IMPORTANT ANNOUNCEMENT!

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1 THE WATSON WEALTH MANAGEMENT GROUP 3 NATIONAL BANK FINANCIAL VOLUME 12, ISSUE 1B MARCH 2012 A NEW STYLE FOR OUR NEWSLETTERS IMPORTANT ANNOUNCEMENT! The Portfolio Review Committee at National Bank Financial has reviewed The Watson Dividend Private Portfolio (formerly Watson Equity Basket) and is now allowing ½ private portfolio purchases for an initial purchase due to the good size, good returns and good trading practises. What does this mean to Me? If you are interested in buying a Watson Dividend Portfolio but the current value of approx. $55,000 was more than you have available to invest, you can now own one in your account for an initial investment of approximately $27,500 (after doing a little paperwork). Portfolio values as of March 9, What is the Watson Dividend Private Portfolio? It is the new name for the Watson Equity Basket. When you own the Watson Dividend Private Portfolio all the stocks in the portfolio are listed individually in your account. As of writing there are 18 stocks in the Watson Dividend Private Portfolio. You will see all 18 of these stocks listed in your account, alongside of all your other investments. In your account, ONLY this group of stocks in the Watson Dividend Private Portfolio will Rob buy and/or sell for our clients without phoning you and without getting your prior permission to buy or sell. These stocks are bought and sold instantly in block trades when Rob thinks that this should be done. Time isn t wasted by playing phone tag to everyone who holds this particular stock; while the markets move up and down. For example, if a company announced unexpected very bad news, that Rob felt required action; Rob would make one phone call to our stock trading desk and everyone in a Watson Dividend Private Portfolio would have that stock sold from their private portfolios.

2 This automatic buying and selling only applies to the holdings in the Watson Dividend Private Portfolio. All the other investments in your account(s) that are NOT part of the Watson Dividend Private Portfolio; we still have to call to get your permission to buy or sell these other investments. Since inception to the end of February 2012 the Watson Dividend Private Portfolio has returned 15.85% per year net of fees which are 1.75% per year 1. This results in a 14.10% per year rate of return after fees since November 1, This return is very remarkable in these turbulent markets! How is the Watson Dividend Private Portfolio different than a Mutual Fund? In some ways they are the same in some ways they are different. What is the same is that someone that you trust is investing your money and choosing the investments without contacting you. For example, you might own XYZ Mutual Fund in your account. The Manager of XYZ Mutual Fund does not call you before he decides to sell one investment and buy another investment within the Mutual Fund. You put your money into this mutual fund trusting that the Manager to make good decisions for you and everyone else invested in the fund. They are different because with mutual funds you have no idea what investments the mutual fund actually holds. Mutual funds will produce reports that tell you what they did hold in the past, but typically these investment reports can be 1 to 12 months old before they are published. With a Private Portfolio you own the ACTUAL investments and you see all the investments listed in your account, on your account statement. You can also see all the investments when viewing your account online with slight delay for processing. If at any time you wish to no longer participate in the Watson Dividend Private Portfolio you may choose to sell some of the investments and keep some others. This is ok. They are your investments to do with as you please. Typically private portfolios have lower fees than mutual funds. How does buying the Watson Dividend Private Portfolio lower my fees? Every mutual fund for sale in today s market has fees; including ones sold by all the other financial institutions. Don t let someone fool you. Financial companies are not charities, they don t work for free. These fees or costs might be hidden under another name, for example, Management Expenses Ratio or MER. However they exist. They are paid to the financial institution and/or mutual fund company regularly as a percentage of the fund. This fee or MER allows the financial institution and/or mutual fund company to turn on its lights, pay its rent, pay its employees etc. etc. Typically these charges from mutual funds in Canada can total 2% to 2.75% per year. By investing in the Watson Dividend Private Portfolio we also charge a fee to manage the holdings on your behalf, but it is lower at 1.75% per year. In addition, in taxable accounts this fee is tax deductible; while the costs charged inside your mutual fund(s) typically are not tax deductible. We would be happy to provide information on this feature to your Accountant for further review. This is a huge advantage to you to be able to: 1) lower the fees you are already paying if you hold mutual funds and 2) deduct these fees on your tax return from your taxable accounts. 1 Partnership accounts are charged according to the rate in their agreement with NBF.

3 What is the difference between an Investment Advisor and an Investment Advisor who also is a Portfolio Manager? Investment Advisors who are Portfolio Managers are Investment Advisors who have received portfolio management certification by a recognized regulatory authority are able to make discretionary decisions on a client account. This service has typically been reserved for wealthy and institutional clientele. The Discretionary Management Program at National Bank Financial now enables the clients of approved Investment Advisors to take advantage of services and opportunities not always afforded them elsewhere in the industry, for example by investing in the Watson Dividend Private Portfolio. Both Robert Watson and Adam Watson have qualified to be Portfolio Managers. How do you buy a Watson Dividend Private Portfolio? First you must review some documents and sign some documents allowing you to buy the Private Portfolio. Then we must review your account and decide where is the best place for you to own the basket (eg. RRSP, cash account, margin account, etc.). Next we must choose some investments for you to sell and you must agree to this sale. Alternatively, you can transfer or deposit funds into your account to buy a Watson Dividend Private Portfolio. Then together we decide when you will first buy the Private Portfolio. Only then is the Watson Dividend Private Portfolio bought for you. Later, can I buy more Watson Dividend Private Portfolios? Yes, you can buy more later. Each purchase of a Watson Dividend Private Portfolio must be done with your prior knowledge and permission. If you are buying the Private Portfolio in the same account root no new documents must be signed. If you are buying in a different root then you must sign documents for that root too. When we talk of roots think of envelopes that come in the mail from NBF. Typically each root comes in its own envelope. How do I get updates on my Watson Dividend Private Portfolio? Each quarter Rob sends out a report updating all the Watson Dividend Private Portfolio holders telling them how the private portfolio has performed and some news about some of the companies in the private portfolio. Can you give me a reference? Yes, from time to time our clients provide to us written remarks that we can make available to our clients. (We do remove the client s name to maintain the client s privacy). Here is a recent letter we received: To Rob and the Team at National Bank Financial, I would like to thank Rob and the team at NBF for all their help in making my retirement years an easier road to travel. I have been with NBF for two years, and this being a couple of very scary years my investments have done very well. Each time I have called with concerns I have been able to talk to someone right away, and was always listened to and set at ease. It was very scary for me to turn all my savings over to someone to be responsible for my way of living out my senior years comfortably. Thanks again, KM

INVESTMENT POLICY STATEMENT WATSON DIVIDEND PRIVATE PORTFOLIO INVESTMENT OBJECTIVE The investment objective of the Watson Dividend Private Portfolio is to provide long term return comparable to the

4 INVESTMENT POLICY STATEMENT WATSON DIVIDEND PRIVATE PORTFOLIO INVESTMENT OBJECTIVE The investment objective of the Watson Dividend Private Portfolio is to provide long term return comparable to the market index with less volatility. The disciplined approach of security selection results in a well diversified equity portfolio of common shares, trust units and exchange traded funds with a focus on generating income and capital appreciation. This basket is intended to represent the higher risk segment of a well-diversified portfolio. INVESTMENT SELECTION CRITERIA Number of securities: Diversification: The basket will invest in mid and large capitalization securities (above 400 million) representing a cross section of Industries. No security will represent more than 10% of the portfolio. No single industry will represent more than 40% of the portfolio. ADMISSIBLE SECURITIES The basket will invest in Canadian and US dividend paying common shares, income trust and exchange traded funds. Short-term money market securities will be used for cash management. There will be a maximum of up to 10% that may be allocated to alternate investment strategies outside of the stated equity objectives including but not exclusive to: commodity exchange traded funds*, and short Index exchange traded funds*. * There may be additional fees related to these products if contained in the basket. MANAGEMENT STYLE Our investment philosophy is based on the belief that financial markets are inefficient and therefore there is an opportunity to add value from active management over the medium to long term. Our process begins with a "top-down" analysis of both the Canadian and global economies, to determine which markets in the world we want to invest in, and how economic factors may impact specific economies, sectors and companies. We identify sectors that are growing and individual stocks which we believe to be undervalued. We look at the company's balance sheet, cash flows, and other financial measurements, as well as its management record, dividend history, competitiveness and vision for the future. Our style is value based and growth at reasonable prices.

5 HOLDING PERIOD The turn over for the portfolio will be targeted at less than 70% with no minimum hold period. Although we will endeavour to protect value at risk, this strategy is more suitable for medium to long-term investors due to the high equity component. (1-2 years) RESEARCH SOURCES Research resources include fundamental research from National Bank Financial, Credit Suisse First Boston, Valueline, Investment Reporter, Argus Research publicly disseminated information and analyst opinion from major investment firms both in Canada and the US. INITIAL INVESTMENT AND MARKET VALUE When the basket began on November 1, 2008, the value was approximately $37,500. Client purchases are made at the current market value for the sum total of all the investments according to the number of baskets purchased. Minimum investment will be a 1/2 basket. Subsequent purchases can be a 1/2 basket. MANAGEMENT PARAMETERS AND REFERENCE PORTFOLIO Investment performance will be measured against the Benchmark: 50% S&P/TSX, 15% EAFE (CDN) 30% S&P500 (CDN), 5% T-BILL. Asset Categories Minimum Reference Maximum Short-term Securities 0% 5% 40% Stocks 60% - 100% Canada 40% 50% 80% United States 10% 30% 50% International 10% 15% 35% Total N.A. 100% N.A. Revised: March 9, :03 am

6 Robert Watson, Kellie Watson, BBA, CIM, FCSI, PFP BA, CFP, PFP Portfolio Manager, Investment Advisor Investment Advisor, Vice President, Manager Financial Planner Adam Watson, BBA, FMA, CIM, PFP, FCSI Portfolio Manager, Investment Advisor or From Across Canada: Fax: (Note: web page is case sensitive) team Office Hours: Mon to Fri 8:30 am to 4:30 pm; additional times by Appointment: NBF is closed on Weekends and both: Ontario and Canadian Federal Statutory Holidays. For 2012 we will be closed on: April 6, May 21, July 2, Aug 6, Sept 3, Oct 8, Dec 25 & Dec 26 We have prepared this newsletter to give you our thoughts on various considerations which may be relevant to your portfolio. This commentary reflects our opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, we bring our best judgement and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of our informed opinions rather than analyses produced by the Research Department of National Bank Financial. National Bank Financial is an indirect wholly-owned subsidiary of the National Bank of Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX). National Bank Financial is a member of the Canadian Investor Protection Fund. This information was prepared by Kellie Watson, Robert Watson and Adam Watson, three Investment Advisors with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed herein do not necessarily reflect those of National Bank Financial. National Bank Financial is not a tax advisor and we recommend that clients seek independent advice on tax-related matters.

Words on Wealth. Welcome to the winter edition of Meridian s Words on Wealth. Meridian W INTER 2015

Words on Wealth. Welcome to the winter edition of Meridian s Words on Wealth. Meridian W INTER 2015 Meridian Words on Wealth W INTER 2015 Welcome to the winter edition of Meridian s Words on Wealth. The holiday season has passed, which can only mean one thing: it s time to turn (at least some of) your