UPDATE REPORT As of December 31, 2013

Portfolio vs. Benchmark Returns*

18.00% 14.00% 10.00% 6.00% Portfolio 2.00% TSX(TRI) -2.00% Sep Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -6.00% 2010 2011 2012 2013 -10.00% -14.00% * Performance is shown gross of all fees. Performance data is historical and is not indicative of future performance. Returns are annualized for periods > 1 year. This document is for information purposes only.

Top 10 Holdings % Portfolio Performance* 1 Methanex Corp. 4.55% Since 2 Valeant Pharmaceuticals 4.34% 1 Month 3 Month 2013 2 Year Inception 3 Magna International Inc. 3.88% Portfolio 1.6% 8.6% 29.0% 18.3% 13.9% 4 Transcontinental Inc. 3.26% TSX(TRI) 2.0% 7.3% 13.0% 10.1% 7.2% 5 Constellation Software 3.21% Over/Under Performance -0.4% 1.3% 16.0% 8.2% 6.7% 6 Linamar Corp. 3.13% 7 Stantec Inc. 3.06% 8 Element Financial Corp 2.96% # of Stocks in Portfolio 75 9 Air Canada 2.86% 10 Sierra Wireless, Inc. 2.63% Market Capitalization % Portfolio Total: 33.87% Large Cap (>2 Billion) 68.62% Style Models - Last Quarter's Performance Mid Cap (>= 1 Billion and <= 2 Billion) 16.20% Small Cap (<1 Billion) 14.94% Style Weight Style Model Performance Rank Selected (Out of 6) Portfolio Characteristics Portfolio SP/TSX AGGCON 11.51% 7 1 Price / Earnings on Trailing EPS 16.79 16.59 AGGCON100 12.09% 6 Current Price / Book Ratio 2.39 1.94 INCOME 5.53% 10 Price / Latest Cash Flow 8.20 8.21 GROWTH 15.56% 2 1 Reinvestment Rate on Current Year Median 13.67 7.37 GIV 6.62% 8 1 1 Year Price Alpha vs. TSX Equity 3.77 0.57 GROWTH-VALUE 13.32% 3 1 Quarterly Earnings Surprise 3.81 0.68 INDUSTRY ALL STARS 12.13% 5 1 Quarterly Earnings Momentum 11.97 1.05 RISK 17.17% 1 1 3 Month Estimate Revision 3.78 -1.40 VALUE PE 6.51% 9 Price Change From Month End 3 Months Ago 14.34 6.59 VALUE PS 12.55% 4 Price Change From Month End 6 Months Ago 32.21 12.38 Expected Yield 1.83 2.97 Refer to final page for more information on each Style Model. Refer to final page for more information on each Portfolio Characteristic.

Top 10 Contributors (YTD) % Contribution Top 10 Overweights % Weight 1 INTERTAPE POLYMER GROUP INC 2.22% 1 Methanex Corp. 4.19% 2 METHANEX CORP 2.01% 2 Transcontinental Inc. 3.20% 3 VALEANT PHARMACEUTICALS INTERNATIONAL INC 1.96% 3 Linamar Corp. 3.01% 4 GILDAN ACTIVEWEAR INC 1.80% 4 Constellation Software 2.96% 5 MAGNA INTERNATIONAL INC 1.65% 5 Stantec Inc. 2.87% 6 TRANSCONTINENTAL INC 1.64% 6 Element Financial Corp 2.83% 7 WEST FRASER TIMBER CO LTD 1.41% 7 Air Canada 2.74% 8 LINAMAR CORP 1.29% 8 Magna International Inc. 2.70% 9 CONSTELLATION SOFTWARE INC 1.22% 9 Sierra Wireless, Inc. 2.63% 10 RMP ENERGY INC 1.19% 10 DeeThree Exploration 2.42% Total: 16.38%

Bottom 10 Contributors (YTD) % Contribution Top 10 Underweights % Weight 1 COASTAL ENERGY CO -0.64% 1 Royal Bank of Canada -5.66% 2 BLACKBERRY LTD -0.57% 2 Toronto-Dominion Bank -5.54% 3 AINSWORTH LUMBER CO LTD -0.51% 3 Bank of Nova Scotia -4.84% 4 PARKLAND FUEL CORP -0.32% 4 Cdn. National Railway -3.04% 5 DUNDEE REAL ESTATE INVESTMENT TRUST -0.32% 5 Suncor Energy Inc. -2.88% 6 AGNICO EAGLE MINES LTD -0.31% 6 Manulife Financial Corp. -2.33% 7 NEVSUN RESOURCES LTD -0.29% 7 Enbridge Inc. -2.32% 8 ARGONAUT GOLD INC -0.24% 8 Cdn. Imperial Bank -2.18% 9 MARTINREA INTERNATIONAL INC -0.21% 9 TransCanada Corp. -2.07% 10 TIMMINS GOLD CORP -0.20% 10 Cdn. Natural Resources -1.89% Total: -3.62%

18 ASSET MANAGEMENT INC. 284 Dundas Street, Suite 218 Contact Information: Jeff Brown London Ontario Canada N6B 1T6 | Tel: 1.519.433.0018 | www.18assetmanagement.com [email protected] As of Decemb er 31st, 2013 [2]

Style Allocation Activity

All styles stayed the same during the quarter.

Style Selection

Style Allocation Methodologies

1 2 3

GROVAL RISK ALL STARS GROWTH GIV AGGCON

Style Allocation Sector Allocation

AGGCON Financials 17.0% GROWTH 16.3% Information 16.5% Health Care 4.3% Technology 14.8%

Consumer Staples Telecomm 0.64% 3.3%

Utilities 0.5% RISK ALL STARS 17.3% 15.8% Consumer Discretionary 15.3% Energy 17.1%

GIV 15.9%

GROVAL Industrials 15.0% Materials 12.0% 18.1%

GLOSSARY - Portfolio Characteristics CHARACTERISTIC & FORMULA EXPLANATION Price to Earnings using trailing EPS is the ratio of a company's latest price to its trailing 4 quarters of operating earnings per Price / Earnings on Trailing EPS share. It is a commonly used valuation measure of a firm and can be interpreted as the multiple investors are willing to pay Current share price / Latest 4 quarters adjusted EPS for a firm's reported operating earnings. Price to Book is the ratio of a company's latest price to the per share value of its common share equity. The denominator Current Price / Book ratio used in the calculation is the "adjusted" book value of a company. The book value is calculated at least once a quarter and Current share price / Adjusted book value is "adjusted" between a company's fiscal quarter-ends if there are any changes to its common share equity value. Price / Latest Cash Flow Price to Cash Flow based on trailing Cash Flow is the ratio of a company's price to its trailing 4 quarters of cash flow from Latest price / Latest 4 quarters of Cash Flow from Operations per share operations. Estimated Reinvestment Rate is the estimated EPS less the expected dividends per share to be paid in the next 12 months Reinvestment Rate on Current Year Median as a % of the company's adjusted book value per share. Reinvestment Rate, a measure of a company's profitability, is the (Latest median estimate for current year - Declared dividend rate) / absolute rate at which a company is expected to reinvest earnings back into its business and is a common measure of growth of a (Adjusted book value) x 100 company. 1 Year Price Alpha vs. TSX Equity Quarterly Earnings Surprise ESRP is adjusted in two ways: 1) a decay factor is used to reduce the surprise as time passes; and 2) earnings variability is A proprietary measure of the percentage difference between actual and factored into the calculation to ensure that if two companies beat the consensus estimate by the same percentage, the expected earnings for the latest reported quarter company with the lower earnings variability will have the higher ESRP. Quarterly Earnings Momentum (Latest 4 quarters adjusted EPS - 4 quarters adjusted EPS 1 quarter ago) / absolute (4 quarters adjusted EPS 1 quarter ago) x 100 3 Month Estimate Revision Three month Estimate Revision measures the percentage change over the past 3 months in the current fiscal year median (Median of current year estimate - Current year median estimate 3 months ago) earnings estimate. For example, a value of 15 for this variable means that the current year median earnings estimate has / absolute (Current year median estimate 3 months ago) x 100 been raised by 15% over the past 3 months. Price Change From Month End 3 Months Ago (Current share price - Price from month end 3 months ago) / absolute (Price from month end 3 months ago) x 100 Price Change From Month End 6 Months Ago (Current share price - Price from month end 6 months ago) / absolute (Price from month end 6 months ago) x 100 Expected Yield Expected Annual Dividends / Current share price

Reference: Characteristics, Formulas, and Explanations provided by CPMS

GLOSSARY - Style Models STYLE MODEL NAME STYLE CHARACTERISTICS The AggCon Model consists of 20 stocks – 10 aggressive and 10 conservative. To avoid any repeat stocks, the stock selection precedence is designated as the following: Conservative --> Aggressive. The Conservative side of the model looks at companies that have lower betas, high dividend yields, and show signs of positive earnings. Dividend payouts should not be too high and there should be upward estimate revisions. Companies are Aggressive-Conservative (AggCon) sold when they no longer distribute dividends and/or generate any earnings, or fail the sell rank threshold. The Aggressive side of the model looks at companies that have strong earnings momentum, positive earnings surprise, and positive 12-month price change, and 3-month price momentum. Companies must also be generating earnings. Companies are sold if the stock price has greatly fallen in the last 3 months and 12 months and/or no longer exhibits earnings, or fail the sell rank threshold The AggCon100 Model is similar to AggCon except that it only ranks stocks from a universe consisting of 100 largest Aggressive-Conservative 100 (AggCon100) companies based on Market Float. The Growth Model looks at companies that exhibit strong future earning potential shown through active reinvestment of their earnings to drive future growth. Strong short-term and mid-term price changes are also emphasized. Earnings should Growth not be highly volatile and analysts’ sentiment regarding the upside of these companies should be positive. The company’s stock price should not have been performing poorly in the last half year, or else it will be sold. The Growth-Value Model looks at companies with earnings that are more stable and predictable yet tend to be undervalued by the market. 3-month and 6-month price change should be strong and analysts should be revising their estimates upwards. Growth-Value Earnings are reinvested to drive growth and companies should show signs of quarterly earnings momentum. A company is sold if either their overall rank or 3-month price change falls below the designated threshold. The GIV Model incorporates 3 style models – Growth, Income, and Value PE. Each model is restricted to their top 10 Growth-Income-Value companies based on rank. To avoid any repeat stocks, we have designated the stock selection precedence as the following: Growth --> Income --> Value PE. The Income Model looks at companies that exhibit positive dividend yield trends. Emphasis is placed on a stable history of Income dividend payouts and dividend increases. Companies must not be highly risky as measured by beta and should not be carrying too much debt. The model also ranks based on strong quarterly cash flows and positive 12-month price changes. The Industry All-Stars Model consists of mid to large cap companies that show superior performance relative to comparable peers. Emphasis is placed on the following criteria: Strong mid-term price momentum and quarterly cash flow momentum, Industry All Stars higher than expected earnings, and a lower Price/Book. Companies should be reinvesting their earnings as a sign of future growth. Earnings should also show some stability. The Risk Model looks at companies that show both strong short term and long term price momentum. Companies must also exhibit increasing earnings potential and analysts’ sentiment should be positive. Quarterly sales momentum must stay Risk above the designated threshold. Companies are sold when they fall out of rank or when short term and long term price change fall below a designated level. The Value PE model looks at companies that exhibit strong fundamentals using Price/Earnings and Price/Cash Flow. To Value PE avoid Value Traps, analysts’ sentiment should be positive with estimates being revised upwards. The sell discipline eliminates companies that experienced poor price performance in the last three months and/or fail the rank hurdle. The Value PS model places strong emphasis on companies’ Price/Sales as its main value metric. Companies should also be Value PS coming off the bottom, showing the ability to generate return on equity. The sell discipline eliminates companies when they fail the rank or price change hurdles.

18 ASSET MANAGEMENT INC. 284 Dundas Street, Suite 218 Contact Information: Jeff Brown London Ontario Canada N6B 1T6 | Tel: 1.519.433.0018 | www.18assetmanagement.com [email protected]