Private Client Services
Managing Wealth from a
Preserving Wealth in an Ever Changing Financial Scene
through Flow-Through Limited Partnerships (FTLPs)”
Canada’s leading independent investment firm
• Established in 1950
• Over 1,500 employees, including more than 470 Investment Advisors
• 30 locations in Canada and internationally
• 23 Private Client Services branches across Canada
• Global capital markets activities through Canaccord Adams: Canada, UK, US
• Record $584.4 million in revenue FY06
• Record $81.2 million in net income in FY06
• Over $14.3 billion in assets under administration
• Publicly traded on the TSX and AIM under the symbol CCI
• Member of the Canadian Investor Protection Fund
30 locations in four countries
San Francisco New York
Comprehensive financial planning
• Retirement planning
– RRSPs, RRIFs, Individual Pension Plans & RCA’s
• Education planning
• Canaccord’s Financial Services
– Estate planning
– Insurance specialists
– Investment advisors can draw on the expertise of our in-house Estate Planning and
Insurance Specialists to ensure your wealth management opportunities are maximized
and your risk is minimized
Full range of financial solutions
– Canaccord advisors are supported by some of Canada’s top ranked research analysts
– Strong understanding of the entire stock market, including the subtle workings of small
to mid-sized companies other investment firms often neglect.
• Fixed Income
– Canaccord’s fixed income group actively trades federal, provincial, municipal, and
corporate bond issues, assuring you of competitive pricing and wide selections.
• Mutual Funds
– All of Canada’s leading mutual funds are available through Canaccord
• Fee-based approach
– Canaccord’s Azure Account gives clients the freedom to buy and sell bonds, stocks,
and mutual funds commission free
• Tax Mitigation Strategies
-- Individual Pension Plan, RCA’s & Flow Through Limited Partnerships
Equity research available to clients
• Monthly, weekly, and daily research materials available to clients
• Comprehensive stand-alone reports
• Weekly sector-focused online reports:
– Royalty Trust Review, Precious Metal Weekly, and Weekly Energy Outlook, and more
• Daily online briefings
– Daily letters, “Morning Coffee”,
• Access to US and international research
from Credit Suisse First Boston
Highly ranked institutional research analysts
• Over 50 research analysts based in Toronto, Vancouver, Calgary, Montreal, Boston, New
York, San Francisco, Houston, and London
• Top ranked independent research department
• 2005 Brendan Wood survey placed Canaccord analysts in the top 5 of the following
– Base Metals; Small Cap/Special Situations; Chemicals; Software and Services
• In the same survey, 10 out of 15 Canaccord analysts ranked in the top ten of their sectors
*Brendan Wood International Institutional Equity Research, Sales and Trading Performance in Canada 2005 Report
Managed accounts: Canaccord’s Alliance program
• Canaccord’s Alliance Program is a privately managed accounts program, combining
exceptional investment management with personal ownership of individual securities.
• Features multi-manager, multi-style, multi-region diversification comparable to the way
pensions and endowments invest
• Clients have the choice of more than 30 different portfolios from these leading investment
Canaccord Adams: capital markets
• Canaccord Adams activity contributes to Private Client Services
• Includes over 450 employees in: Institutional sales & trading International and principal trading
Research Venture capital
Investment banking Fixed income trading
• Operations in Research, Sales and Trading, Investment Banking and Corporate Services
• Participated in 315 equity offerings of $1.5 million and greater in Canada, 55 in the UK, and
5 in the US for a total of $25.9 billion gross proceeds in FY06
• Analysts are some of the top in their sectors
Mick Mitrovic: Investment Advisor
• Mick Mitrovic Exec MBA, PFP- 416.867.2033 / Mick_Mitrovic@Canaccord.com
• Dedicated to servicing lawyers, medical professionals, chiropractors, pharmacists, veterinarians,
• Main focus
– To help you meet your investment goals.
– To assist clients in creating and preserving wealth using a collaborative approach.
• Holistic measures
– Incorporate positive routines, positive habits, and a greater level of consistent behavior with investments.
– Holistic planning is a proactive behavior, not a reactive one.
• For a comprehensive review of your Investment Portfolio please do not hesitate to contact me.
Tax Wise Investing
• With RRSP & Tax Season closing & reflections plentiful, you may be asking yourself:
• Q: 'How could I have mitigated my tax situation more effectively?’
• If this has crossed your mind, you are among millions of Canadians who are in the same
• For Individuals who are in the highest marginal tax bracket - RRSP's do not suffice –
• Q: Where do you turn?
• A: Flow Through Limited Partnerships are the most effective Tax Mitigation tool.
What is a Flow-Through Limited Partnership?
• A flow-through limited partnership is an equity investment in a portfolio of Canadian
resource companies that combines unique tax advantages with the prospect for capital
• Early-stage oil and gas, or mining exploration companies receive special tax deductions
that flow through the limited partnership to investors, who receive a 100 per cent tax
deduction for the amount invested.
• Typically, after a period of 18 to 24 months, assets of the limited partnership roll over tax-
deferred to units of a resource-based mutual fund.
What is the role of a FTLP in a portfolio?
• A flow-through limited partnership is primarily a tax-planning vehicle that converts
income fully taxable in the current year into capital gains taxable in the future.
• In addition, it offers growth and diversification opportunities as a small-cap holding in the
equity portion of a well-diversified portfolio:
• Junior resource companies have the potential to experience strong growth
• Overall portfolio volatility can be reduced in two ways:
1. Resource stock prices often move independently of the overall market
2. Small-cap company prices tend to move independently of large-cap
Who can benefit from a FTLP?
• Individuals seeking an investment tax shelter to reduce current taxable income
• Investors who wish to reduce risk through a diversified portfolio, instead of investing in
flow-through shares of a single company
• Investors who wish to defer tax and convert fully taxable income in the current year into
capital gains taxed at a later date
• Individuals looking to invest with a proven, disciplined investment management team
Advantages of FTLP’s
• Tax Deductions & Increased Return
• Tax deduction of about 100 per cent of the amount invested
• Preferential tax treatment by converting current income to future capital gains
• Increased portfolio diversification reduces volatility and increases return potential
• Capital gains potential
• Tax-free rollover to a mutual fund after two years allows for further deferral of capital
• Achieve Specific Goals
• Preventing or reducing Old Age Security claw backs
• Utilizing capital loss carry-forwards
• Maximizing charitable donations
What are the Risks?
• Shares could decline in value: with any investment in small-cap equities, market values
can fluctuate widely. Since investments are concentrated in the resource sector, there is
further potential for volatility.
• A 100 per cent tax-write-off may not be achieved if investment proceeds cannot be
invested by the manager before year-end.
• Investors pay a higher cost for FTLPs vs common shares for the premium paid in return
for the tax benefit. This cost must be recouped before investors make any capital gains
on their investments.
• For more details on the risks associated with investing in Sentry Select's flow-through
limited partnerships, please refer to each offering's prospectus.
How does the Tax Write-Off Work?
• The Canadian government allows exploration expenses known as Canadian Exploration
Expense (CEE) to be transferred, or flowed-through, to holders of flow-through shares of
• CEE is divided among the shareholders and usu. represents an amount equal to the
investor's capital outlay. In this way, investors can reduce their taxable income by the
amount of their investment.
What Happens on the Rollover?
• After two years, most partnerships allow for the assets to be rolled into an open-ended
mutual fund, without triggering any tax consequences.
• The investor then has a choice to hold the mutual fund units, or sell and pay capital gains
tax on the full disposition amount.
Use of FTLP to Reduce Taxable Income
• An investor earns $200,000 per year. Based on 2007 tax rates, he’ll pay approx $75,347
• He considers investing $50,000 in a FTLP each year for the next nine years.
• This would be done by two initial investments of $50,000, then re-investing the proceeds
from the redemption of the mutual fund shares.
Summary of the effect of this FTLP investment on his/her taxes:
• The $50,000 investment in a FTLP will reduce income tax to approx $52,142, resulting in
an immediate savings of approx $23,200.
…Use of FTLP to Reduce Taxable Income
• When he redeems the investment after it has been converted into a mutual fund, there
will be a taxable capital gain of $25,000 and tax payable of about $11,600, leaving him
ahead by about $11,600.
• Year 1 & 2, the investor will realize savings of $23,200
• In years 3 to 9, he redeems the mutual fund shares and re-invests $50,000 in a flow-
through limited partnership. The tax savings help fund the subsequent investments.
• Year 3+, the $23,200 tax savings is reduced by the amount of tax payable on capital
gains arising from the redemption of the mutual fund shares. Finally in years 10 and 11,
the remaining mutual fund shares are redeemed and capital gains are realized.
• After 11 years, the investor has achieved cumulative tax savings of $104,400, or $11,600
for each year $50,000 was invested
FTLPs- The Numbers
• Year FT Purchase Tax Savings Tax paid Net Savings Cumulative Savings
• 2007 $50,000 $23,200 $– $23,000 $23,200
• 2008 50,000 23,200 – 23,200 46,400
• 2009 50,000 23,200 11,600 11,600 58,000
• 2010 50,000 23,200 11,600 11,600 69,600
• 2011 50,000 23,200 11,600 11,600 81,200
• 2012 50,000 23,200 11,600 11,600 92,800
• 2013 50,000 23,200 11,600 11,600 104,400
• 2014 50,000 23,200 11,600 11,600 116,000
• 2015 50,000 23,200 11,600 11,600 127,600
• 2016 –– 11,600 (11,600) 116,600
• 2017 –– 11,600 (11,600) 104,400
Mick’s FTLP Selections
• GGOF Mining Flow Through LP 2008
• Middlefield Resources (MRF) 2008
• NCE Diversified 2008