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Statement of Policies

The Company
Terra Fund Management Ltd. ("Terra") is an investment fund manager registered with the Ontario Securities Commission that offers a family of flow-through limited partnerships and corporate class mutual funds that invest in publicly traded companies. Terra is owned by its President, Mr. John Jacobi. Mr. Jacobi is also the President, Chief Executive Officer and sole director of the General Partner for each Terra Flow-Through Limited Partnership and the President and Chief Executive Officer for Linden Mills Investments Inc., an Agent for Terra's offerings.

At Terra we take careful and controlled measures to ensure that we are compliant will all legal and regulatory requirements and strive for transparency in all our documented processes and practices. In addition to working with SGGG Fund Services Inc., an independent third party administrative services provider, we work closely with legal counsel, custodians, investment counsel portfolio manager, auditors and our strategic partners to ensure that investors' rights and purchases are safeguarded. We feel it is crucial to disclose any potential investment risks – including potential conflicts of interest – with the same level of clarity and conciseness that we describe our products, their structure, fees and performance record.

Potential Conflicts of Interest

Manager, Dealer and General Partner:
Terra, the General Partner and Linden Mills are controlled by the same individual and, as a result, the Partnership may be considered to be a connected issuer and related issuer of Terra. As such, we maintain reasonable policies and procedures to minimize the potential for conflict of interest from our activities as the Manager for Terra offerings.

The General Partner made the decision to create the Terra Flow-Through Limited Partnerships and distribute its Units and, together with the Agents, determined the terms of the Offering. Except for the portion of the Agents' fee payable to Linden Mills and the Management Fee and/or Performance Fee payable to the Terra, none of the proceeds of the Offering will be applied, directly or indirectly for the benefit of Terra.

Terra Flow-Through Limited Partnerships, the Terra Small Cap Resource Fund, Terra Resource ETF Fund, TerraTundra Equity Income Fund and TerraTundra Money Market Fund (the “Funds”) are related and connected issuers of Terra. The Funds are either limited partnerships or corporate class mutual funds and to which Terra provides administrative and management services. Terra charges management fees, redemption fees and/or performance fees to the Funds in connection with its management of the Funds’ investment portfolios.

Terra's products are sold via offering memorandum through financial advisors of brokerages and financial planning firms in Canada. The financial advisor, therefore, has the responsibility of the Know-Your-Client ("KYC") Rule and as an independent third party, can objectively assess the merits of our products to determine what is most suitable to the investor.
In cases were an investor chooses to purchase directly from Terra, the Agent, Linden Mills can, in its sole discretion, also accept direct client purchases and in those situations accepts the responsibility for the KYC, required disclosure and suitability requirements. The direct client activity is incidental to our business and wherever possible, we encourage investors to seek independent advice from a financial advisor. Linden Mills will assess the suitability of a potential investment in Terra's products but cannot advise on the suitability of products not offered by Terra.

Fees and Commission:
Terra follows standard industry practices relating to the payment of fees and commissions and, therefore does not accept direct referral arrangements from individual financial advisors of brokerages, dealers and financial planning firms. This allows us to avoid potential conflict of interests between clients and their registered dealers, concerns around the suitability assessment of our products for individual clients, and other such compliance obligations. Linden Mills may from time to time accept direct referral arrangements from individual financial advisors of brokerages, dealers and financial planning firms. Referral arrangements, if any, are set out in a written agreement and must comply with the required provisions in NI 31-103 and ensure that clients are given the required disclosure.

Relationship of Related Registrants:
Terra is related to the General Partner of Terra's Flow-Through Limited Partnerships and the Agent Linden Mills. Terra, the General Partner and Linden Mills are controlled by Mr. Jacobi and, as a result, the Partnership may be considered to be a connected issuer and related issuer of Terra and Linden Mills. Each entity maintains its own distinct policies and procedures.

MFDA Exemption
Terra is not currently a member, and does not intend to become a member of the Mutual Fund Dealers Association (MFDA); consequently, clients of Terra and Linden Mills will not have available to them investors protection benefits that would otherwise derive from membership of Terra or Linden Mills in the MFDA, including coverage under any investor protection plan for clients of members of the MFDA.

Privacy Plan
At Terra we recognize that all personal information is private and confidential. Terra's Privacy Plan ("Privacy Plan") governs Terra's collection, use and disclosure of personal information. It is the intention of Terra, by way of its Privacy Plan, to comply with privacy legislation and, in particular, with the requirements of the federal Personal Information Protection and Electronic Document Act (PIPEDA). Terra recognizes the following key principles of PIPEDA: accountability, purpose; consent; collection; use, disclosure and retention; accuracy; safeguards; directness; access; and complaints and recourse. The measures outlined in the Privacy Plan are intended to provide clients with comfort that we regard personal information with the utmost importance. The Privacy Plan is also created to provide the right of access to personal information and an avenue to address any concerns individuals may have about the use of their information. For more information or for a copy of our Privacy Plan, please contact Terra's Privacy Officer.

Money Laundering and Terrorist Financing
As outlined by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Terra is obligated to implement specific measures to detect and deter money laundering and the financing of terrorist activity. As such, all investments into our offering memorandum products require completed documentation including confirmation of investor identification or financial entity information where required. If Terra becomes aware or suspects that an investor is engaged in money laundering, it is our duty to report to the Financial Transactions and Reports Analysis Centre of Canada. This reporting will not be deemed a breach of information disclosure restrictions imposed by law or otherwise.

Please do not hesitate to contact us should you have any questions in regards to Terra's Statement of Policies or should you require further details on any Terra practices and policies.

Terra Fund Management Ltd.
517 Wellington Street W., Suite 207
Toronto, Ontario M5V 1G1
Tel: 416-203-2477 / 1-888-449-4645
Fax: 416-203-1544
Email: info@terrafunds.ca

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