and engaging in securities-related activities outside of the Dealer Member.

►FILING A COMPLAINT WITH VMD

Complaints may be sent by mail at the following address :

Compliance Department
Complaints and Litigation
Desjardins Securities
1170 Peel Street, Suite 300
Montreal, Quebec
H3B 0A9

We recommend your letter includes details of the grievance, a description of the alleged prejudice and the requested corrective measure.

If you are having difficulties in formulating your complaint, you can refer to the Autorité des marchés financiers (AMF) website for tools to help you with your approach:

http://www.lautorite.qc.ca/clientele/consommateur/comment-porter-plainte.en.html

If you are unable to write your complaint, you can contact VMD’s “Info-Complaint” line. An advisor from our Compliance, Complaints and Litigation department will contact you within 24 hours following your phone call. The phone numbers are:

Montreal: (514) 985-1883
Toll Free: 1 877 985-1883

► STEPS FOLLOWING THE RECEIPT OF A COMPLAINT

• Appointment of a member of the Compliance, Complaints and Litigation department to your file;
  
  
• Acknowledgement receipt forwarded to the complainant within five business days;
  
  
• The person responsible for your file proceeds to his/her review and conducts an investigation. His/her contact information is available on the acknowledgement receipt;
  
  
• A detailed response to the complaint is sent by mail as soon as possible and no later than 90 calendar days from the receipt of the complaint. The answer includes a summary of the complaint, the results of the investigation and the final decision, with an explanation thereof.
  The letter also provides you with other options for seeking compensation, if you are not satisfied with the response.

In the event that the Compliance, Complaints and Litigation department is not able to provide you with a response within the set delay of 90 days, it will contact you within that timeframe to inform you of the reasons for the delay and of the new expected response time.

► OTHER OPTIONS AVAILABLE
Many other options are available if you are not satisfied with the conclusion reached by VMD’s Compliance, Complaints and Litigation department.

►► Desjardins Group’s Ombudsman

Upon a written request, Desjardins Securities’ Compliance, Complaints and Litigation department can forward a copy of your file to Desjardins Group’s Ombudsman, which will serve as your final recourse within Desjardins Group. Once it has received all necessary information, Desjardins Group’s Ombudsman will review your file within 60 days.

You may also forward them your file directly, at the following address:

Ombudsman
Fédération des caisses Desjardins du Québec
1, Complexe Desjardins
South Tower, 11th Floor
P.O. Box 7, Desjardins Station
Montreal, Quebec
H5B 1B2

►► An Investor’s Guide to Making a Complaint

The Investment Industry Regulatory Organization of Canada (IIROC) provides you with a brochure entitled “An Investor’s Guide to Making a Complaint”. Its content was included in Desjardins Securities’ “Regulatory Disclosures and Information on Asset Protection” brochure, handed to you on the day you opened your account.

“The Investor’s Guide to Making a Complaint” is also available upon demand:

• At any VMD branch;
• Within VMD’s Compliance, Complaints and Litigation department, at the address previously mentioned;
• Online, at the following address: http://www.iiroc.ca/English/MemberResources/Brochures/Documents/InvestorProtectionBrochure_en.pdf

The Guide provides information on the recourses available to you:

• From IIROC;
• From the Ombudsman for Banking Services and Investments;
• From AMF’s mediation services for Quebec residents;
• By arbitration;
• By pursuing legal actions.
  
  

With the Canadian Investor Protection Fund, you are protected if your investment dealer becomes insolvent.

WHAT IS THE CANADIAN INVESTOR PROTECTION FUND?
CIPF was created by the investment industry to ensure that client assets are protected—within defined limits — if an investment dealer who is a CIPF Member becomes insolvent. Assets include cash, securities and certain other property such as segregated insurance funds. CIPF is not a government organization. Payments to clients are determined independently by CIPF, not by the investment dealers. For more detail, please visit the CIPF website at www.fcpe.ca.

WHO PAYS FOR THIS COVERAGE AND HOW DO I GET IT?
You, the investor, pay no fees for CIPF protection. Coverage is automatic when you open an account with an investment dealer that’s a Member of CIPF. Each investment dealer contributes to a substantial fund which CIPF maintains. CIPF determines the size of the fund and the amount that each investment dealer has to contribute.

WHO ARE THE CIPF MEMBERS?
Approximately 200 investment dealers across Canada are Members of CIPF as a result of being a Dealer Member of the Investment Industry Regulatory Organization of Canada, the successor to the Investment Dealers Association of Canada. All Members are listed on the CIPF website. CIPF Members must include the words “Member CIPF” and/or the CIPF logo on your contracts and statements. Members must also display the CIPF logo at their premises.

ARE THERE LIMITS ON MY COVERAGE?
The limit is $1,000,000 CDN for any combination of cash and securities. Most investors will have two accounts—a general account and a retirement account —that are each eligible for $1,000,000 coverage. If an investor has several general accounts, such as cash, margin and $US, they are combined into one account for coverage purposes. Similarly, retirement accounts, such as your registered retirement savings plan (RRSP), registered retirement income fund (RRIF), life income fund (LIF) and locked-in retirement account (LIRA), are combined into one account for coverage purposes.

If you have other types of accounts, you’ll want to review the information on our website as it will help you to determine which of your accounts would be combined. CIPF doesn’t cover losses from market fluctuations, or from the bankruptcy of an issuer of a security or deposit instrument held in your account, no matter how drastic or unfortunate.

IF THE VALUE OF MY ACCOUNT IS MORE THAN $1 MILLION, WILL I HAVE A LOSS?
The $1,000,000 limit applies to your shortfall, which in most cases will be substantially less than the value of your account. For an example, please visit the CIPF website at www.fcpe.ca.

WHAT DO I NEED TO DO IF MY INVESTMENT DEALER BECOMES INSOLVENT?
Generally, investors don’t have to file individual claims as your monthly statement is considered your claim. Any additional information you will need will be available on our website or you can contact CIPF directly.

In most cases, your account will be moved to another investment dealer where you can access it. Alternatively, CIPF may deliver the contents or value of your account to you. To the extent there is an eligible loss, each claim is considered according to the coverage policies adopted. It’s important to remember that you’re only covered if your losses result from the insolvency of a CIPF Member. To view the coverage policies, please visit the CIPF website.

For more information on CIPF, please visit www.fcpe.ca or call toll-free at 1 866 243 6981 or 416 866 8366 or e-mail: info@fcpe.ca.

Canadian Investor Protection Fund
79 Wellington Street West, Suite 610, Box 75,
Toronto, Ontario, Canada M5K 1E7

Over the last few years, new Exchanges have been established in Canada. With the availability of multiple marketplaces (such as Alpha, Pure and Chi-X), new circumstances come into play in the trade order execution process, which is no longer limited to the Toronto Exchange exclusively. Desjardins Securities and Disnat (VMD) therefore prepared an informative document describing the changes applying to various trade types.

For any question, please contact your Desjardins Securities Investment Advisor.

Please note that the trade order execution process may differ for the Disnat Online Brokerage division. We suggest you consult the user guides on www.disnat.com or contact a Disnat representative for additional information.

Hours of Operation for Trading in Listed Canadian Securities
VMD’s trading staff is available for order execution between the hours of 9:30 a.m. and 4:00 p.m., Eastern Time ("ET"), Monday through Friday, not including statutory Canadian holidays. Staff may be further available before and after these hours; however VMD cannot guarantee any order taking and/or trade execution outside of the hours noted above. For Disnat Online Brokerage, the trading service is generally available from 8 a.m. to 5 p.m. ET.

Please be advised that unless otherwise stated, or unless otherwise agreed to between an Investment Advisor or Registered Representative of VMD and the client:

1. an order received prior to 9:30 a.m. ET will route into the opening sequence of the marketplace for execution on the opening; and
2. an order received after 4:00 p.m. ET can be entered to the after-hours trading of markets where this feature is available, if the trade characteristics allow. If received after “extended-hours” trading becomes unavailable, the order will route the next business day to the pre-opening of the marketplaces.

Principal Marketplacel
For those securities listed on the Toronto Stock Exchange ("TSX") and trading on other alternative marketplaces, the principal marketplace will be the TSX unless notified otherwise by VMD.

"Best market"
The “Best market” is defined as the market with the best bid (buy price) or offer (sell price) and/or best historical liquidity and where VMD feels the order has the highest probability of being executed.

Trade characteristics

Day Orders:
A Day Order is an order that is only valid during the market opening hours on and for the day it is entered. A Day Order received after the opening of the principal marketplace will be entered into the "best market" at the time of entry. From there, the order will trade on any marketplace VMD has access to and/or can access for the purpose of best execution. The order will expire, if not filled in full, on the market where the last portion of the order remains live and will expire at 4:00 p.m. ET, or at the time after-hours market activities cease on that market.

Special Terms Orders:
Special Terms Orders are orders with specific terms that are not executable in the regular marketplace. Special Terms Orders will only post to the Special Terms Market of the principal marketplace, currently the TSX, unless they are immediately executable on an alternative marketplace at the time of entry and they will only be live between 9:30 a.m. and 4:00 p.m. ET.

Good-Til-Cancelled Orders:
Good-Til-Cancelled Orders are orders that the client wants to remain open until a specified date of expiry. These orders will be sent to a marketplace determined by VMD’s established routing map. The order will remain in the principal marketplace until executed or expired, whichever comes first. It is the client's responsibility to ensure they know what the date of expiry will be and to contact their Investment Advisor/Registered Representative on the expiry date should they wish the order to be re-instated.

All-or-None Orders :
Note: The TSX no longer accepts “All-or-None” orders. Retail All-or-None Orders are orders that must be executed in full; no partial fills are to be executed or booked pending a complete fill. In the multiple marketplace environments, an All-or-None order may not be executed due to limited volume on more than one marketplace. While the total volume on all marketplaces might complete the order, the All-or-None terms apply only to the individual marketplace where entered. An All-or-None order received after the opening of the principal marketplace will be booked to the "best market" at the time of entry. Institutional All-or-None orders are orders that must be executed for large block volume in full, and do not book to the marketplace unless they can be filled in full for their entire volume at the time of receipt. These can be executed on any marketplace as agreed to between both parties at the time of receipt.

Market Orders:
An order is considered a “Market Order” when the client has instructed a dealer to buy or sell at whatever prices are available in the marketplace to help ensure a complete and full fill. These orders require immediate completion. A market order received after the opening of the principal marketplace will be entered into the "best market" at the time of entry. From there, the order will trade on any marketplace VMD has access to and/or can access for the purpose of best execution. The order will expire, if not filled in full, on the market where the last portion of the order remains live until that marketplace closes.

Limit Orders :
A limit order has a specific minimum sale price or maximum purchase price provided by the client. On or after 9:30 a.m. ET, if a limit order is not immediately executable on any marketplace, the order will be sent to a marketplace determined by VMD’s established routing map. The order will expire, if not filled in full, on the market where the last portion of the order remains live until that marketplace closes.

Disclosure of Marketplace
An order executed using one or more marketplaces or alternative marketplaces in either Canada or the United States will be reported to the client using a trade confirmation that will read (not limited to the following); "we confirm the following purchase/sale for your account traded on a North American Marketplace". If multiple prices or marketplaces were used in the completion of the order, a further disclaimer will be provided which reads; "multiple marketplaces and/or average prices used, details available on request". Should you receive such a confirmation, you are free to contact your Investment Advisor/Registered Representative to obtain further information.

Alpha Trading Systems Limited Partnership (Alpha) is a marketplace in Canada for the trading of securities.

Desjardins Securities Inc. is a limited partner of Alpha Trading Systems Limited Partnership (registered as Alpha ATS L.P.) and a shareholder of Alpha Trading Systems Inc. (the general partner of Alpha Trading Systems Limited Partnership). The ownership interest of Desjardins Securities Inc. and certain other limited partners of Alpha is subject to a re-determination agreement which provides that the ownership interest of certain limited partners (including Desjardins Securities Inc.) will be adjusted on the first and second anniversary date of the launch of Alpha based on the market share of trades executed by the limited partner on Alpha.

Desjardins Securities Inc. may execute trades on your behalf on Alpha and may enter orders which are not immediately tradable into Alpha’s order book. Notwithstanding the ownership interest of Desjardins Securities Inc. in Alpha or any of its rights under the re-determination agreement referred to above, Desjardins Securities Inc. is subject to a number of regulatory obligations, including the requirement to diligently pursue best price and best execution of each client order on the marketplace, obligations which override any interest of Desjardins Inc. in Alpha.