Private Client Investing

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1 Private Client Investing January 4, Year in Review Natural Resources Help Spur Canadian Market to Solid Gains As we close the books on 2005, and look to 2006 we reflect on some of the most dominant market themes for the past year. In the forefront for many investors was the strength in the prices of oil and natural gas, which rose 48% and 82.6%, respectively. Stoked by the S&P/ TSX Energy sector s 61.3% rise, the Canadian market had a buoyant 2005 with the S&P/TSX Composite climbing 21.9%, the third year in a row it has ended positive. The strong returns in the energy patch have resulted in the Energy Sector almost doubling its weighting in the S&P/TSX Composite since the end of Materials also put in a solid performance with large gains in gold, silver, copper, zinc and uranium among others. BRIAN HUTCHISON, MBA CFA CANADIAN EQUITIES SPECIALIST PRIVATE CLIENT INVESTING Bellwether Indices S&P/TSX COMPOSITE INDEX 11, S&P 500 INDEX 1, DOW JONES INDUS. AVG 10, NASDAQ COMPOSITE INDEX 2, , local currency The U.S. markets, despite good economic data and earnings growth struggled to make headway in Troubling the U.S. markets was the potential economic effects of increasing energy costs, in addition to rising short-term interest rates. On a price performance basis, the Dow Jones Industrials actually lost 0.6%, while the S&P 500 appreciated 3% and the NASDAQ Composite 1.4%. S&P/TSX Sub-sector Weightings Percent Financials Energy Materials Industrials Cons. Disc. Telecom Info Tech Cons. Staples Utilities Health Care Complete research on any securities mentioned in this report, which discloses our potential conflicts of interest, is available from your Investment Advisor. See back page for state/provincial restrictions. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of Canadian Imperial Bank of Commerce and Member CIPF. 200 King St. West Suite 1200, Toronto, Canada M5H 3W8 (416)

2 Strong Performance in Trusts For the seventh year in a row the Income Trust Total Return Index delivered a positive performance for investors, rising 31% for the year. Declining longer-term interest rates, a strong performance from the energy component and S&P/TSX Composite inclusion of some trusts are but some of the reasons for another stellar performance. The Energy Trust Total Return fueled by high oil and gas prices, was 49.4% higher, while the REIT Total Return Index climbed 25.3%. Income Trust Indices Income Trust Total Return Income Trust Index Energy Trust Total Return Energy Trust Index REIT Total Return REIT Index ** All are Based on S&P/TSX Capped Indices, local currencies Metals and Energy Shine During 2005 Propelled by strong global demand, 2005 was a strong year for many natural resources. The price of WTI oil was 48% higher to US$61.04 per barrel, while natural gas climbed an amazing 82.6% to US$11.23 per mmbtu. Copper struck a record high in 2005, closing up 39.5% at US$1.99 per pound on continued strong demand, and relatively low inventories. Zinc was another strong base metal performer rising 53.2% to end the year at US$0.87 per pound. For precious metals, gold managed to climb over US$500 to close at US$517 per ounce, up 17.9%, on increasing demand and news of renewed interest by central banks. Not to be outdone, silver showed some lustre by rising 29.3% to close at US$8.82 per ounce. Commodity Prices Prices 31-Dec-05-1 mo -3 mo -6 mo -12 mo YTD(%) Gold Spot US$/oz Silver Spot US$/oz Brent Crude Oil West Texas Intermediate Oil Natural gas Lumber Copper Nickel Aluminum Zinc January 4, 2006

3 U.S. Federal Reserve and Bank of Canada Hike Rates in 2005 Percent Fed Funds Target Rate BoC Overnight Lending Rate Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Short Term Rates Higher in 2005 Both the Bank of Canada and the U.S. Federal Reserve were active in hiking interest rates during Starting in September 2005 the Bank of Canada hiked rates three times for a cumulative 75 basis points, with the likelihood that rates hikes will continue in The U.S. Federal Reserve increased interest rates eight times during 2005, ending the year at 4.25%. There was significant yield spread compression during In fact, between the U.S. 5 and 10-year treasuries the yield spread had narrowed to a slim 4 basis points from 61 bps a year ago. Although temporary, the U.S. 2 and 10 year yields inverted in late December concerning some investors. Canada & U.S. Yields Yield as of 31-Dec-05-1 mo -3 mo -6 mo -12 mo 3-month Canada T-bills Canada 5yr Notes Canada 10yr Notes Canada 30yr Notes US 3-month T-bills US 5yr Treasuries US 10yr Treasuries US 30yr Treasuries January 4, 2006

4 Strong Loonie Private Client Investing 2005 Year in Review The loonie was stronger against the greenback for the fourth year in a row, closing the year at $ and seemingly a world away from the $ closing level for Helping the C$ was strong natural resources prices, fiscal strength, and rising interest rates. Despite weakness against the loonie, the U.S. Dollar had a positive year against major currencies, aided by rising short-term interest rates. The U.S. trade-weighted dollar rose 12.6% to end the year at Currency Moves Level Change Canadian vs. US Dollar % 0.1% 5.4% 3.4% 3.4% Euro vs. Canadian Dollar % -1.6% -7.2% -15.4% -15.4% Euro vs. US Dollar % -1.5% -2.1% -12.6% -12.6% US Dollar vs. Japanese Yen % 3.7% 6.2% 14.7% 14.7% Trade Weighted US Dollar % 1.7% 2.2% 12.6% 12.6% C$ has Pronounced Effect on International Holdings The strong loonie weighed on returns from international investments during When converted into Canadian dollar terms the S&P 500 and NASDAQ Composite fell into the red. A 15.4% decline in the Euro vs. the Canadian dollar hurt what were otherwise very strong returns from the European bourses. U.S. investors were hurt by the strength of the U.S. vs. the Trade Weighted U.S. Dollar, the Euro and the Japanese Yen. Index Returns In Canadian Dollars 1 mo 3 mo 6 mo 12 mo YTD S&P/TSX COMPOSITE INDEX S&P 500 INDEX DOW JONES INDUS. AVERAGE NASDAQ COMPOSITE INDEX BLOOMBERG EUROPEAN MSCI WORLD , as of December 31, 2005 Investor Profile Returns All investor profiles delivered a positive performance during 2005, but investors with a higher allocation in equities were rewarded with better returns thanks to strong Canadian and global equity markets. The Aggressive Growth Investor Profile delivered a 10.1% gain compared to a more modest 6.4% return for the Capital Preservation Profile. Long-Term Strategic Asset Allocation Investor Profiles (All In C$) Performance % Change (Global Equity/Cdn Equity/Bonds/Cash) 1 mo 3 mo 6 mo 12 mo YTD CAPITAL PRESERVATION (10 / 5 / 65 / 20) INCOME (20 / 15 / 55 / 10) INCOME & GROWTH (30 / 20 / 40 / 10) GROWTH (45 / 25 / 25 / 5) AGGRESSIVE GROWTH (60 / 30 / 10 / 0) , Scotia Capital as of December 31, January 4, 2006

5 Canadian Bond Market Delivers Positive Total Returns While the Canadian equity markets performed strongly during 2005, the Canadian bond markets, notably on the mid- to longer end of the curve delivered decent returns. The Government of Canada 10-Year Bond dropped in yield for the sixth year in a row, and by year-end stood at just 3.98%, while the 3-month T-bill yielded 3.38%. Asset Class Returns Total Return % Change Level 1 mo 3 mo 6 mo 12 mo YTD 31-Dec-05 EQUITIES S&P/TSX Composite Total Return S&P 500 Total Return BONDS Term YTM CIBC WM Bigar All Government Bonds CIBC WM Bigar Mid Term All Govt CIBC WM Bigar Short Term All Govt CIBC WM Bigar All Corporate Bonds CIBC WM Bigar Mid Term Corporates CIBC WM Bigar Short Term Corp CIBC WM Bigar Broad Composite , CIBC World Markets, as of December 31, 2005 And the Winner is..energy The Energy sector delivered a performance nothing short of spectacular during 2005 rising 61.3% on a price performance basis. A distant second was the normally defensive Utilities Sector, which climbed 33.1%. The sector was boosted by a takeover, speculation about further M&A, and the prospect for further growth in the sector as energy demand pushed up power prices. Remarkably, only two of the 10 sub-sectors beat the 21.9% price return of the S&P/TSX Composite Index, demonstrating the heft of the Energy Sector. At the end of 2004, the Energy Sector represented 18.4% of the S&P/TSX Composite, but by year end 2005 it stood at 27.3%, second only to the Financial Sector at 31.6%. For its part, the stalwart Financial Sector chimed in with a 20.5% return on a price basis during 2005, and since the end of 2002 it has rallied 74.7%. S&P/TSX Composite Sector Returns (GICS Sectors) Index Weight Consumer Discretionary 5.2 1, Consumer Staples 3.2 1, Energy , Financial Services , Health Care Industrials 5.5 1, Info Technology Materials , Telecom Services Utilities 1.5 1, January 4, 2006

6 Strong International Markets Private Client Investing 2005 Year in Review International markets were generally fairly robust during 2005 excluding the U.S. markets. The Korean market, historically a leading indicator of global markets was up 54%. One market which garnered lots of interest was the Japanese Nikkei 225 which rose 40.2%, helped by the re-election of Japanese Prime Minister Koizumi. On the European front, markets were fairly buoyant with the German DAX delivering 27.1%, the French CAC 40 up 23.4%, while the FTSE 100 up a more modest 16.7%. International Indices Bloomberg Euro FTSE Eurotop 100 2, England FTSE 100 5, German DAX 5, French CAC 40 4, MSCI World 1, MSCI EAFE 1, MSCI Emerging Mkts Japan Nikkei , Hong Kong Hang Seng 14, Australia S&P/ASX 200 4, Taiwan Weighted 6, Korea Comp 1, , local currencies Investors Prefer U.S. Small Caps in 2005 In Canada, investors preferred larger cap names, with the S&P/TSX 60 Index delivering a 24% return on a price basis, compared to a 19.9% return for the S&P/TSX MidCap Index and 8.9% for the S&P/TSX SmallCap. For its part the S&P/TSX Venture Composite delived a solid 22.5% return, helped by natural resource stocks. Stateside, the SmallCap S&P 600 beat the S&P 500 for the sixth year in a row. Small vs. Large Cap CANADA S&P/TSX 60 INDEX S&P/TSX MIDCAP INDEX S&P/TSX SMALLCAP INDEX S&P/TSX VENTURE COMP INDEX U.S. S&P 100 INDEX S&P 500 INDEX RUSSELL 1000 INDEX S&P 400 MIDCAP INDEX S&P 600 SMALLCAP INDEX RUSSELL 2000 INDEX , local currency 6 January 4, 2006

7 Growth vs. Value Mixed During 2005 There was no clear winner between growth and value investing strategies in While all the indices finished up for 2005, there was no clear style preference. The best performance was the 12.6% price performance return of the S&P Mid 400 Barra Growth Index, while the S&P Mid 400 Barra Value climbed 9.8%. Meanwhile, the S&P Barra Value Index was up 3.5% while the S&P/Barra Growth Index was up a more muted 2.5%. Style Indices GROWTH S&P BARRA GROWTH INDX RUSSELL 1000 GROWTH INDX S&P MID 400 BARRA GROWTH S&P 600 BARRA GROWTH INDX RUSSELL 2000 GROWTH INDX VALUE S&P BARRA VALUE INDX RUSSELL 1000 VALUE INDX S&P MID 400 BARRA VALUE S&P 600 BARRA VALUE INDX RUSSELL 2000 VALUE INDX , local currency Hedge Fund Indices Hedge funds and other alternative investments are becoming increasingly popular across the Canadian private client investment industry and as a result we have decided to include the Credit Suisse First Boston Tremont hedge fund indices. We have included performance for a number of the more popular strategies on both a short term and long term basis. ** Note There is a one-month delay on hedge fund performance data ** Hedge Fund Indices 1 mo 3 mo 6 mo 12 mo YTD CSFB Tremont Hedge Fund Idx CSFB Tremont Hedge Multi-Strategy CSFB Tremont Hedge Equity Market Neutral CSFB Tremont Hedge Dedicated Short Bias CSFB Tremont Hedge Distressed CSFB Tremont Managed Futures , as of November 30, 2005 Long Term Hedge Fund Indices 1-Year 2-Year 3-Year 5-Year 10-Year CSFB Tremont Hedge Fund Idx CSFB Tremont Hedge Multi-Strategy CSFB Tremont Hedge Equity Market Neutral CSFB Tremont Hedge Dedicated Short Bias CSFB Tremont Hedge Distressed CSFB Tremont Managed Futures , as of November 30, January 4, 2006

8 Long Term Returns Long Term Returns (as of 31-Dec-2005) Return % Change (annualized) 1 yr 2 yr 3 yr 5 yr 10 yr 15 yr 20 yr S&P/TSX Composite (price) S&P/TSX Composite Total Return WG Bigar All Government Bonds na na WG Bigar All Corporate Bonds na na S&P/TSX Income Trust Tot Return na na na Dow Jones Industrial Average S&P S&P 500 Total Return na Nasdaq Comp FTSE 100 Index na German DAX France CAC na Japan Nikkei MSCI World MSCI (EMU) Europe na MSCI Emerging Markets na MSCI EAFE MSCI Far East , CIBC World Markets, local currencies unless otherwise noted Long Term Returns in Canadian Dollars (as of 31-Dec-2005) Return % Change (annualized) 1 yr 2 yr 3 yr 5 yr 10 yr 15 yr 20 yr S&P/TSX Composite (price) S&P/TSX Composite Total Return Dow Jones Industrial Average (in C$) S&P 500 (in C$) S&P 500 Total Return (in C$) na Russell 2000 (in C$) Nasdaq Comp (in C$) MSCI World (in C$) MSCI EMU Europe (in C$) na MSCI Emerging Markets (in C$) na MSCI EAFE (in C$) MSCI Far East (in C$) , CIBC World Markets, Canadian Dollar based returns 8 January 4, 2006

9 Important Disclosures This report is issued and approved for distribution by (i) in Canada, CIBC World Markets Inc., a member of the Investment Dealers Association ("IDA"), the Toronto Stock Exchange, the TSX Venture Exchange and CIPF, (ii) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority ("FSA"), and (iii) in Australia, CIBC World Markets Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, "CIBC World Markets"). This report is distributed in the Unites States by CIBC World Markets Inc. and has not been reviewed or approved by CIBC World Markets Corp., a member of the New York Stock Exchange ("NYSE"), NASD and SIPC. 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