S&P/TSX Composite Index Operating Earnings

Bissett Investment Management

2013 Investment Forum Materials / Not for Public Distribution GARY J. AITKEN, MBA, CFA Chief Investment Officer Co-Lead Manager

Bissett Investment Management

June 5, 2013 Global Indices As of March 31, 2013

Annualized Returns (%) 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year 4.9 S&P/TSX Composite TRI 6.1 2.1 10.0 5.9 8.9

S&P 500 (Cdn $) 15.8 12.7 5.6 4.6 2.0 7.4

MSCI World (Cdn $) 14.4 9.1 2.6 5.5 2.0 6.2

MSCI EAFE (Cdn $) 13.6 5.5 -0.6 6.2 1.9 5.0

MSCI Emerging Markets (Cdn $) 4.0 3.6 1.2 13.1 6.3 7.3

Source: Bloomberg. Charts are for illustrative and discussion purposes only. 2013 Investment Forum Materials / Not for Public Distribution 4 S&P/TSX Composite Index Operating Earnings As of March 31, 2013 TSX Operating Earnings

1200 1200 Trailing Bottom-Up Fcst Top-Down Fcst 1000 10201023 1000

903920

825 800 800

600 600

500 500

400 400

300 300

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Source: TD Securities, as of 3/31/13. Bottom-up forecast based on CPMS Consensus.There is no assurance that any projection, estimate or forecast will be realized.Charts are for illustrative and discussion purposes only. 2013 Investment Forum Materials / Not for Public Distribution 5 S&P/TSX Composite Index Forward Earnings Yield and Long Term Canada Bond Yield As of March 31, 2013 g() 18 18

16 16 TSX Forward Earnings Yield Long-Term Canada Bond Yield 14 14

12 12

10 10

8 8 7.31

6 6

4 4

2.34 2 2 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Source: TD Securities. Charts are for illustrative and discussion purposes only. 2013 Investment Forum Materials / Not for Public Distribution 6 Bissett Investment Management’s Equity Capabilities

2013 Investment Forum Materials / Not for Public Distribution Bissett Investment Management A Legacy of Expertise in the Canadian Capital Markets

• Founded in 1982 and joined Franklin Templeton Investments in 2000

• CAD $18.1 billion in assets under management as of March 31, 2013

• Fundamental equity, quantitative equity, fixed income and balanced mandates

• Diverse equity strategies to meet different client investment goals

Source: Franklin Templeton Investments. 2013 Investment Forum Materials / Not for Public Distribution 8 Bissett Equity Group Years of Experience and Responsibilities

Name Industry Since Firm Since Responsibilities Garey Aitken, CFA, MBA 1993 February, 1998 Chief Investment Officer Chief Investment Officer Portfolio Management: Canadian Equity Strategies Tim Caulfield, CFA 1999 January, 2007 Portfolio Management: Canadian Equity Strategies VP, Director Equity Research Research: Financials Leslie Lundquist, CFA 1992 May, 1992 Portfolio Management: High Dividend Strategies SVP, Portfolio Management Research: Real Estate Les Stelmach, CFA 1999 January, 2006 Portfolio Management: Dividend & High Dividend Strategies VP, Portfolio Management Research: Energy Ryan Crowther, CFA 2002 February, 2008 Portfolio Management: Dividend Strategies VP, Portfolio Management Research: Materials Ralph Lindenblatt, CFA 1998 January, 2001 Portfolio Management: Small/ Micro Cap Strategies SVP, Portfolio Management Research: Small/ Mid Cap across all sectors Richard Fortin, CFA 1996 January, 2009 Portfolio Management: Small/ Micro Cap Strategies VP, Portfolio Management Research: Small/ Mid Cap across all sectors Jason Hornett, CFA 1997 November, 1997 Portfolio Management: Quantitative Strategies VP, Portfolio Management Andrew Buntain, CFA 1995 May, 2007 Communication of BIM process, philosophy and strategies to internal VP, Institutional Portfolio and external constituencies Manager Izabel Flis 2001 January, 2001 Research: Pipelines and Infrastructure, Retailing, Cable, Broadcasting, Research Analyst Consumer Staples, Telecommunication Services, Utilities Jayson Moss, CFA 2004 November, 2011 Research: Consumer Discretionary, Industrials, Health Care, Research Analyst Information Technology

As of 3/31/13. 2013 Investment Forum Materials / Not for Public Distribution 9 Bissett's Fundamental Equity and Sector Program Line-Up

Canadian Canadian High Canadian Dividend Dividend Small Cap Equity (BCEP) (BCDP) (BCHDP) (BSCP) Microcap Energy

Investment Style GARP GARP GARP GARP GARP GARP

Ralph Ralph Garey Aitken Ryan Crowther Leslie Lundquist Garey Aitken Portfolio Lindenblatt Lindenblatt Managers Tim Caulfield Les Stelmach Les Stelmach Richard Fortin Richard Fortin Les Stelmach

Inception Date1 1-Jan-93 1-Jan-93 1-Jul-99 1-Jan-93 1-Jul-99 1-Jul-07

S&P/TSX S&P/TSX S&P/TSX Equity S&P/TSX Small S&P/TSX Small S&P/TSX Capped Benchmark Composite TRI Composite TRI Income TRI2 Cap TRI3 Cap TRI3 Energy TRI

~1.5+ x Index ~2.5+ x Index Yield Target4 ~Index Yield N/A N/A N/A Yield Yield Weighted Avg. $25.5 B $26.2 B $4.5 B $0.7 B $0.3 B $6.1 B Market Cap5 Morningstar Rating for associated retail Mutual Fund (Series A)6

(1) Inception date of composite for performance measurement purposes. (2) This was changed as of January 1, 2011 from the Scotia Capital Income Trust Index. (3) This was changed as of April 1, 2012 from the BMO NB Small Cap TRI. (4) The Index is the S&P/TSX Composite. (5) As of March 31, 2013. (6) Source: Morningstar Research Inc., as of March 31, 2013. Quartile rankings and Morningstar Ratings apply to Series A of the funds. Morningstar Research Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The Morningstar Risk-Adjusted Rating, commonly referred to as the Star Rating, relates the risk-adjusted performance of a fund to that of its category peers and is recalculated monthly. The overall Star Rating for a fund is a weighted combination of its three, five, and ten year ratings. Overall ratings are adjusted where a fund has less than five or ten years’ history. A fund scoring in the top 10% of its fund category receives five stars; in the 10.1% to 22.5% of its fund category, four stars; in the middle 35% of its fund category, three stars. Please refer to www.morningstar.ca for more details on the calculation of Morningstar Risk-Adjusted Ratings. 2013 Investment Forum Materials / Not for Public Distribution 10 Correlation Matrix – Trailing 10 Year As of March 31, 2013

Russell Russell S&P/TSX S&P 500 1000 TRI S&P 500 1000 TRI BCEP1 BCDP1 BCHDP1 BSCP1 Composite TRI TRI (Cdn$) (Cdn$) TRI (US$) (US$)

BCEP1 1.00 0.91 0.75 0.87 0.91 0.62 0.65 0.85 0.86

BCDP1 1.00 0.75 0.78 0.84 0.62 0.63 0.82 0.82

BCHDP1 1.00 0.77 0.78 0.43 0.46 0.67 0.68

BSCP1 1.00 0.83 0.53 0.56 0.77 0.78

S&P/TSX Composite 1.00 0.50 0.53 0.80 0.81 TRI S&P 500 TRI 1.00 1.00 0.73 0.72 (Cdn$) Russell 1000 1.00 0.74 0.74 TRI (Cdn$) S&P 500 TRI 1.00 1.00 (US$) Russell 1000 1.00 TRI (US$)

1. Calculated on a gross of fees basis using the relevant composite. 2013 Investment Forum Materials / Not for Public Distribution 11 Bissett’s Fundamental Equity Approach

2013 Investment Forum Materials / Not for Public Distribution Representative Bissett Client Investment Goals

• A pure Canadian equity allocation

• Investment style purity to fulfill specific asset allocation objectives

• Truly active portfolio management

• Vigilant, informed risk management

• Consistent, superior absolute, relative and risk adjusted returns

2013 Investment Forum Materials / Not for Public Distribution 13 Equity Investing at Bissett A Distinctive Approach to the GARP Style

• Growth at a Reasonable Price discipline across all fundamental equity investment strategies

• An exacting definition of the “G” in GARP – Growth defined as sustainable profits – Looking for strong, consistent earnings and cash flow growth – Focused on financially stable companies

• Portfolio companies often are engaged in shareholder-friendly actions such as share buybacks and well-executed dividend plans

• Bottom-up security selection process

• Estimated intrinsic values exceed current share prices

2013 Investment Forum Materials / Not for Public Distribution 14 Investment Process Building a Fundamental Bissett Canadian Equity Portfolio

123 Identify Profitable Assess Determine Portfolio Companies Valuation Suitability • High full-cycle • Portfolio concentration profitability • Estimated and diversification • Secular earnings and intrinsic considerations cash flow growth value based on • Strategy requirements • Durable business present value of (market cap/dividend model future cash constraints) • Appropriate capital flows structure • Effective capital allocation

INVESTABLE BISSETT UNIVERSE PORTFOLIO

Risk Monitoring, Portfolio Rebalancing and Sell Discipline

The above chart is for illustrative and discussion purposes only. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. 2013 Investment Forum Materials / Not for Public Distribution 15 The Bissett Canadian Equity Program

2013 Investment Forum Materials / Not for Public Distribution Strategy Overview As of March 31, 2013

• 100% Canadian Securities • Concentrated Yet Diversified – Holdings typically range between 40 and 50 – Positions often are concentrated in the top 10-20 holdings – Individual positions typically do not exceed 5% • Fully Invested – Cash balances are normally between 1% and 5% – Current cash level is 2.6% • Large- and Mid-Cap Coverage – Typical large-cap/mid-cap split is 65%-85%/15%-35% – Current large-cap/mid-cap split is 84%/16% (current large/mid-cap cutoff is $3.17 B) • Annual Turnover Target of 15%–25% • Dividend-Payer Bias – Currently 46 dividend/distribution paying holdings (46 out of 51) – Approximate current yield of 3.0% vs. S&P Composite Index current yield of 3.1%1

Source: CPMS. 1. Based on weighted average calculation of expected yields of holdings within the representative portfolio for the Bissett Canadian Equity Composite and S&P/TSX Composite Index. 2013 Investment Forum Materials / Not for Public Distribution 17 Top 20 Equity Holdings Balancing Concentration with Diversification As of March 31, 2013 Portfolio S&P/TSX Composite Index

Portfolio Weight (%) S&P/TSX Composite Index Weight (%) Canadian National Railway 4.4 Royal Bank of Canada 5.8 Bank of Nova Scotia 4.1 Toronto-Dominion Bank 5.1 Royal Bank of Canada 4.0 Bank of Nova Scotia 4.6 Thomson Reuters 3.9 Suncor Energy 3.0 Brookfield Asset Management 3.7 Canadian National Railway 2.9 Canadian Imperial Bank Of Commerce 3.6 Bank of Montreal 2.7 TransCanada 3.4 Enbridge 2.5 Toronto-Dominion Bank 3.4 BCE 2.4 Canadian Natural Resources 3.2 Canadian Natural Resources 2.3 SNC-Lavalin Group 3.0 Potash Corp of Saskatchewan 2.3 Power Financial 2.9 TransCanada 2.2 Power Corporation of Canada 2.9 Canadian Imperial Bank of Commerce 2.1 Metro 2.7 Barrick Gold 2.0 Rogers Communications 2.5 Goldcorp 1.8 MacDonald Dettwiler & Associates 2.4 Manulife Financial 1.8 NuVista Energy 2.4 Cenovus Energy 1.6 Gildan Activewear 2.3 TELUS 1.5 Enbridge 2.1 Valeant Pharmaceuticals International 1.4 Bank of Montreal 2.1 Brookfield Asset Management 1.4 Franco-Nevada 2.1 Canadian Pacific Railway 1.3 Total 61.1 Total 50.7

Source: Franklin Templeton Investments. Based on a representative portfolio. Information is historical and may not reflect current or future portfolio characteristics. All portfolio holdings are subject to change. The information provided is not a recommendation to purchase, sell or hold any particular security. The securities identified do not represent the representative portfolio’s entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in the representative portfolio or that securities sold will not be purchased. In addition, it should not be assumed that any securities transactions discussed were or will prove to be profitable. The portfolio manager for the representative portfolio reserves the right to withhold release of information with respect to holdings that would otherwise be included in the top 10 holdings list. 2013 Investment Forum Materials / Not for Public Distribution 18 Sector Allocations As of March 31, 2013

Portfolio S&P/TSX Composite Index Difference % of Total % of Total (in Basis Points) Financials 33.2 33.1 10 Energy 24.5 24.6 -10 Industrials 10.3 6.8 350 Materials 7.5 16.4 -890 Consumer Discretionary 7.5 5.0 250 Consumer Staples 7.1 2.9 420 Telecommunication Services 4.0 5.5 -150 Information Technology 2.5 1.5 100 Utilities 0.9 1.9 -100 Health Care 0.0 2.3 -230 Cash 2.6 0.0 260 Total 100 100

Source: Franklin Templeton Investments. Based on a representative portfolio. Percentage may not equal 100% due to rounding. 2013 Investment Forum Materials / Not for Public Distribution 19 A Closer Look at the Big Three Sectors As of March 31, 2013

Portfolio S&P/TSX Composite Index Difference % of Total % of Total (in Basis Points) Financials 33.2 33.1 10 Commercial Banks 17.3 21.4 -410 Insurance 8.6 5.7 290 Diversified Financials 2.1 1.2 90 Thrifts & Mortgage Finance 1.5 0.2 130 Other 3.7 4.6 -90 Energy 24.5 24.6 -10 Oil & Gas Exploration & Production 10.4 10.3 10 Oil & Gas Storage & Transportation 5.6 6.5 -90 Energy Equipment & Services 4.8 1.0 380 Integrated Oil & Gas 2.8 5.9 -310 Other 0.8 1.0 -20 Materials 7.5 16.4 -890 Chemicals 3.0 3.6 -60 Diversified Metals & Mining 1.5 2.4 -90 Gold & Precious Metals 3.0 9.8 -680 Other 0.0 0.6 -60

Source: Franklin Templeton Investments. Based on a representative portfolio. Percentage may not equal 100% due to rounding. 2013 Investment Forum Materials / Not for Public Distribution 20 Absolute, Relative and Risk-Adjusted Return Objectives

• Absolute Return Objective – Target long-term absolute returns that compensate for the related risks.

• Relative Return Objective – Target excess returns relative to the benchmark

• Risk Objectives – Primary risk objective: To ensure that the absolute return objective is achieved. – Secondary risk objective: To maintain less return volatility than the benchmark

• Risk-Adjusted Return Objective – Target a below-market beta and positive alpha

2013 Investment Forum Materials / Not for Public Distribution 21 Performance Statistics – Gross of Fees As of March 31, 2013

Annualized Returns YTD 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20 Year SI2 Bissett Canadian Equity Program (%) 6.9 17.6 5.8 11.8 21.3 8.0 11.8 8.6 12.1 12.7 S&P/TSX (TR) Index (%) 3.3 6.1 -2.2 4.9 13.2 2.1 10.0 5.9 8.9 9.2 Difference1 3.6 11.5 8.0 6.9 8.1 5.9 1.8 2.7 3.2 3.5

Annualized Standard Deviation 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20 Year SI2 Bissett Canadian Equity Program (%) 7.7 10.4 10.8 12.8 16.3 13.4 14.1 13.7 13.7 S&P/TSX (TR) Index (%) 8.3 10.6 10.6 12.6 16.8 14.0 16.2 15.4 15.3 Difference1 -0.6 -0.2 0.2 0.2 -0.5 -0.6 -2.1 -1.7 -1.6

Annualized Alpha & Beta 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20 Year SI2 Alpha (%) 12.1 7.8 7.2 8.5 6.1 2.9 3.9 4.7 4.9 Beta 0.8 0.9 0.9 0.9 0.9 0.9 0.8 0.8 0.8

Additional Annualized Statistics 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20 Year SI2 Tracking Error 3.9 5.0 5.1 5.7 7.2 5.8 7.2 6.6 6.6 Information Ratio 3.0 1.6 1.4 1.4 0.8 0.3 0.4 0.5 0.5

Source: Franklin Templeton Investments. 1. Bissett Pure Canadian Equity Composite versus S&P/TSX Composite TRI. 2. Inception date as of January 1, 1993. For illustrative and discussion purposes only. The returns shown herein for the Bissett Canadian Equity Program are those of the Bissett Pure Canadian Equity Composite, which represents account(s) that follow a similar investment strategy as the Bissett Canadian Equity Program and that are managed by the same investment team utilizing the same research. The account minimum for inclusion in the composite is $1,000,000. The composite returns reflects the asset-weighted return of the performance results of all the portfolios in the composite. The performance returns for the composite are in compliance with GIPS from January 1, 1997 to the present. Actual client returns may differ for a variety of reasons including differences in: portfolio size, percentages held in each security, the timing of purchases and sales, price per security, fees and expenses. These differences may result in returns that may vary from those presented. Performance is presented in Canadian dollars, assumes reinvestment of dividends and other earnings and is gross of fees. Returns represent past performance. Past performance does not guarantee future results. 2013 Investment Forum Materials / Not for Public Distribution 22 Performance Attribution

Sources of Relative Return (Gross of Fees)

Unannualized to March 31, 2013

Security Selection Portfolio S&P/TSX Composite Relative Return1 Sector Allocation & Interaction (%) Total Return Index (%) (in basis points) (in basis points) (in basis points)

1 Year 17.8 6.1 1,170 350 810

3 Year 40.5 15.4 2,510 360 2,150

5 Year 47.7 10.8 3,690 910 2,770

Source: FactSet. Based on a representative portfolio. 2013 Investment Forum Materials / Not for Public Distribution 23 The Nature of the Opportunity

2013 Investment Forum Materials / Not for Public Distribution Our Current Outlook

• An overall improved equity market environment has been driven by factors such as: – Low interest rates – Fewer concerns about economic/financial system tail-risk – Continued improvement in corporate health

• However, varying degrees of global structural concerns remain such as: – Euro zone problems – Resolution of quantitative easing – Fiscal and debt imbalances

• The oscillation between risk-on and risk-off markets allows us to capitalize on the frequent mispricing of equities – Strength in equities naturally tempers our outlook; we expect trend returns going forward

This commentary reflects the analysis and opinions of the speaker as of June 2013, and may differ from the opinions of other portfolio managers, investment teams or platforms at Franklin Templeton Investments. Because market and economic conditions are subject to rapid change, the analysis and opinions provided may change without notice. The commentary does not provide a complete analysis of every material fact regarding any country, market, industry or security. An assessment of a particular country, market, security, investment or strategy is not intended as an investment recommendation nor does it constitute investment advice. Statements of fact are from sources considered reliable, but no representation or warranty is made as to their completeness or accuracy. All investments involve risks, including possible loss of principal. Currency rates may fluctuate significantly over short periods of time, and can reduce returns. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Investments in emerging markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size and lesser liquidity. The information presented herein is considered reliable at the present time, however, we do not represent that it is accurate or complete, or that it should be relied upon as such. Speculation or stated beliefs about future events, such as market or economic conditions, company or security performance, upcoming product offerings or other projections represent the beliefs of the speaker and do not necessarily represent the views of Franklin Templeton Investments. General business, market, economic and political conditions could cause actual results to differ materially. The information presented is not a recommendation or solicitation to buy or sell any securities. Series O investors do not pay any of the management fees within the Fund but instead pay a separate management and administration fee that they negotiate directly with Franklin Templeton Investments Corp. (FTIC). To qualify to purchase or hold Series O units an investor must meet minimum investment requirements as set out in the Fund’s current prospectus and must enter into a Series O Agreement with FTIC. Please read the prospectus before investing. Additional information about the Funds and Portfolios is available in the Funds' and Portfolios' annual information form, management reports of fund performance and financial statements. You can get a free copy of any or all of these documents, from your dealer, by calling toll-free 1-800-387-0830 or by contacting us at [email protected]. Commissions, trailing commissions, management fees and expenses all may associated with mutual fund investments. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes or Series O management and administration fees, payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance does not guarantee future results.

© Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Source: © 2013 FactSet Research Systems Inc. All Rights Reserved. The information contained herein: (1) is proprietary to FactSet Research Systems Inc. and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither FactSet Research Systems Inc. nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Russell index shown is a trademark/servicemark of the Frank Russell Company. STANDARD & POOR’S®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC. Standard & Poor’s does not sponsor, endorse, sell or promote any S&P index-based product. Indexes are unmanaged and one cannot invest directly in an index. CFA© and Chartered Financial Analyst© are trademarks owned by CFA Institute.