FINANCIER THE. Starting 2015 off on a flexible note. Spring Even greater diversification for National Bank Managed Portfolios.

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1 THE FINANCIER Spring 2015 p. 2 Oil shock reverberates throughout financial markets p. 3 How to fight inflation with your investments p. 4 MyIdea, your projects start here p. 5 Self-directed investing: A growing trend p. 6 Louis Vachon named Financial Personality of the Year for the second time in three years Jonathan Durocher President and CEO National Bank Investments Starting 2015 off on a flexible note What a start to the year! Just a few weeks after we closed the books on 2014, we can already say that 2015 will make its mark on history, particularly in terms of financial news! In a bold move, Stephen Poloz, the Governor of the Bank of Canada, surprised everyone by cutting the Bank s key rate to 0.75%, proving once again that markets are more and more erratic and that we need to offer diversified and flexible solutions. This is an approach that National Bank Investments 1 follows to the letter. Even greater diversification for National Bank Managed Portfolios In an effort to provide you with solutions that generate the best return possible, National Bank has recently opted to update its Managed Portfolios*. As these are sophisticated products to protect and grow your assets, we needed to allow you to more effectively take advantage of market opportunities, both in Canada and abroad. We therefore revised the strategic allocation of the Managed Portfolios equity component, so as to provide you with greater exposure to world markets. This change allows enhanced portfolio diversification, as well as an optimized balance between risks and returns. When it comes to investing, diversification is key to reducing risks and maximizing the return on your portfolio. It was also with this in mind that we modified National Bank Strategic Portfolios* back in September MyIdea In another initiative to offer a more user-friendly experience for planning your finances, we upgraded our MyIdea tool last January. With its expanded functions, MyIdea makes managing your investment strategy easier in order to achieve your retirement objectives and carry out other projects. With the year off to a flying start, we are proud to provide you with the tools you need to manage your portfolio efficiently. Rest assured that we will continue to work toward this goal and remain on the lookout for new opportunities to constantly enhance our offering and make flexibility a central theme throughout the year.

2 02 Economics and Strategy Group Oil shock reverberates throughout financial markets A noticeable pick up in volatility was observed in the markets in the last few months as a result of a sudden and sharp decline in oil prices. A barrel of West Texas Intermediate (WTI) oil, which traded at more than $100 in June of 2014, was suddenly trading at less than $50 at the start of $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jan. 14 Feb. 14 Source: Bloomberg March 14 April 14 A decline of more than 50% May 14 June 14 July 14 Aug. 14 Sept. 14 This decline sent shock waves throughout the world and caused a number of central banks including the Bank of Canada to take extraordinary measures by cutting interest rates to guard against its secondary effects. However, financial markets continue to ponder the significance of the steep decline in oil prices. For some, it is a clear symptom of a weakening global economy, as is the drop in bond yields. For others, declining energy prices are rooted in a supply-shock experiment from the Organization of Petroleum Exporting Countries (OPEC) in order to recapture lost market share. As this development exacerbates the decline in market interest rates due to weakening inflation, worldwide consumers are benefitting from a potent stimulus that will prove beneficial to economic growth. According to consensus, the potential stimulus to households could be as much as US $1.2 trillion, as the vast majority of the 3.1 billion workers in the world live in countries that are net importers of oil. Oct. 14 For oil producing countries such as Canada, the impact is obviously negative. According to estimates, the sharp drop in oil prices may cost the Canadian economy close to 2% of nominal economic growth. Though sizeable, the impact is manageable due to the country s industrial structure that will see benefits accrue to its manufacturing base, mostly in Ontario and Quebec. So, even if nominal growth WTI crude oil price was to decelerate from 4% to around 2% in 2015, Canada would not fall into recession. However, the fiscal impact on federal government finances will limit its overall stimulus effect. For the U.S., the shock to growth may prove slightly positive against a backdrop of strong job creation, wage gains and stronger consumption. It is true that the U.S. has become a much bigger energy producer. However, in recent years investment incentives in the sector have dropped to a 40-year low according to research. The bad news is that capital expenditures (CAPEX) could drop by $30 billion, but this drop will be more than offset by a $100 billion windfall for U.S. consumers. Nov. 14 Dec. 14 Jan. 15 As for OPEC members and Russia that depend on oil for much of their growth, the dramatic drop in prices if sustained could pummel their respective economies. Angola, Venezuela, Algeria, Iran, Iraq, Nigeria and Russia are facing outright recession with negative shocks that range from 5% to 25% of gross domestic product. Notwithstanding these developments, experts believe that the global economy is better off with lower energy prices. In general, the net effect of lower energy prices will be beneficial for consumers, through increased purchasing power, and for financial markets, through accommodative central bank policies. Overall, most expect oil prices to average $55/barrel in 2015.

3 Jean-Philippe Bernard Investment Advisor National Bank Financial 03 How to fight inflation with your investments In Canada, the average inflation rate for the last 30 years has been 2.70%, and it was hovering close to 2.20% at the end of December. Inflation eats into your spending power every year by increasing the prices of your consumer goods basket. Generally speaking, your annual salary adjustment compensates this price increase, but not always. Lastly, for retirees or those who live off their investments, the situation becomes more complex if they rely too heavily on guaranteed investment certificates (GICs). What to do with your investments In investing, it is possible to fight inflation by using the right financial tools. The choices available include the two major asset classes most commonly used to build portfolios: equities and fixed income securities (bonds and GICs). Stocks When you buy individual stock positions or a basket of shares (through mutual funds or exchange-traded funds), you are buying a stake in one or many companies. In the context of pursuing their main goal of improving profitability, businesses are entirely free to raise their prices in order to protect their profit margins, especially if their costs increase (inflation). For shareholders who own stock in FLUCTUATIONS a profitable company, this means that the buying power of their investment will be better protected. Over long periods of time, business equity generally appreciates in order to reflect this rising profitability. In addition, companies that pay dividends will also tend to increase them when their profits rise. These two effects will allow shareholders to record gains over the long term that are much higher than the inflation rate. For instance, the average return on U.S. large caps (S&P 500 Index) for the past 30 years has been 10.7% and the return on Canadian equities (S&P/TSX Composite Index) has been 10.3%. Fixed income securities For many investors, bonds and GICs are still the cornerstones of their portfolios. However, the returns offered by fixed income securities essentially reflect how the economy is doing. MACROECONOMICS MARKETS Low rates are normally indicative of a more morose outlook (low inflation) whereas high rates indicate that the economy is doing well (inflation is rising). Currently, GICs offer yields that are barely higher than the inflation rate. At the time of writing, the best GIC rates available for one year are 1.50%, and 1.85% for three years. Low yields are also true for bonds. STOCKS DATA INFLATION ECONOMICGROWTH OUTLOOK INVESTMENTS During prolonged periods of time where rates are low, as required by the current economic environment, overexposing your portfolio to fixed income securities will increase your risk in relation to higher inflation trends because stronger inflation would then quickly impact the real return provided by your fixed income holdings, especially those with long terms. It is therefore a mistake to think that because your capital is guaranteed, it will also be protected. In our current economic situation, the opposite could actually hold true if rates start to rise (to keep pace with suddenly frothy inflation rates). Diversify, diversify, diversify Many studies have proven that diversification remains the best way to reduce your portfolio s risk profile. An optimal allocation of stocks and bonds based on your investor profile will allow you to hold assets that fight inflation while minimizing risks. To make sure that your portfolio is diversified optimally, talk to your investment advisor today. National Bank Financial is a wholly owned subsidiary of National Bank of Canada. The opinions expressed here do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretations of these particulars and must not be construed as a solicitation or offer to buy or sell the securities mentioned herein.

4 04 MyIdea, your projects start here Looking to organize your finances? Planning a major life project or one of the many other projects you have in mind? The MyIdea tool was created to help you with the financial aspects of your most important projects. With MyIdea, we have brought together in one place a series of calculators related to different projects, explained Yann Jodoin, Senior Vice-President Client Strategy and Retail Solutions. More than ever, clients are better prepared when meeting with their advisor. We decided to make available certain tools used by our advisors to help our clients develop their ideas. Depending on the cost of your project and the amount of time you have to save, you ll get an action plan specifically suited to your reality. As simple as 1, 2, 3 1. Answer a few questions about your project and financial situation. 2. Get a made-to-measure plan, presented in a simple chart. This plan will include recommendations that will help you reach your financial objectives. 3. Put your plan into action on your own or with the help of an advisor. Take control of your savings with MyIdea MyIdea is available on ipad or on any computer via the Web. An Android version is under construction. l Ready to start? Visit nbc.ca/myidea ipad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. TM Android is trademark of Google Inc.

5 Robert Girard Business Development Manager National Bank Direct Brokerage 05 Self-directed investing: A growing trend In the 2.0 era, information about the economy, markets, investment products and investment strategies is everywhere you look. With this deluge of information, you may have chosen to follow the lead of a growing number of investors who manage their own portfolio independently without professional advice. But what do you know about the latest trends in direct investing? Robo-advisors: When the virtual world meets reality Over the past few months in Canada, we ve seen a new concept in online investing advice: Robo-advisors. Contrary to what the name may suggest, these are not virtual advisors who build portfolios, but rather a way for clients to access certain sophisticated computing tools that help them evaluate their investment goals and streamline their decision-making. To meet the growing demand for self-directed investing, we needed to make efficient, user-friendly solutions accessible to everyone, so that clients could build their own portfolios from the comfort of home using powerful analytical tools. Do-it-yourself investors can now rebalance portfolios, reinvest funds or manage financial losses, among other tasks. InvestCube: Smart rebalancing cubed Since September 2014, National Bank Direct Brokerage (NBDB) clients have been able to use InvestCube, a system that re-assesses portfolios every month and automatically rebalances them based on the established target asset allocation. If a holding deviates by more than 10% from its targeted allocation, InvestCube will step in and rebalance your assets, providing investors with a simple, low-cost way to manage their own assets while saving time. Active and passive management: Hybrid investors Although some experts believe that the popularity of direct brokerage has had a negative impact on full-service brokerage, others believe that the two are complementary services, with something for everyone. Whatever the case may be, a new type of client has begun to make an appearance: Hybrid investors. Hybrid investors passively manage certain assets through fullservice brokerage, while at the same time actively managing other assets via direct brokerage. By studying markets carefully, hybrid investors can choose between low-priced securities with potential and managers who outperform the market while generating income that exceeds the fees they charge. Both approaches have their pros and cons. However, with the rise of sophisticated technology and increasingly well-informed investors, clients opting for a hybrid structure are becoming more and more common. National Bank Direct Brokerage tools and initiatives Check out the Do-It-Yourself Investors Zone Investors at all levels can visit the Do-It-Yourself Investors Zone to ask questions about direct brokerage and speak to a business development representative. Come visit us from Monday to Friday, between 9:00 a.m. and 5:00 p.m., at the National Bank Tower located at 600, De La Gauchetière West, Level B (entrance Viger and Beaver Hall). Enhance your knowledge with our seminars NBDB offers seminars to allow do-it-yourself investors to acquire knowledge or hone their expertise in various financial products and market areas. The goal is to learn by completing real trades supervised by instructors. To find out more, visit nbdb.ca/events. National Bank Financial research NBDB is the only direct brokerage firm that provides free access to NBF research and recommendations concerning nearly 300 Canadian equities, enabling you to consult the opinions of professionals before making investment decisions. Staying informed is crucial! Although there s no shortage of information on the Web, not all sources have the same credibility, and self-directed investing can be risky if your knowledge is limited. That s why we make different platforms available to you so that you can quickly get information about your account, take the pulse of the economy and meet your needs. Our team of seasoned representatives will be pleased to help you with your transactions and answer your questions. You can rely on NBDB when it comes to keeping up to date on trends and developments in active portfolio management because being a do-it-yourself investor shouldn t mean you re all by yourself. l Go to nbdb.ca National Bank Direct Brokerage Inc. is a wholly owned subsidiary of National Bank of Canada. National Bank Direct Brokerage offers no advice and makes no investment recommendations. The client is solely responsible for the financial and fiscal consequences of his or her investment decisions. Member of the Canadian Investor Protection Fund.

6 Louis Vachon named Financial Personality of the Year for the second time in three years Louis Vachon, President and Chief Executive Officer, was named Financial Personality of the Year by the business publication Finance et Investissement at a gala event to celebrate the Top 25 of Quebec s financial industry. Under Louis Vachon s leadership, National Bank has been pursuing a balanced growth strategy that once again yielded record results in fiscal National Bank has demonstrated its capacity to adapt to rapidly changing technology, market conditions and consumer preferences, stated Mr. Vachon. These achievements were made possible by the engagement of our 20,000 employees, and I share this honour with them. This distinction is in addition to another prestigious title given to Mr. Vachon last fall by Canadian Business magazine, which named him CEO of the Year. Two other members of the Office of the President were also named in the Top 25 of Quebec s financial industry: Diane Giard, Executive Vice-President Personal and Commercial Banking, and Luc Paiement, Executive Vice- President Wealth Management and Co-President and Co-Chief Executive Officer of National Bank Financial. In addition, Jonathan Durocher, Senior Vice-President and President and Chief Executive Officer of National Bank Investments, earned a spot in the Top 25 Under 40 category. An-Lap Vo-Dignard, Investment Advisor, Vice-President and Portfolio Manager at National Bank Financial, was named Advisor Most Involved in his Community. l For more information on National Bank s investment solutions, please visit our website at nbc.ca or contact your advisor or one of our representatives: TelNat Customer Service TelNat ( ) or , telnat@nbc.ca 6:00 a.m. midnight (Eastern time), seven days a week National Bank Direct Brokerage or , directbrokerage@nbc.ca 8:00 a.m. 8:00 p.m. (Eastern time), Monday to Friday National Bank Investments Advisory Service or , investments@nbc.ca 8:00 a.m. 8:00 p.m. (Eastern time), Monday to Friday 9:00 a.m. 5:00 p.m., Saturday (2015/03) 1 National Bank Investments is a trademark used by National Bank Investments Inc. * National Bank Mutual Funds (including the Diversified Funds and the Monthly Income Portfolios), National Bank Strategic Portfolios (the Strategic Portfolios ) and National Bank Managed Portfolios (the Managed Portfolios ) (collectively the Portfolios ) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments and the use of an asset allocation service (such as the Portfolios). Please read the prospectus of the mutual funds or that of the funds in which the Portfolios may invest before making an investment. The funds securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. For money market funds, there can be no assurances that a fund will be able to maintain its net asset value per security at a constant amount or that the full amount of the investment in a fund will be returned. The funds are not guaranteed, their values change frequently and past performance may not be repeated. In respect of the Managed Portfolios, investors will enter into a discretionary management agreement with National Bank Trust Inc. (for all activity in Quebec, Prince Edward Island, Saskatchewan and New Brunswick) or Natcan Trust Company (for all activity in other Canadian provinces and territories), which gives the portfolio manager the authority to select, add or remove National Bank Mutual Funds forming part of the Managed Portfolios. There are no fees or expenses related to investing in the Managed Portfolios except for the fees and expenses related to investing in the funds that make up the Managed Portfolios. All distributions made by a fund included in the Managed Portfolios will be automatically reinvested for you. This publication is for personal use only. The information and opinions herein are provided for information purposes only and are subject to change, based on market or other conditions. The opinions are not intended as investment advice, nor are they provided to promote any particular investments and should in no way form the basis for your investment decisions. Past performance is not necessarily indicative of future performance. This document should at no time be construed as a solicitation or offering of units of any fund or other security in any jurisdiction. National Bank of Canada has taken the necessary measures to ensure the quality and accuracy of the information contained herein at the time of publication. It does not, however, guarantee that the information is accurate or complete, and this communication creates no legal or contractual obligation on the part of National Bank. National Bank of Canada, Reproduction or distribution of this communication in any form is strictly prohibited without the written consent of National Bank of Canada.