Conflicts of Interest Disclosure

The fundamental concept is that Bancorp Investor Services Ltd. (BISL) clients’ interests must always come first ahead of the interests of BISL, their employees and agents and related companies.  We have a duty to deal fairly, honestly and in good faith with our clients. We recognize that conflicts may arise between BISL, our dealing representatives, our clients, BFSI and securities BFSI manages and we are therefore providing you with this information to help you better understand conflict issues that may arise in your dealings with us.  A conflict of interest is any circumstance where the interests of different parties are inconsistent, competing or divergent. We have policies and procedures to identify any conflict of interest and where an actual, potential or perceived conflict of interest may exist, we will avoid the conflict or will disclose the conflict to clients together with our plan to manage the conflict.

The following is a list of conflicts that we want you to be aware of:

We only offer securities of related or connected issuers

BISL only offers shares of each of Bancorp Balanced Mortgage Fund (BBMF) and Bancorp Growth Mortgage Fund (BGMF) and mortgage units of individual syndicated mortgages (ISMs) issued by Bancorp Financial Services Inc. (BFSI) which are related or connected issuers managed by BFSI for which BFSI as the Manager receives compensation for its services. There is also a significant percentage of common ownership and/or common directors and officers between BISL and each of BFSI, BBMF and BGMF.

Our relationship with each of BBMF, BGMF and BFSI may cause us to perform due diligence on the products that we offer with a less independent view.  We may also be considered to have an added incentive to sell these securities, including that the judgement of our dealing representatives, management and supervisory staff may be affected by this relationship.  While we do have policies and procedures in place to assess if a purchase is suitable for a client, you may wish to get independent advice from a trusted professional before you consider purchasing these related/ connected issuer securities through BISL.

We are related or connected to certain entities

BISL is a wholly-owned subsidiary of BFSI and as such BISL has a relationship, including common control, with BFSI.  BFSI is the manager of each of BBMF, BGMF and the ISMs offered by BISL, which are the only investment products we offer.  As the manager of these products, BFSI receives mortgage commitment fees and certain other administrative fees, and in the case of BBMF and BGMF, profit participation over a target rate of return.

We have entered into a services agreement with the BBMF, BGMF and BFSI, pursuant to which we provide exempt market dealer services in consideration for a dealer services fee paid to us by the BBMF, BGMF and BFSI. Additional details regarding various conflicts of interest arising from BFSI’s role as Manager of BBMF and BGMF and its relationship with the officers and directors of these related entities are described in the offering memorandums (each, an “OM”, and collectively, the “OMs”) for BBMF and BGMF and in the Conflicts of Interest Disclosure Document for ISMs.

We share services and premises with related or connected entities

We operate solely for the purpose of offering to investors securities issued by related entities and, as such, have no revenue independent of these relationships.  The related issuers (BBMF, BGMF, and BFSI) have agreed to provide funding and resources to meet BISL’s operational requirements and expenses.  Funding is not directly linked to the amount of securities purchased through BISL and is not considered a commission or trailer fee but is a service fee for performing dealer services pursuant to an agreement with the related issuers.  The operational requirements include, but are not limited to, providing resources as needed from the administration, legal, accounting, and information technology areas of BFSI.  In addition, BISL shares the use of common premises with BBMF, BGMF, and BFSI.  BISL has confidentiality and access policies in place to control access to BISL client and business records.

We offer access to a limited number of products

We do not offer a wide range of products from a variety of issuers or sectors.  We offer a very limited number of products from related issuers that we have relationships with and are not independent from.  The products that we offer may not be suitable for everyone.  Our dealing representatives only provide advice regarding the products that we offer and do not provide you with advice on other investments or asset classes that may be beneficial for you to invest in.  Should you wish for advice about other securities, you will need to seek out a different registered firm.

Our personnel are engaged in outside business activities

All of our dealing representatives, directors and other personnel are engaged in other business activities outside of their duties with BISL.  These activities may include positions as a director, officer, licensed mortgage broker or employee of BFSI, BBMF, BGMF, each of which are related entities and related issuers.  Individuals with multiple business activities are considered to be exposed to certain conflicts of interest, including the potential for biased judgement and added incentive to sell the securities offered by BISL.  While we have policies and procedures in place to mitigate these conflicts, it is impossible for these conflicts of interest to be completely eliminated.  It is also a requirement that our dealing representatives are clear as to which firm is providing services to you at a given time.

Outside business activities may also include volunteer activities with charitable organizations, industry associations and positions with or shareholdings in personal holding companies.  We have a process in place for assessing the actual, potential and perceived conflicts of interest arising from the outside business activities of our dealing representatives.