Glossary of Technical Terms

North Growth Funds

Load

A load is a commission that you pay when you buy or sell units of some mutual funds. North Growth Funds are no-load, meaning that you are not charged a fee for purchasing or selling units of a North Growth Fund.

Management Expense Ratio (MER)

The MER represents the total expenses of a fund for a one-year period expressed as a percentage of the fund’s daily net asset values.

'All-in-one' Management Fee

As Manager of the Funds, North Growth Management Ltd. provides research, accounting, sales and management services and acts as investment advisor. Management fees are calculated daily and payable monthly at the annual rate of 1.25% of the net asset value of the Canadian Equity Fund and of 1.20% of the net asset value of the U.S. Equity and U.S. Equity Advisor Funds, and the Manager absorbs all other expenses of the Funds.

Trailer Fees

For Series D units of the Canadian Equity Fund and U.S. Equity Advisor Funds dealers are paid an ongoing service fee, known as a “trailing commission” based on the total value of Series D units their clients hold in the Fund. No trailing commissions are paid on Series F units. Purchasers of Series F units will generally be required to pay their dealers under a “fee-for-service” program.

Total Fund Expenses

The North Growth US Equity Advisor Fund’s MER and its ‘all-in-one’ management fee represent the same value: namely the total annual expenses (including management fees) paid by the Fund. The numbers are not cumulative; they are essentially two different ways of presenting the Fund’s expenses. In both calculations, the dollar amount of the expenses are identical, it is simply the base used to calculate the percentage value that differs. The MER is calculated using average daily net asset values, whereas the ‘all-in-one’ management fee is calculated using the quarter-end net asset value of the Fund.

How do fees affect you?

You do not pay a commission or fee when you purchase or redeem units of the North Growth Funds. Fund expenses are deducted before performance numbers are calculated. For more details on the Fee Structure of the North Growth Canadian Equity Fund and U.S. Equity Advisor Fund please read the Prospectus.

Accredited Investor

The definition of an accredited investor, as per National Instrument 45-106, includes:

  • “an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,
  • an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300 000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,
  • an individual who, either alone or with a spouse, has net assets of at least $5,000,000, or
  • a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.”

For the entire definition please refer to section 1.1 of NI 45-106 as available on the website of the British Columbia Securities Commission here.

Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) was designed to improve U.S. tax compliance involving foreign financial assets and offshore accounts. Under FATCA, certain U.S. taxpayers with specified foreign financial assets must report those assets to the IRS. FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers.

Definition of a U.S. Person

Under U.S. tax law, you are considered a U.S. person if you are:

  • A citizen of the U.S. (including an individual born in the U.S. but resident in Canada or another country, who has not renounced U.S. citizenship);
  • A lawful resident of the U.S. (including a U.S. green card holder);
  • A person residing in the U.S.;
  • A domestic partnership;
  • A domestic corporation;
  • Any estate other than a foreign estate;
  • Any trust if: A court within the United States is able to exercise primary supervision over the administration of the trust; and one or more United States persons have the authority to control all substantial decisions of the trust.

Generally, the following information is indicia of U.S. status for an account owned by an individual:

  • U.S. citizenship or a lawful permanent U.S. resident;
  • U.S. place of birth;
  • Residence address or correspondence address in the U.S. (including a U.S. post office box);
  • Standing instructions to transfer funds to an account maintained in the U.S. or directions regularly submitted from a U.S. address;
  • An “in care of” or “hold mail” address that is the sole address with respect to a client account; and
  • Power of attorney or signature authority held by a person with a U.S. address.

You also may be considered a U.S. person if you spend a considerable amount of time in the U.S. on a yearly basis. For example, some Canadian “snowbirds” may be considered U.S. persons for U.S. tax purposes. If you are unsure, contact your tax advisor.

For more information about U.S. persons and their U.S. tax obligations, visit the IRS Website at: http://www.irs.gov/