Group Investment Report. December 31, 2005

Transcription

1 Group Investment Report December 31, 2005

2 Table of Contents PAGE The Importance of Diversification 3 Asset Classes 4 Investment Platform - Style Grid 5 Volatility Rating Overview 6 Fund Managers 8 Rates of Return Overview 10 How to Read Fund Descriptions 12 Funds Available Asset Allocation 14 Guaranteed Interest Accounts and Money Market 25 Fixed Income 28 Balanced 34 Balanced Global Balanced Canadian Equity 44 Canadian Large Cap Equity Canadian Small/Mid Cap Equity U.S. Equity 58 U.S. Large Cap Equity International/Global Equity 65 Investment Watch (i-watch) 73 Statement of Investment Policies, Procedures and Goals 74 2

3 The Importance of Diversification Diversification is the key to a well-balanced portfolio; it is perhaps the most important consideration when choosing where to invest your money. Why should you diversify your investment portfolio? Have you ever heard the saying don t put all your eggs in one basket? If you apply that same philosophy to investing, it means don't invest all your money in one fund or market. It s difficult to accurately predict how individual funds or markets will perform over time. A well-diversified portfolio offers you the opportunity to achieve better returns on your investments with less risk, helping you reach your long-term retirement savings goals. When creating your investment portfolio, take these factors into consideration: asset class, volatility and fund managers. To help ensure you are developing a diversified investment portfolio, ask yourself these questions: 1. Is my money invested in more than one asset class? An asset class is an investment type defined by the nature of securities held within a mutual or pooled fund. For example, broad asset classes include Canadian Bond, Canadian Equity, U.S. Equity and International/Global Equity. Predicting the best performing asset class (such as Canadian Bond, U.S. Equity) with any degree of success is extremely difficult. If you diversify your portfolio by asset class, you decrease the chance of losing a large amount of your investment if an event in the market affects one asset class adversely. Refer to page 4 for more information on asset classes. 2. How volatile are the funds I m invested in? Volatility is the fluctuation of a fund s performance up or down based on its historical monthly track record. Where available, discloses the volatility of funds based on the last three years worth of performance data. The greater a fund s volatility, the greater the range of returns it has experienced over the time period under consideration. Although a fund s historical volatility is not necessarily an accurate indication of future volatility, it does provide some valuable insight into the level of risk associated with the fund. The Volatility Rating Overview on pages 6 7 show how different funds rank relative to the other funds in your plan. 3. What are fund managers doing to ensure the fund I invest in is meeting its stated objectives? Fund managers typically differentiate themselves through the application of distinct investment approaches and expertise, often known as fund manager style. Investing with more than one fund manager allows you to take advantage of managers distinct approaches to investing. Diversifying by fund manager is a good way to ensure you are benefitting from the range of opportunities available to help your retirement savings grow. The fund manager for each fund is listed on the corresponding fund page. Achieving the right balance between asset class, volatility and fund managers in your investment portfolio can help you reach your retirement savings goal. 3

4 Asset Classes Each asset class is represented by a different colour. The fund pages in this Group Investment Report and on 's website are colourcoded to reflect the asset class they represent. ASSET ALLOCATION: A fund that invests in a diverse range of asset classes, investor styles and fund managers with the goal of maximizing expected return while minimizing volatility for each investor profile. GUARANTEED INTEREST ACCOUNT: A fund that earns a fixed interest rate from the of deposit until the of maturity. The interest rate is determined on the of deposit and does not change. MONEY MARKET: A fund that invests in short-term securities. FIXED INCOME: A fund that invests in fixed income securities that pay interest, such as corporate and government bonds. The interest rate earned is more commonly referred to as a coupon rate and is expressed as a percentage. BALANCED: A fund that invests primarily in a combination of common and preferred stocks, bonds and short-term securities. A typical balanced fund concentrates on capital preservation and growth while mitigating risk. CANADIAN LARGE CAP EQUITY: A fund that invests primarily in shares of companies incorporated in Canada. While the fund may hold some shares of small companies, it invests primarily in medium to large companies listed on Canadian stock exchanges. CANADIAN SMALL/MID CAP EQUITY: A fund that invests primarily in shares of small and medium companies incorporated in Canada. U.S. LARGE CAP EQUITY: A fund that invests primarily in shares of companies incorporated in the U.S. While the fund may hold some shares of small companies, the fund invests primarily in medium to large companies. INTERNATIONAL EQUITY: A fund that invests primarily in shares of companies incorporated outside North America. GLOBAL EQUITY: A fund that invests in shares of companies incorporated in one of the following three geographic regions Asia, Europe and the Americas. GLOBAL BALANCED: A fund that invests in a combination of common and preferred stocks, bonds and short-term securities worldwide with the goal of providing a balance between capital preservation and growth while minimizing excessive risk. 4

5 Investment Platform Style Grid Actively Managed Passively Managed (Index) ASSET ALLOCATION 2001 Conservative Asset Allocation Fund 2002 Moderate Asset Allocation Fund 2003 Balanced Asset Allocation Fund 2004 Growth Asset Allocation Fund 2005 Aggressive Asset Allocation Fund 2101 Conservative Index Asset Allocation Fund 2102 Moderate Index Asset Allocation Fund 2103 Balanced Index Asset Allocation Fund 2104 Growth Index Asset Allocation Fund 2105 Aggressive Index Asset Allocation Fund Short-term MONEY MARKET 3132 Canadian Money Market Rate Anticipation Yield Enhancement Sector Trading Index FIXED INCOME 4161 McLean Budden Fixed Income Fund 4171 SEAMARK Bond Fund 4141 Fidelity Canadian Bond Fund 4131 Canadian Bond Fund (MFC) 4191 MFC Global Pooled Canadian Bond Index Fund Growth Core/Blend Value Sector Rotator Index BALANCED 5161 McLean Budden Balanced Growth Fund 5162 Canadian Balanced Ethics Fund 5164 McLean Budden Balanced Fund 5171 SEAMARK Balanced Fund 5241 Jarislowsky Fraser Balanced Fund 5301 Leith Wheeler Diversified Pooled Fund 5132 Elliott & Page Monthly High Income Fund 5181 Trimark Income Growth Fund GLOBAL BALANCED 5231 CI International Balanced Fund CANADIAN LARGE CAP EQUITY 7121 Elliott & Page Canadian Equity Fund 7161 McLean Budden Canadian Equity Growth Fund 7141 Fidelity Canadian Large Cap Fund 7164 McLean Budden Canadian Equity Fund 7171 SEAMARK Canadian Equity Fund 7241 Jarislowsky Fraser Canadian Equity Fund 7131 Canadian Large Cap Value Equity Fund (MFC) 7181 Trimark Canadian Fund 7351 Maxxum Dividend Growth Fund (Mackenzie) 7192 Canadian Large Cap Top Down Equity Fund (Zechner) 7132 MFC Global Pooled Canadian Index Fund CANADIAN SMALL/MID CAP EQUITY 7122 Elliott & Page Growth Opportunities Fund 7191 Canadian Small Cap Equity Fund (Tattersall) U.S. LARGE CAP EQUITY 8132 MFC Global Pooled U.S. Equity Fund 8171 SEAMARK U.S. Equity Fund 8142 Fidelity Growth America Fund 8191 U.S. Equity Fund (Bernstein) 8261 Legg Mason U.S. Value Fund 8131 MFC Global Pooled U.S. Index Fund INTERNATIONAL EQUITY 8172 SEAMARK International Equity Fund 8241 Jarislowsky Fraser International Equity Fund 8192 International Equity Fund (Templeton) 8321 BGI International Equity Index Fund GLOBAL EQUITY 8161 McLean Budden Global Equity Fund 8141 Fidelity International Portfolio Fund 8181 Trimark Fund 5

6 Volatility Rating Overview LOW HIGH Volatility Meter 2001 Conservative Asset Allocation Fund 2101 Conservative Index Asset Allocation Fund 2002 Moderate Asset Allocation Fund 2102 Moderate Index Asset Allocation Fund 2003 Balanced Asset Allocation Fund 2103 Balanced Index Asset Allocation Fund 2004 Growth Asset Allocation Fund 2104 Growth Index Asset Allocation Fund 2005 Aggressive Asset Allocation Fund 2105 Aggressive Index Asset Allocation Fund 4131 Canadian Bond Fund (MFC) 4171 SEAMARK Bond Fund 4141 Fidelity Canadian Bond Fund 4191 MFC Global Pooled Canadian Bond Index Fund 4161 McLean Budden Fixed Income Fund 5241 Jarislowsky Fraser Balanced Fund 5181 Trimark Income Growth Fund 5164 McLean Budden Balanced Fund 5162 Canadian Balanced Ethics Fund 5161 McLean Budden Balanced Growth Fund 5171 SEAMARK Balanced Fund 5301 Leith Wheeler Diversified Pooled Fund 5132 Elliott & Page Monthly High Income Fund 7351 Maxxum Dividend Growth Fund (Mackenzie) 7181 Trimark Canadian Fund 7241 Jarislowsky Fraser Canadian Equity Fund GLOBAL BALANCED BALANCED FIXED INCOME MONEY MARKET ASSET ALLOCATION A S S E T The triangle represents the fund's rating on the volatility meter Canadian Money Market Fund (MFC) 5231 CI International Balanced Fund 6

7 7131 Canadian Large Cap Value Equity Fund (MFC) 7132 MFC Global Pooled Canadian Index Fund 7171 SEAMARK Canadian Equity Fund 7161 McLean Budden Canadian Equity Growth Fund 7121 Elliott & Page Canadian Equity Fund 7141 Fidelity Canadian Large Cap Fund 7192 Canadian Large Cap Top Down Equity Fund (Zechner) 7191 Canadian Small Cap Equity Fund (Tattersall) 7122 Elliott & Page Growth Opportunities Fund 8171 SEAMARK U.S. Equity Fund 8261 Legg Mason U.S. Value Fund 8241 Jarislowsky Fraser International Equity Fund 8172 SEAMARK International Equity Fund 8192 International Equity Fund (Templeton) GLOBAL EQUITY INTERNATIONAL EQUITY U.S. LARGE CAP EQUITY CANADIAN SMALL\ MID CAP EQUITY CANADIAN LARGE CAP EQUITY C L A S S 7164 McLean Budden Canadian Equity Fund 8191 U.S. Equity Fund (Bernstein) 8132 MFC Global Pooled U.S. Equity Fund 8131 MFC Global Pooled U.S. Index Fund 8142 Fidelity Growth America Fund 8321 BGI International Equity Index Fund 8141 Fidelity International Portfolio Fund 8161 McLean Budden Global Equity Fund 8181 Trimark Fund LOW HIGH Volatility Meter The volatility rating is based on the standard deviation of monthly returns of the fund or underlying funds over a three-year period as of December 31, Standard deviation is a measure of risk and indicates the degree to which the fund s value has fluctuated. A fund with a high volatility has experienced more variability in month-to-month returns than a fund with low volatility. 7

8 Fund Managers AIM Trimark Investments is one of Canada s largest investment management companies. AIM Trimark offers a diversified suite of investment solutions to institutions, organizations, companies, high-net worth individuals and millions of investors in Canada and around the world. A subsidiary of U.K.-based AMVESCAP PLC, which is among the world s largest independent investment managers, AIM Trimark leverages the global expertise of several hundred AMVESCAP investment professionals worldwide. Sanford C. Bernstein, LLC (founded in 1967) was acquired by Alliance Capital Management (founded in 1971) to become AllianceBernstein in the year Both equity investment teams remain separate and distinct entities. AllianceBernstein manages approximately $555 billion US in assets, including $342 billion US for institutional clients around the world. Barclays Global Investors (BGI) is one of the world's largest investment management firms and one of the world's largest providers of structured investment strategies including indexing, exchange traded funds (ETFs), tactical asset allocation and quantitative active products. BGI manages over $1.7 trillion Cdn for almost 2700 clients in 47 countries around the world. From offices in Toronto and Montreal, BGI manages over $56 billion Cdn of assets for 175 Canadian clients. These clients include pension and savings plans, mutual fund companies, governments, corporations, charitable foundations & endowments and universities. CI Investments was established in the early 1960s. In 1994, CI Financial (then CI Fund Management Inc.) was listed on the TSX under the symbol (CIX) with assets under administration at the time of $3.7 billion Cdn. then, CI has grown quickly, launching new funds and products, and increasing the breadth and depth of product and portfolio management expertise available to its clients. Due to these new product launches, strong net sales and strategic acquisition, CI has grown to manage approximately $50 billion Cdn in assets as of June 30, Elliott & Page Limited has one of the longest track records in money management in Canada. Founded in 1949, Elliott & Page is one of Canada s oldest registered investment counsellors. Today the firm manages more than $40 billion Cdn in assets, and ranks as one of the nation s leading investment counselling firms. Fidelity Investments opened its Canadian operations in 1987 and has grown to become Canada's eighth largest mutual fund company, with more than $36 billion Cdn, as at June 30, 2005 in assets under management. Franklin Templeton Investments Corp. is the Canadian subsidiary of Franklin Resources, Inc., a global investment management organization known as Franklin Templeton Investments. Franklin Templeton Investments Corp has assets under management of $540.2 billion Cdn, as of December 31, Founded in 1962 to serve private clients, Howson Tattersall Investment Counsel (Howson Tattersall) has grown over the years to provide investment services to a wide range of institutional investors for their pension plans, endowments, foundations and corporate reserves. In August 2003, Howson Tattersall merged with Lancet Asset Management, a subsidiary of the Canadian Medical Association (CMA). The merged firm which has its headquarters in Toronto, Canada, continues to operate under the trusted Howson Tattersall name and manages over $7 billion Cdn in assets including the Saxon Mutual Funds. 8

9 Jarislowsky Fraser Limited is a registered investment counselling firm managing pension funds, pooled funds, endowment funds, and corporate and private portfolios for clients in North America and Europe. The company was founded in 1955 as an investment research firm. In the early 1960s, the firm began to use research material to counsel private investors and, in 1966, extended its client base to include pension funds. Today, the firm manages investment funds on behalf of governments, corporations, universities, institutions and labour unions with assets exceeding $58.9 billion Cdn. Founded in 1972 and headquartered in Toronto, Legg Mason Canada Inc. serves institutional and private clients from offices in Montreal, Toronto, Vancouver, and Waterloo. Legg Mason Canada serves the Canadian institutional and private client investment communities. Currently, they manage $12.4 billion Cdn in assets. Leith Wheeler Investment Counsel Ltd. is a fully independent investment counsel firm based in Vancouver, B.C. Founded in 1982, it manages over $5 billion Cdn for clients including corporations, endowments and foundations. As well, they manage assets for multiemployer and union pension plans in private and public sectors across Canada. Mackenzie Financial Corporation is an integrated financial services company, operating directly in North America and internationally through partner sub-advisor firms. Mackenzie offers more than 100 investment funds in Canada and the United States and manages more than $45 billion Cdn for over one million investors and their financial advisors. In addition Mackenzie and its subsidiaries offer an array of loan, deposit and other financial products and services and employ over 1,400 people. McLean Budden Limited is one of Canada's oldest investment counselling firms. From offices in Toronto, Montreal, Vancouver and Chicago, the firm manages over $30 billion Cdn of pension, foundation and mutual fund assets as well as personal wealth. MFC Global Investment Management has more than 100 years of experience managing the assets of The Manufacturers Life Insurance Company and other clients. In April 2004, it more than doubled its size through the merger of Financial and John Hancock Financial Services, Inc. Today it is a leading global investment manager, with over $240 billion Cdn ($206 billion US) in assets under management as of September 30, SEAMARK Asset Management Ltd., based in Halifax, Nova Scotia, was founded in 1982 as Atlantic Canada's first full-service investment counsel firm. SEAMARK manages over $10 billion Cdn in assets on behalf of pensions, endowments, mutual funds and private clients. SEAMARK has consistently been one of Canada's top performing investment management firms. J. Zechner Associates Inc. manages money for pension funds, institutions, and mutual fund companies, family trust and endowments. The firm was founded in 1993 by John Zechner and is owned by its investment professionals. Total assets under management have grown to over $2 billion Cdn. 9

10 Rates of Return Overview Gross rates of return (%) as of December 31, Gross rates show rates before any management fees are deducted. Fund code ASSET ALLOCATION Fund name Year to 1 1 year ANNUALIZED RETURN ANNUAL RETURN 2 2 year 3 year 4 year 5 year 10 year Conservative Asset Allocation Fund n/a Conservative Index Asset Allocation Fund n/a Moderate Asset Allocation Fund n/a Moderate Index Asset Allocation Fund n/a Balanced Asset Allocation Fund n/a Balanced Index Asset Allocation Fund n/a Growth Asset Allocation Fund n/a Growth Index Asset Allocation Fund n/a Aggressive Asset Allocation Fund n/a Aggressive Index Asset Allocation Fund n/a MONEY MARKET 3132 Canadian Money Market Fund (MFC) n/a Scotia Capital 91-Day Treasury Bill Index FIXED INCOME 4131 Canadian Bond Fund (MFC) n/a Fidelity Canadian Bond Fund McLean Budden Fixed Income Fund SEAMARK Bond Fund n/a MFC Global Pooled Canadian Bond Index Fund n/a Scotia Capital Universe Bond Index BALANCED 5132 Elliott & Page Monthly High Income Fund Þ n/a McLean Budden Balanced Growth Fund Canadian Balanced Ethics Fund n/a McLean Budden Balanced Fund n/a SEAMARK Balanced Fund n/a Trimark Income Growth Fund Jarislowsky Fraser Balanced Fund n/a Leith Wheeler Diversified Pooled Fund n/a n/a n/a 42 Balanced Benchmark GLOBAL BALANCED 5231 CI International Balanced Fund Global Balanced Benchmark Year to (YTD) rates of return are not annualized. 2 The rates of return that a fund earned over a specific 12-month period. As an example: a one-year annual return as at June 2005 would measure performance from July 1, 2004 to June 30, On September 30, 2002, the underlying fund changed from Elliott & Page Pooled Bond to the Canadian Bond. Performance prior to this was derived from the Elliott & Page Pooled Bond. Þ The Elliot & Page Monthly High Income Fund's primary objective is to provide investors with a steady flow of monthly income and capital growth. The fund invests in. a variety of equity securities, fixed income securities and income trusts. Comprised of 35% S&P/TSX Composite Index, 35% Scotia Capital Universe Bond Index (Total Return), 1 S&P 500 Index ($C), 1 MSCI EAFE Index ($C), and 1 91-Day T-bills. Comprised of 6 MSCI World Index and 4 JP Morgan Government Bond Index. On May 21, 2004, the underlying fund changed from the Elliott & Page Blue Chip fund to the Elliott & Page Canadian Equity Fund. Performance prior to this data was derived from the Elliott & Page Blue Chip Fund. On September 30, 2002, the underlying fund changed from Elliot & Page Pooled Canadian Equity to Canadian Large Cap Value Equity. Performance prior to this was derived from the Elliott & Page Pooled Canadian Equity. The non-shaded area represents the returns of a similarly managed fund for the period before the start of the fund. On June 1, 2003, the underlying fund changed from the Elliott & Page Emerging Growth to Elliott & Page Growth Opportunities. Performance prior to this was derived from the Elliott & Page Emerging Growth. Page number 10

11 The investment mangement fees (IMFs) you pay appear on the secure member website at ANNUALIZED RETURN ANNUAL RETURN 2 Fund code Fund name Year to 1 1 year 2 year 3 year 4 year 5 year 10 year Page number CANADIAN LARGE CAP EQUITY 7121 Elliott & Page Canadian Equity Fund n/a Canadian Large Cap Value Equity Fund (MFC) n/a MFC Global Pooled Canadian Index Fund n/a Fidelity Canadian Large Cap Fund McLean Budden Canadian Equity Growth Fund McLean Budden Canadian Equity Fund SEAMARK Canadian Equity Fund n/a Trimark Canadian Fund Canadian Large Cap Top Down Equity Fund (Zechner) n/a n/a n/a Jarislowsky Fraser Canadian Equity Fund n/a Maxxum Dividend Growth Fund (Mackenzie) S&P/TSX Composite Index CANADIAN SMALL/MID CAP EQUITY 7122 Elliott & Page Growth Opportunities Fund n/a Canadian Small Cap Equity Fund (Tattersall) n/a BMO Nesbitt Burns Small Cap Index U.S. LARGE CAP EQUITY 8131 MFC Global Pooled U.S. Index Fund n/a MFC Global Pooled U.S. Equity Fund n/a Fidelity Growth America Fund SEAMARK U.S. Equity Fund n/a U.S. Equity Fund (Bernstein) n/a Legg Mason U.S. Value Fund n/a S&P 500 Index ($ Cdn) INTERNATIONAL EQUITY 8172 SEAMARK International Equity Fund n/a International Equity Fund (Templeton) n/a Jarislowsky Fraser International Equity Fund BGI International Equity Index Fund MSCI EAFE Index ($ Cdn) GLOBAL EQUITY 8141 Fidelity International Portfolio Fund McLean Budden Global Equity Fund n/a Trimark Fund MSCI World Index ($ Cdn) Return: These numbers represent the gross rates of return of the fund. Additional Historical Information: In order to provide historic gross rates of return information, we have included the returns for each of the respective underlying funds. 11

12 How to Read Fund Descriptions 4 GLOBAL EQUITY Code 8141 Volatility meter Fidelity International Portfolio Fund UNDERLYING FUND > Fidelity International PortfolioA 8 Objective This fund invests primarily in equity securities of companies anywhere in the United Kingdom 9.7 world with the objective of achieving longterm capital growth. The fund is not subject Australia 2.9 to any geographic constraints with regard to the allocation of portfolio assets among Canada 5.4 Other 18.6 different markets. United States 41.7 Japan Managed by Fidelity Investments Canada Ltd. Switzerland 3.2 Germany 3.8 Fund managers Richard Habermann, BA, MBA. 5 BP PLC Ericsson LM Telephone Genentech Inc. GlaxoSmithKline PLC Goldman Sachs Monster Worldwide Novartis AG Peabody Energy Corp Total SA Univision Communication Total 10.1 Global equity markets performed well during the fourth quarter of 2005, with the MSCI World index gaining 3.7% (all returns in Canadiandollar terms). The Japanese equity market posted strong gains, advancing (+13%), followed by the Asia exjapan region (+7.) and the U.S. (+2.9%). The European equity market lagged the other regions but still posted positive returns (+2.6%). Japanese equities mirrored the strong gains of the previous quarter, surging to a fiveyear high. Improving economic conditions and earnings growth continued to attract overseas investors to Japanese equities. The financials, industrials, and materials sectors performed particularly well with the latter sector benefiting from rising gold prices, which broke through the $500 US barrier in December. Weaker performance was seen in the energy and telecommunicationservices sectors. Energy prices fell to more moderate levels due to a softening in demand. The Fund rose 3.7% during the fourth quarter, trailing the return of its benchmark index slightly. Security selection was the primary driver of relative returns, particularly within the Japanese market. The largest detractor from performance was being overweight the underperforming energy sector. Lead portfolio manager, Dick Habermann, continues to observe differing levels of strength in global economies. Persistently high oil prices and strong raw material demand in China are continuing themes. Mr. Habermann is underweighted in the U.S. where continued interest rate hikes and sustained high energy prices have negatively impacted consumer sentiment. European stocks are also underweighted, despite improved corporate earnings, structural problems persist. Japan is overweight in the Fund and Mr. Habermann remains positive in his outlook for the Japanese market. Inception November 1987 Total assets $1,337.2 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. MLI Fidelity Int l Portfolio Fidelity International PortfolioA MLI Fidelity Int l Portfolio MSCI World ($ Cdn) Fidelity International PortfolioA $24,000 $22,000 $20,000 $18, $21,922* $17,129 $16,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 Annual compound returns the MSCI World ($ Cdn). MLI Fidelity Int l Portfolio 11.77% 9.31% 10.69% 0.57% 5.57% Jul 1997 MSCI World ($ Cdn) 6.58% 6.96% 7.78% 2.41% The fund seeks to achieve returns comparable to, or better than, the MSCI World Index ($ Cdn) Volatility meter: You can use the volatility meter of each fund to help you choose funds that suit your tolerance for risk. The volatility meter is based on the standard deviation of monthly returns of the fund or the underlying fund over a threeyear period where available. For any funds with less than a three-year history, the rating was based on the next longest available time period. Generally, the greater the return you hope to earn on your investments, the greater risk you must assume. A fund with high volatility has experienced larger fluctuations of monthly returns than a fund with low volatility. Investors expect the potential for higher return in exchange for assuming the higher risk of more volatile investments. Volatility is ranked from lowest to highest - the left side represents low volatility and the right side represents high volatility. 4 : The pie chart depicts the mix of investments held by the underlying fund. 5 Top holdings: The primary security holdings based on the percentage weighting of the underlying fund s net market value. 1 Fund code: A specific code has been assigned to each fund. This code makes it easier for you and to identify a specific fund. Use this code in all communications with. When you use s secure website and telephone services to access your account, you will be able to identify funds using the fund codes. 2 Asset class: The fund pages in this Group Investment Report and on the website ( reflect the colour of their asset classes. For more information on asset classes, read page 5. 6 Fund commentary/: These commentaries offer the fund managers' reviews of fund activity and/or performance over a specified time period. They include an outlook reflecting economic trends or conditions that may affect the fund. Commentaries appear in the format provided by the fund manager(s). 7 Underlying fund: The market-based investment options in your group plan are fund-on-fund investments which invest in existing pooled or mutual funds (referred to as underlying funds). When a deposit is made into a fund, the deposit is used to purchase units of the corresponding underlying fund. For example, if you purchase units of the Trimark Canadian Fund, this fund invests in units of the Trimark Canadian Fund. Due to the timing 12

13 of these transactions, each fund may contain a small cash component in addition to the underlying fund's cash component. The goal of the fund-on-fund strategy is to produce returns on the fund that are similar to the returns on the underlying fund. 8 Objective: The fund s primary investment goal(s) as determined by the fund manager. 9 Managed by: The fund management company that manages the underlying fund. 10 Fund managers: The name of the lead fund manager(s) responsible for the investment decisions regarding the underlying fund. 11 Inception : The the underlying fund was made available for purchase by investors. 12 Total assets: The total market value of all the assets invested in the underlying fund as of the specified. 13 : Historical performance of the fund over a specified time period. All performance histories are offered for illustrative purposes only and are not a guarantee of future performance. Unit values will fluctuate with the market value of the underlying fund s assets. Gross returns are the rates of return earned before the deduction of investment management fees. An individual investing in the fund earns a net return after applicable management fees are charged. Management fees can vary by client depending on the products purchased. The returns shown here are returns for the fund and/or the underlying fund. Returns for individual plans will differ as investment management fees are applied. 14 Year by year returns: The one-year return of the fund for each year specified, based upon calendar year from January to December. 15 : The graph shows you how a investment in a fund would change in value for the specific number of years compared with a related broad-based index. 16 Index: The index shown represents a broad-based market view and is not necessarily the fund s specific benchmark. It should be used as a reference to compare funds against a broad asset class. The fund s objective may differ from the style of the index. 17 Annual compound returns: The return for historical period specified, converted to an annualized rate. 18 : The first full month the fund was made available for investment by Group Savings and Retirement Solutions. 19 : The benchmark the fund manager expects to meet or exceed over the long-term. 13

14 Asset Allocation Asset allocation funds are portfolios of underlying funds diversified by fund manager, asset class and investor style. Asset allocation funds are designed to make investing convenient. They provide fund participants with a balance of capital growth and preservation consistent with five investor styles ranging from conservative to aggressive. Asset allocation funds diversify by investing in a number of underlying funds so plan members do not need to manage these portfolios. offers two types of asset allocation funds: five actively-managed asset allocation funds and five passively-managed index asset allocation funds. The actively-managed funds strive to out-perform a variety of benchmark index composites while the passively-managed portfolios are designed to track to the returns of these benchmark index composites. (Please note: The passively-managed index asset allocation funds do not track to the same benchmarks as their actively managed counterparts.) The funds are re-balanced periodically to maintain their respective long-term target asset mixes which ensures each fund's underlying composition fulfills its objectives. Asset Allocation FUND PAGE CODE NUMBER Conservative Asset Allocation Fund Moderate Asset Allocation Fund Balanced Asset Allocation Fund Growth Asset Allocation Fund Aggressive Asset Allocation Fund Index Asset Allocation Conservative Index Asset Allocation Fund Moderate Index Asset Allocation Fund Balanced Index Asset Allocation Fund Growth Index Asset Allocation Fund Aggressive Index Asset Allocation Fund

15 ASSET ALLOCATION Code 2001 Conservative Asset Allocation Fund How the fund is invested Target allocation Bonds 70.2 US Equity 5.7 Int l Equity 3.0 Canadian Equity 11.6 Money Market 9.5 MLI Cdn Universe Bond (TAL) 28.7 MLI Cdn Bond (MFC) 24.0 MLI Mortgage Backed Fund (MFC) 17.5 MLI Cdn Money Market (MFC) 9.5 MLI U.S. Equity (Bernstein) 5.7 MLI Cdn Large Cap Val Equity (MFC) 5.1 MLI Cdn Large Cap Growth Eq (MB) 4.2 MLI International Equ (Templeton) 3.0 MLI Cdn Lg Cap Top Dn Eq (Zechner) 2.3 Total Objective The Conservative Asset Allocation Fund is managed to provide a high level of current income and capital preservation with some consideration given to growth of capital. This fund is diversified by asset class and investment styles with the objective of achieving superior riskadjusted returns over the long term. The fund will generally maintain 8 of its investments in bond funds and 2 in equity funds, though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception February 1999 Total assets $220.0 million deducted. The solid area represents the gross returns of the fund since its in February MLI Conservative Asset Allocation Fund commentary The economic and market fundamentals are sound, and valuation levels are reasonably attractive. Investor sentiment has been dampened by the increase in the price of oil and by the U.S. trade and budget deficits. On the positive side, inflation remains tame and earnings continue to grow at an attractive rate, although that rate is decreasing. For the year, all of the Portfolio s components added to performance. The largest single performance contribution came from Canadian equities such as the MLI Canadian Large Cap Value Equity Fund and the MLI Canadian Large Cap Growth Fund both of which had strong, doubledigit gains. Other contributors were Canadian bonds such as the MLI Canadian Bond Fund and the MLI Canadian Universe Bond Fund with singledigit gains. The consensus outlook is that the market will grow slowly, displaying singledigit positive The Portfolio is well positioned to offer capital protection in volatile markets as well as conservative upside potential when markets are positive. The Portfolio remains fully invested, weighted primarily in a diversified portfolio of fixed income holdings with a smaller exposure to a broad range of domestic, U.S., and international equities and management styles. $16,000 $15,000 $13,000 $11,000 MLI Conservative Asset Allocation Blend: MLI Conservative Asset Allocation $9,000 Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $15,168* $14,291 Annual compound returns the composite benchmark, as outlined in the below. MLI Conservative Asset Allocation Blend: MLI Conservative Asset Allocation 7.77% 7.54% 8.19% 6.07% 6.21% Feb % 6.84% 7.17% 5.19% Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of the following: 7% BARRA Value Total Return Index 5% BARRA Growth Total Return Index 5% S&P 500 Total Return Index ($ Cdn) 3% MSCI EAFE Total Return Index ($ Cdn) 53% Scotia Capital Universe Bond Total Return Index 9% Scotia Capital 91Day Tbill Total Return Index 18% Scotia Capital Mortgage Total Return Index 15

16 ASSET ALLOCATION Code 2101 Conservative Index Asset Allocation Fund How the fund is invested Target allocation Bonds 80.0 Int l Equity 3.0 Canadian Equity 10.0 US Equity 7.0 Objective The Conservative Index Asset Allocation Fund is managed to provide a high level of current income and capital preservation with some consideration given to growth of capital. This fund is expected to track the performance of a blend of market indices that is diversified by asset class. It will generally maintain 8 of its investments in passively managed bond funds and 2 in passively managed equity funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception June 1999 Total assets $6.9 million MFC Global Pooled Cdn Bond Index 55.0 MFC Global Pooled Short Term 25.0 MFC Global Pooled Canadian Index 10.0 MFC Global Pooled U.S. Equity Index 7.0 MLI BGI International Eq Index 3.0 Total deducted. The solid area represents the gross returns of the fund since its in June MLI Conservative Index Asset Alloc For the year, all of the Portfolio s asset classes added to performance. The largest contribution to the Portfolio s performance came from Canadian largecap equities with a gain of 24.1% as measured by the S&P/TSX Composite Index. To a lesser extent, positive performance by international largecap equities and U.S. largecap equities, also contributed to the Portfolio s performance. $15,000 $13,000 MLI Conservative Index Asset Alloc Blend: MLI Conservative Indx Asset Alloc $14,579* $14,454 The Portfolio was rebalanced in April, May, July, August, and September. The Fund was rebalanced so frequently (primarily) to respond to the outperformance of the Canadian equities market and the fact that each rebalancing did not move the Portfolio all the way back to the target mix, but left the Portfolio overweight in Canadian equities. This was done to reduce transaction costs and exploit the momentum of the Canadian equities market. $11,000 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 Annual compound returns the composite benchmark, as outlined in the below. MLI Conservative Index Asset Alloc Blend: MLI Conservative Indx Asset Alloc 7.19% 6.87% 7.21% 5.45% 5.9 Jun % 7.06% 5.28% Over the long term, the fund attempts to track the performance of a benchmark portfolio that is comprised of the following: 1 S&P/TSX Composite Total Return Index 7% S&P 500 Total Return Index ($ Cdn) 3% MSCI EAFE Total Return Index ($ Cdn) 55% Scotia Capital Universe Bond Total Return Index 25% Scotia Capital 91Day Tbill Total Return Index 16

17 ASSET ALLOCATION Code 2002 Moderate Asset Allocation Fund How the fund is invested Target allocation Bonds 59.8 Int l Equity 5.1 Canadian Equity 25.8 US Equity 9.3 MLI Cdn Universe Bond (TAL) 23.7 MLI Cdn Bond (MFC) 21.1 MLI Mortgage Backed Fund (MFC) 15.0 MLI U.S. Equity (Bernstein) 9.3 MLI Cdn Large Cap Val Equity (MFC) 8.8 MLI Cdn Large Cap Growth Eq (MB) 6.5 MLI International Equ (Templeton) 5.1 MLI Cdn Small Cap Equ (Tattersall) 4.2 MLI Cdn Lg Cap Top Dn Eq (Zechner) 3.8 MLI Growth Opportunities Fund (MFC) 2.5 Total Objective The Moderate Asset Allocation Fund is managed to provide a balance between current income and growth of capital with a greater emphasis on income and capital preservation. This fund is diversified by asset class and investment styles with the objective of achieving superior riskadjusted returns over the long term. The fund will generally maintain 6 of its investments in bond funds and 4 in equity funds, though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception February 1999 Total assets $323.3 million deducted. The solid area represents the gross returns of the fund since its in February % 1 5% 5% MLI Moderate Asset Allocation Fund commentary The economic and market fundamentals are sound and valuation levels are reasonably attractive. Investor sentiment has been dampened by the increase in the price of oil and by the U.S. trade and budget deficits. On the positive side, inflation remains tame, and earnings continue to grow at an attractive rate, although that rate is decreasing. For the year, all of the Portfolio s components added to performance. The largest single performance contribution came from Canadian equities such as the MLI Canadian Large Cap Value Equity Fund and the MLI Canadian Large Cap Growth Fund both of which had strong, doubledigit gains. Other contributors were Canadian bonds such as the MLI Canadian Bond Fund and the MLI Canadian Universe Bond Fund with singledigit gains. The consensus outlook is that the market will grow slowly, displaying singledigit positive The Portfolio is well positioned to offer capital protection in volatile markets as well as moderate upside potential when markets are positive. The Portfolio remains fully invested, with a slight majority of the holdings in a diversified fixed income portfolio, while maintaining a comfortable exposure to a broad range of domestic, U.S., and international equities and management styles. $16,000 $15,000 $13,000 $11,000 MLI Moderate Asset Allocation Blend: MLI Moderate Asset Allocation $9,000 Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $15,590* $14,219 Annual compound returns the composite benchmark, as outlined in the below. MLI Moderate Asset Allocation Blend: MLI Moderate Asset Allocation 9.68% 9.25% 10.35% 6.23% 6.63% Feb % 8.36% 9.06% 4.59% Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of the following: 13% BARRA Value Total Return Index 9% BARRA Growth Total Return Index 3% Nesbitt Burns Small Cap Index 9% S&P 500 Total Return Index ($ Cdn) 6% MSCI EAFE Total Return Index ($ Cdn) 44% Scotia Capital Universe Bond Total Return Index 3% Scotia Capital 91Day Tbills Total Return Index 13% Scotia Capital Mortgage Total Return Index 17

18 ASSET ALLOCATION Code 2102 Moderate Index Asset Allocation Fund How the fund is invested Target allocation Bonds 60.0 Int l Equity 4.0 Canadian Equity 21.0 US Equity 15.0 MFC Global Pooled Cdn Bond Index 39.0 MFC Global Pooled Canadian Index 21.0 MFC Global Pooled Short Term 21.0 MFC Global Pooled U.S. Equity Index 15.0 MLI BGI International Eq Index 4.0 Total Objective The Moderate Index Asset Allocation Fund is managed to provide a balance between current income and growth of capital with a greater emphasis on income and capital preservation. This fund is expected to track the performance of a blend of market indices that is diversified by asset class. It will generally maintain 6 of its investments in passively managed bond funds and 4 in passively managed equity funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception June 1999 Total assets $9.6 million deducted. This solid area represents the gross returns of the fund since its in June % 1 5% MLI Moderate Index Asset Allocation % For the year, all of the Portfolio s asset classes added to performance. The largest contribution to the Portfolio s performance came from Canadian largecap equities with a gain of 24.1% as measured by the S&P/TSX Composite Index. To a lesser extent, positive performance by international largecap equities and U.S. largecap equities, also contributed to the Portfolio s performance. The Portfolio was rebalanced in April, May, July, August, and September. The Fund was rebalanced (primariy) to respond to the outperformance of the Canadian equities market and the fact that each rebalancing did not move the Portfolio all the way back to the target mix, but left the Portfolio overweight in Canadian equities. This was done to reduce transaction costs and exploit the momentum of the Canadian equities market. $15,000 $13,000 $11,000 MLI Moderate Index Asset Allocation Blend: MLI Moderate Index Asset Alloc Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $14,333* $14,290 Annual compound returns the composite benchmark, as outlined in the below. MLI Moderate Index Asset Allocation Blend: MLI Moderate Index Asset Alloc 8.95% 8.08% 8.76% 4.54% 5.62% Jun % 8.54% 4.37% Over the long term, the fund attempts to track the performance of a benchmark portfolio that is comprised of the following: 21% S&P/TSX Composite Total Return Index 15% S&P 500 Total Return Index ($ Cdn) 4% MSCI EAFE Total Return Index ($ Cdn) 39% Scotia Capital Universe Bond Total Return Index 21% Scotia Capital 91Day Tbill Total Return Index 18

19 ASSET ALLOCATION Code 2003 Balanced Asset Allocation Fund How the fund is invested Target allocation Int l Equity 7.6 Bonds 39.0 Canadian Equity 39.3 US Equity 14.1 MLI Cdn Universe Bond (TAL) 15.6 MLI U.S. Equity (Bernstein) 14.1 MLI Cdn Bond (MFC) 13.6 MLI Cdn Large Cap Growth Eq (MB) 13.4 MLI Cdn Large Cap Val Equity (MFC) 10.0 MLI Mortgage Backed Fund (MFC) 9.8 MLI International Equ (Templeton) 7.6 MLI Cdn Small Cap Equ (Tattersall) 6.0 MLI Cdn Lg Cap Top Dn Eq (Zechner) 5.9 MLI Growth Opportunities Fund (MFC) 4.0 Total Objective The Balanced Asset Allocation Fund is managed to provide a balance between growth of capital and current income with a greater emphasis on growth of capital. This fund is diversified by asset class and investment styles with the objective of achieving superior riskadjusted returns over the long term. The fund will generally maintain 6 of its investments in equity funds and 4 in bond funds, though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception February 1999 Total assets $1,239.0 million deducted. The solid area represents the gross returns of the fund since its in February MLI Balanced Asset Allocation Fund commentary The economic and market fundamentals are sound and valuation levels are reasonably attractive. Investor sentiment has been dampened by the increase in the price of oil and by the U.S. trade and budget deficits. On the positive side, inflation remains tame, and earnings continue to grow at an attractive rate, although that rate is decreasing. For the year, all of the Portfolio s components added to performance. The largest single performance contribution came from Canadian equities such as the MLI Canadian Large Cap Value Equity Fund and the MLI Canadian Large Cap Growth Fund both of which had strong, doubledigit gains. Other contributors were Canadian bonds such as the MLI Canadian Bond Fund and the MLI Canadian Universe Bond Fund with singledigit gains. The consensus outlook is that the market will grow slowly, displaying singledigit positive The Portfolio is well positioned to offer relative value in volatile markets as well as upside potential when markets are positive. The Portfolio remains fully invested with a balanced exposure to a diversified fixed income portfolio and a broad range of domestic, U.S., and international equities and management styles. $17,000 $16,000 $15,000 $13,000 $11,000 MLI Balanced Asset Allocation Blend: MLI Balanced Asset Allocation $9,000 Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $16,370* $14,236 Annual compound returns the composite benchmark, as outlined in the below. MLI Balanced Asset Allocation Blend: MLI Balanced Asset Allocation 11.49% 10.87% 12.51% 6.52% 7.39% Feb % 9.94% 11.05% 3.95% Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of the following: 18% BARRA Value Total Return Index 14% BARRA Growth Total Return Index 5% Nesbitt Burns Small Cap Total Return Index 14% S&P 500 Total Return Index ($ Cdn) 9% MSCI EAFE Total Return Index ($ Cdn) 31% Scotia Capital Universe Bond Total Return Index 1% Scotia Capital 91Day Tbill Total Return Index 8% Scotia Capital Mortgage Total Return Index 19

20 ASSET ALLOCATION Code 2103 Balanced Index Asset Allocation Fund How the fund is invested Target allocation Int l Equity 12.0 Canadian Equity 30.0 Bonds 40.0 US Equity 18.0 MFC Global Pooled Canadian Index 30.0 MFC Global Pooled Cdn Bond Index 25.0 MFC Global Pooled U.S. Equity Index 18.0 MFC Global Pooled Short Term 15.0 MLI BGI International Eq Index 12.0 Total Objective The Balanced Index Asset Allocation Fund is managed to provide a balance between growth of capital and current income with a greater emphasis on growth of capital. This fund is expected to track the performance of a blend of market indices that is diversified by asset class. It will generally maintain 6 of its investments in passively managed equity funds and 4 in passively managed bond funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception June 1999 Total assets $41.6 million deducted. The solid area represents the gross returns of the fund since its in June MLI Balanced Index Asset Alloc For the year, all of the Portfolio s asset classes added to performance. The largest contribution to the Portfolio s performance came from Canadian largecap equities with a gain of 24.1% as measured by the S&P/TSX Composite Index. To a lesser extent, positive performance by international largecap equities and U.S. largecap equities, also contributed to the Portfolio s performance. The Portfolio was rebalanced in April, May, July, August, and September. The Fund was rebalanced so frequently (primarily) to respond to the outperformance of the Canadian equities market and the fact that each rebalancing did not move the Portfolio all the way back to the target mix, but left the Portfolio overweight in Canadian equities. This was done to reduce transaction costs and exploit the momentum of the Canadian equities market. $15,000 $13,000 $11,000 $9,000 MLI Balanced Index Asset Alloc Blend: MLI Balanced Index Asset Alloc Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $14,180 $14,094* Annual compound returns the composite benchmark, as outlined in the below. MLI Balanced Index Asset Alloc Blend: MLI Balanced Index Asset Alloc 10.93% 9.62% 10.52% 3.67% 5.35% Jun % 9.27% 10.36% 3.56% Over the long term, the fund attempts to track the performance of a benchmark portfolio that is comprised of the following: 3 S&P/TSX Composite Total Return Index 18% S&P 500 Total Return Index ($ Cdn) 12% MSCI EAFE Total Return Index ($ Cdn) 25% Scotia Capital Universe Bond Total Return Index 15% Scotia Capital 91Day Tbill Total Return Index 20

21 ASSET ALLOCATION Code 2004 Growth Asset Allocation Fund How the fund is invested Target allocation Canadian Equity 54.8 Int l Equity 9.4 Bonds 18.3 US Equity 17.5 MLI Cdn Large Cap Growth Eq (MB) 18.8 MLI U.S. Equity (Bernstein) 17.5 MLI Cdn Large Cap Val Equity (MFC) 12.0 MLI International Equ (Templeton) 9.4 MLI Cdn Small Cap Equ (Tattersall) 9.2 MLI Cdn Lg Cap Top Dn Eq (Zechner) 8.6 MLI Cdn Universe Bond (TAL) 7.4 MLI Cdn Bond (MFC) 6.3 MLI Growth Opportunities Fund (MFC) 6.2 MLI Mortgage Backed Fund (MFC) 4.6 Total Objective The Growth Asset Allocation Fund is managed to provide long term growth of capital with some consideration given to current income. This fund is diversified by asset class and investment styles with the objective of achieving superior riskadjusted returns over the long term. The fund will generally maintain 8 of its investments in equity funds and 2 in bond funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception February 1999 Total assets $492.0 million deducted. The solid area represents the gross returns of the fund since its in February MLI Growth Asset Allocation Fund commentary The economic and market fundamentals are sound and valuation levels are reasonably attractive. Investor sentiment has been dampened by the increase in the price of oil and by the U.S. trade and budget deficits. On the positive side, inflation remains tame, and earnings continue to grow at an attractive rate, although that rate is decreasing. For the year, all of the Portfolio s components added to performance. The largest single performance contribution came from Canadian equities such as the MLI Canadian Large Cap Value Equity Fund and the MLI Canadian Large Cap Growth Fund both of which had strong, double digit gains. Other contributors were Canadian bonds such as the MLI Canadian Bond Fund and the MLI Canadian Universe Bond Fund with singledigit gains. The consensus outlook is that the market will grow slowly, displaying singledigit positive The Portfolio is well positioned to offer relative value in volatile markets as well as healthy growth potential in positive markets. The Portfolio remains fully invested, with a majority exposure to equities, diversified by a broad range of domestic, U.S., and international equities and management styles. $18,000 $17,000 $16,000 $15,000 $13,000 $11,000 MLI Growth Asset Allocation Blend: MLI Growth Asset Allocation $9,000 Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $17,616* $15,121 Annual compound returns the composite benchmark, as outlined in the below. MLI Growth Asset Allocation Blend: MLI Growth Asset Allocation 13.61% 12.82% 15.12% 7.22% 8.53% Feb % 12.46% 14.46% 4.52% Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of the following: 25% BARRA Value Total Return Index 19% BARRA Growth Total Return Index 11% Nesbitt Burns Small Cap Total Return Index 15% S&P 500 Total Return Index ($ Cdn) 1 MSCI EAFE Total Return Index ($ Cdn) 17% Scotia Capital Universe Bond Total Return Index 3% Scotia Capital Mortgage Total Return Index 21

22 ASSET ALLOCATION Code 2104 Growth Index Asset Allocation Fund How the fund is invested Target allocation Int l Equity 12.0 Bonds 20.0 Canadian Equity 50.0 US Equity 18.0 MFC Global Pooled Canadian Index 50.0 MFC Global Pooled U.S. Equity Index 18.0 MFC Global Pooled Cdn Bond Index 15.0 MLI BGI International Eq Index 12.0 MFC Global Pooled Short Term 5.0 Total Objective The Growth Index Asset Allocation Fund is managed to provide longterm growth of capital with some consideration given to current income. This fund is expected to track the performance of a blend of market indices that is diversified by asset class. It will generally maintain 8 of its investments in passively managed equity funds and 2 in passively managed bond funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception June 1999 Total assets $25.2 million deducted. The solid area represents the gross returns of the fund since its in June MLI Growth Index Asset Allocation For the year, all of the Portfolio s asset classes added to performance. The largest contribution to the Portfolio s performance came from Canadian largecap equities with a gain of 24.1% as measured by the S&P/TSX Composite Index. To a lesser extent, positive performance by international largecap equities and U.S. largecap equities, also contributed to the Portfolio s performance. The Portfolio was rebalanced in April, May, July, August, and September. The Fund was rebalanced so frequently (primarily) to respond to the outperformance of the Canadian equities market and the fact that each rebalancing did not move the Portfolio all the way back to the target mix, but left the Portfolio overweight in Canadian equities. This was done to reduce transaction costs and exploit the momentum of the Canadian equities market. $15,000 $13,000 $11,000 $9,000 MLI Growth Index Asset Allocation Blend: MLI Growth Index Asset Allocation Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $14,798 $14,709* Annual compound returns the composite benchmark, as outlined in the below. MLI Growth Index Asset Allocation Blend: MLI Growth Index Asset Allocation 14.84% 12.53% 13.92% 3.91% 6.04% Jun % 11.98% 13.59% 3.72% Over the long term, the fund attempts to track the performance of a benchmark portfolio that is comprised of the following: 5 S&P/TSX Composite Total Return Index 18% S&P 500 Total Return Index ($ Cdn) 12% MSCI EAFE Total Return Index ($ Cdn) 15% Scotia Capital Universe Bond Total Return Index 5% Scotia Capital 91Day Tbill Total Return Index 22

23 ASSET ALLOCATION Code 2005 Aggressive Asset Allocation Fund How the fund is invested Target allocation Canadian Equity 73.5 US Equity 17.2 Int l Equity 9.3 MLI Cdn Large Cap Growth Eq (MB) 24.3 MLI U.S. Equity (Bernstein) 17.2 MLI Cdn Large Cap Val Equity (MFC) 15.3 MLI Cdn Lg Cap Top Dn Eq (Zechner) 12.8 MLI Cdn Small Cap Equ (Tattersall) 12.7 MLI International Equ (Templeton) 9.3 MLI Growth Opportunities Fund (MFC) 8.4 Total Objective The Aggressive Asset Allocation Fund is managed to provide long term growth of capital with no consideration given to current income. This fund is diversified by asset class and investment styles with the objective of achieving superior riskadjusted returns over the long term. This fund will generally maintain 10 of its investments in equity funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Inception February 1999 Total assets $289.2 million deducted. The solid area represents the gross returns of the fund since its in February MLI Aggressive Asset Allocation Fund commentary The economic and market fundamentals are sound and valuation levels are reasonably attractive. Investor sentiment has been dampened by the increase in the price of oil and by the U.S. trade and budget deficits. On the positive side, inflation remains tame and earnings continue to grow at an attractive rate, although that rate is decreasing. For the year, all of the Portfolio s components added to performance. The largest single performance contribution came from Canadian equities such as the MLI Canadian Large Cap Value Equity Fund and the MLI Canadian Large Cap Growth Fund both of which had strong, doubledigit gains. Other contributors were Canadian bonds such as the MLI Canadian Bond Fund and the MLI Canadian Universe Bond Fund with singledigit gains. The consensus outlook is that the market will grow slowly, displaying singledigit positive The Portfolio is well positioned to offer relative value in volatile markets as well as significant upside potential in positive markets. The Portfolio remains fully invested and with a full exposure to equities, diversified by a broad range of domestic, U.S., and international equities and management styles. $20,000 $18,000 $16,000 MLI Aggressive Asset Allocation Blend: MLI Aggressive Asset Allocation $8,000 Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $18,895* $15,426 Annual compound returns the composite benchmark, as outlined in the below. MLI Aggressive Asset Allocation Blend: MLI Aggressive Asset Allocation 15.95% 14.76% 17.86% 8.18% 9.64% Feb % 14.41% 17.39% 4.46% Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of the following: 31% BARRA Value Total Return Index 2 BARRA Growth Total Return Index 19% Nesbitt Burns Small Cap Total Return Index 18% S&P 500 Total Return Index ($ Cdn) 12% MSCI EAFE Total Return Index ($ Cdn) 23

24 ASSET ALLOCATION Code 2105 Aggressive Index Asset Allocation Fund How the fund is invested Canadian Equity 70.0 US Equity 18.0 Int l Equity 12.0 Objective The Aggressive Index Asset Allocation Fund is managed to provide longterm growth of capital with no consideration given to current income. This fund is expected to track the performance of a blend of equity market indices that is diversified by geographic region. This fund will generally maintain 100 % of its investments in passively managed equity funds though each segment may vary up to 1 from time to time. Managed by Financial Fund managers Various (please refer to target allocation on this page). Target allocation MFC Global Pooled Canadian Index 70.0 MFC Global Pooled U.S. Equity Index 18.0 MLI BGI International Eq Index 12.0 Total Inception June 1999 Total assets $17.3 million deducted. The solid area represents the gross returns of the fund since its in June MLI Aggressive Index Asset Alloc For the year, all of the Portfolio s asset classes added to performance. The largest contribution to the Portfolio s performance came from Canadian largecap equities with a gain of 24.1% as measured by the S&P/TSX Composite Index. To a lesser extent, positive performance by international largecap equities and U.S. largecap equities, also contributed to the Portfolio s performance. The Portfolio was rebalanced in April, May, July, August, and September. The Fund was rebalanced so frequently (primarily) to respond to the outperformance of the Canadian equities market, and the fact that each rebalancing did not move the Portfolio all the way back to the target mix, but left the Portfolio overweight in Canadian equities. This was done to reduce transaction costs and exploit the momentum of the Canadian equities market. $16,000 $15,000 $13,000 $11,000 $9,000 $8,000 MLI Aggressive Index Asset Alloc Blend: MLI Aggressive Index Asset Alloc Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $15,098 $15,032* Annual compound returns the composite benchmark, as outlined in the below. MLI Aggressive Index Asset Alloc Blend: MLI Aggressive Index Asset Alloc % 17.14% 3.69% 6.39% Jun % 14.47% 16.63% 3.58% Over the long term, the fund attempts to track the performance of a benchmark portfolio that is comprised of the following: 7 S&P/TSX Composite Total Return Index 18% S&P 500 Total Return Index ($ Cdn) 12% MSCI EAFE Total Return Index ($ Cdn) 24

25 Guaranteed Interest Accounts and Money Market Guaranteed Interest Accounts (GIA) Similar to guaranteed investment certificates (GICs) offered by banks and trust companies, these accounts guarantee an interest rate from the of contribution until maturity. At maturity, original investments and interest earned will reinvest for the same term unless you provide with different instructions. When contributions are invested in these accounts, they earn the current interest rate at the time of the deposit. That interest is credited to the account monthly and is compounded annually. Each contribution made to a GIA accumulates for the term selected at the guaranteed rate in effect on the s head office receives the contribution. The GIA operates on a compound interest basis which means the guaranteed interest rate applies to both principal and accumulated interest. offers GIAs for these terms: daily interest, 1-year, 2-year, 3-year, 4-year, 5- year and 10-year. Money Market Money Market funds invest in high-quality, short-term fixed income securities. By investing in fixed income securities, these funds are essentially making a short-term loan to a government or corporation and earning interest on its principal. Money Market funds are typically managed to maintain liquidity, protect the initial investment and provide a moderate level of income. These funds are ideal for investors who want to preserve capital, who are saving for the short term or who want to maintain a cash reserve and are comfortable only with the very lowest levels of volatility. Guaranteed Interest Accounts and Money Market Funds FUND PAGE CODE NUMBER Daily Interest Account Guaranteed Interest Accounts 1001, 1002, 1003, 1004, 1005, Canadian Money Market Fund (MFC)

26 VOLATILITY METER GUARANTEED INTEREST ACCOUNTS Code 1000 Daily Interest Accounts Volatility and risk This account is backed by the general assets of Financial. It has the lowest risk and lowest volatility, but earns the lowest rate of interest over the long term. Consider this account as a short-term holding account while you decide on your long-term investment strategy. Once you have determined your investment strategy, you can transfer your funds at any time. HOW THE DAILY INTEREST ACCOUNT WORKS Similar to a daily interest account at a bank or trust company, this account earns interest daily at the current rate for that account. While always guarantees the principal and interest, the interest rate may change at any time. Deposits begin earning interest when received by Financial's head office. As Financial receives deposits, those funds begin to earn interest at a rate similar to a bank savings account. HOW THE DAILY INTEREST ACCOUNT IS PROTECTED Financial is a founding member of Assuris. With Assuris, consumers may be entitled to protection against the loss of their savings and retirement incomes if a member financial institution becomes insolvent. You can call Assuris at for details about maximum coverage guarantees. VOLATILITY METER GUARANTEED INTEREST ACCOUNTS Codes 1001, 1002, 1003, 1004, 1005, 1010 Guaranteed Interest Accounts Volatility and risk These accounts offer good returns and excellent investment security. Consider these accounts if you are an investor who needs guaranteed security for your investment and can commit to investments for a fixed period of time. There is no volatility associated with the return in this account and there is minimal risk as this is a guaranteed investment backed by the general assets of Financial. WHAT THESE ACCOUNTS OFFER Guaranteed returns when held to maturity Principal and interest backed by the assets of Financial Choice of 1, 2, 3, 4, 5 and 10-year terms Investment codes respectively (1001, 1002, 1003, 1004, 1005, 1010) HOW THE GUARANTEED INTEREST ACCOUNT IS PROTECTED Financial is a founding member of Assuris. With Assuris, consumers may be entitled to protection against the loss of their savings and retirement incomes if a member financial institution becomes insolvent. You can call Assuris at for details about maximum coverage guarantees. Sources : Financial 26

27 MONEY MARKET Code 3132 Canadian Money Market Fund (MFC) Cash 99.75% Other 0.25% UNDERLYING FUND > MLI Cdn Money Market (MFC) Objective The Canadian Money Market Fund is managed to achieve a consistent level of interest income while preserving capital and maintaining liquidity. This fund invests primarily in money market securities guaranteed by the Government of Canada, its provinces or municipalities, corporations and chartered banks. Managed by Financial Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Short Term Investment Total Inception January 1999 Total assets $238.8 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. MLI Canadian Money Market MLI Cdn Money Market (MFC) During the first twothirds of the year, the Bank of Canada left interest rates unchanged with the overnight rate at 2.5%. In the second and third quarters, sentiment started to change with the futures market pricing in a possible rate increase in September. A 25basispoint increase took place on September 7, followed by another in October and a third in December bringing the overnight rate to 3.25% by year end. The Federal Reserve has been tightening for the last eighteen months, and while an end may be in sight, at least one or two more increases seem likely. The Bank of Canada also appears to be in a tightening mode, with a similar number of increases expected. The Fund will continue to maintain an average term to maturity, between neutral and slightly longer, adding yield on weakness in the treasury bill curve and taking profits on strength. $13,000 $11,000 MLI Canadian Money Market 91 Day Treasury Bill Index MLI Cdn Money Market (MFC) $12,996* Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $12,801 Annual compound returns the 91 Day Treasury Bill Index. MLI Canadian Money % 2.78% Jul 2002 Market 91 Day Treasury Bill Index 2.58% 2.44% The fund is expected to outperform the SCM 91 Day Tbill Total Return Index over a moving three year annualized period. 27

28 Fixed Income Fixed income funds invest in debt securities issued by corporations, as well as federal, provincial and municipal governments. By investing in bonds, the fund earns a specified amount of interest based on the coupon rate (interest rate) on the bonds. These funds are exposed to risks relating to the issuers' ability to repay the debt at maturity plus changes in interest rates. Bond funds are appropriate for investors who have less tolerance for volatility and would like to emphasize preservation of capital. Fixed Income FUND PAGE CODE NUMBER Canadian Bond Fund (MFC) Fidelity Canadian Bond Fund McLean Budden Fixed Income Fund SEAMARK Bond Fund MFC Global Pooled Canadian Bond Index Fund

29 FIXED INCOME Code 4131 Canadian Bond Fund (MFC) Provincial Bonds 18.4 Municipal Bonds 0.16% Corporate Debentures 27.44% Federal Bonds 32.27% Other 21.73% Gov t of Canada, 4.5, September 1, % Gov t of Canada, 5.75%, June 1, % Gov t of Canada, 6.0, June 1, % Province of Ontario, 5.6, June 2, Gov t of Canada, 8.0, June 1, % Gov t of Canada, 4.5, June 1, % Province of Quebec, 5.5, December 1, % Canada Housing Trust, 3.55%, March 15, % Province of Quebec, 6.25%, June 1, % Province of Ontario, 4.5, March 8, % Total 39.26% UNDERLYING FUND > MLI Cdn Bond (MFC) Objective The Canadian Bond Fund is managed to maximize stable, long term growth through a combination of income and capital appreciation. This fund invests primarily in securities guaranteed by the Government of Canada, its provinces or municipalities, corporations and chartered banks. Managed by Financial Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception January 1999 Total assets $357.6 million deducted. The solid area represents the gross returns of the fund since its in September The underlying fund was changed on September 30, 2002 from the Elliott & Page Pooled Bond Fund to the Canadian Bond Fund MLI Canadian Bond The Bank of Canada resumed tightening in September, bringing the rate to 3.25% by yearend. The yield curve for Government of Canada bonds flattened significantly: yields on twoyear bonds rose to 3.85% while yields on 30year bonds fell to 4.04%. The Federal Reserve raised rates eight times in 2005, bringing the rate to 4.25%. Longermaturity Treasuries rallied considerably, with 30year yields declining to 4.53 partly due to a glut in global savings. Demand also stemmed from the recycling of trade surpluses of Asian exporting countries into U.S. Treasuries, demand from asset liability matching activities, and tame core inflation numbers. Fixedincome credit spreads in the U.S. widened; weakness was concentrated in the auto and auto part manufacturing sectors. Credit spreads in Canada were relatively unchanged. A flattening bias in yield curve positioning positively impacted portfolio returns while the contribution from duration was mixed. The growth of the North American economy is expected to be slower in The housing market and its effect on consumers is expected to lead the slowdown. With core inflation in the U.S. and Canada gradually declining, both central banks have hinted they will soon end their tightening cycles. The Fund managers are reviewing their yield curve and duration strategies to position the portfolio for the new environment. $16,000 $15,000 $13,000 $11,000 MLI Canadian Bond SC Universe Bond Total Return Index $9,000 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $15,587 $15,059* Annual compound returns the SC Universe Bond Total Return Index. MLI Canadian Bond % % 6.54% Sep 1998 SC Universe Bond Total Return Index 6.46% % 7.42% Over the long term, the fund is expected to outperform the SCM Universe Bond Total Return Index over a moving threeyear annualized period by 0.5% per year. 29

30 FIXED INCOME Code 4141 Fidelity Canadian Bond Fund Municipal Bonds 5.5 Federal Bonds 11.3 Corporate Debentures 28.4 Other 30.6 Provincial Bonds 24.2 Province of Nova Scotia, 6.25%, June 1, % Gov t of Canada, 5.25%, June 1, % Gov t of Canada, 8.0, June 1, % Gov t of Canada, 4.25%, December 1, % Province of Newfoundland, 6.15%, April 17, % Province of Manitoba, 7.75%, December 22, 1.87% 2025 Province of New Brunswick, 5.88%, December 6, 1.78% 2012 Province of Quebec, 6.0, October 1, % Canada Housing Trust, 3.75%, March 15, % Province of Quebec, 5.25%, October 1, % Total 24.31% Canadian bonds, as measured by the RBC CM Canadian Bond Market index, rose 0.7% during the fourth quarter of The Bank of Canada upheld its tightening stance by raising its key overnight rate to 3.25% with 25basispoint increases in October and December. The yield curve continued to flatten during the threemonth period, as several strong economic indicators pushed shorterd yields higher. Decadeslow unemployment, resilient retail sales, and strong productivity growth even in the manufacturing sector have been indicative of a solid Canadian economy. The yield on the benchmark Government of Canada 10year bond held steady as headline inflation retreated along with gasoline prices. In the corporate bond market, spreads remained tight. The Fund rose 0.5% in this environment to trail its benchmark index slightly. The Fund s modest overweight exposure to provincial bonds, the best performer during the quarter, helped relative performance. The portfolio manager, David Prothro, continues to hold an overweighted position in structured products at the expense of corporate bonds. In the current market environment, Mr. Prothro prefers corporate bonds with shorter maturities. Federal bonds remain underweight relative to the benchmark index. A barbell strategy remains in place to take advantage of a flattening yield curve. As spreads between corporate and government bonds remain very tight, Mr. Prothro is watchful of the Fund s position in corporate bonds. Instead, the Fund has focused on yield opportunities in the assetbacked and commercial mortgagebacked securities markets for more attractive riskreturn characteristics. If shortterm rates continue to rise in 2006, bond markets will face a more challenging environment than they have in the past few years. UNDERLYING FUND > Fidelity Canadian Bond Objective This fund aims to provide a steady flow of income and invests primarily in Canadian fixed income securities. It delivers enhanced return potential through a disciplined investment approach, which seeks to add value primarily through security selection and yieldcurve strategies rather than interest rate anticipation. Managed by Fidelity Investments Canada Ltd. Fund managers David Prothro, BA, MBA, CFA Inception February 1988 Total assets $344.7 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 15% 1 5% 5% MLI Fidelity Canadian Bond Fidelity Canadian BondA 10.4 $22,000 $20,000 $18,000 $16,000 $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec MLI Fidelity Canadian Bond RBC CM Canadian Bond Market Index Fidelity Canadian BondA $20,999* $20,651 Annual compound returns the RBC CM Canadian Bond Market Index. MLI Fidelity Canadian Bond 7.14% 7.23% 7.38% 7.87% 7.35% Jul 1997 RBC CM Canadian Bond Market Index % 7.37% The fund seeks to achieve returns comparable to, or better than, the RBC CM Canadian Bond Market Index

31 FIXED INCOME Code 4161 McLean Budden Fixed Income Fund Other 10.61% Municipal Bonds 0.54% Corporate Debentures 29.46% Federal Bonds 37.37% Provincial Bonds 22.02% Gov t of Canada, 5.75%, June 1, % Gov t of Canada, 4.0, September 1, % Gov t of Canada, 8.0, June 1, % Gov t of Canada, 4.5, June 1, % Gov t of Canada, 5.25%, June 1, % Province of Ontario, 6.5, March 8, Gov t of Canada, 4.25%, September 1, % Province of Quebec, 6.0, October 1, % Province of Ontario, 4.5, March 8, % Province of Ontario, 5.38%, December 2, % Total 45.53% UNDERLYING FUND > MB Fixed Income Objective The McLean Budden Fixed Income Fund is managed for a balance of security and growth over a period of at least four years. This fund provides moderate real rates of return, primarily through income, by investing in a diversified portfolio of high quality Canadian debt securities such as bonds, debentures and Tbills. Managed by McLean Budden Limited Fund managers Cort Conover, CFA; Peter Kotsopoulos, CFA; Tony Magri, CFA, MBA; Paul Marcogliese, CFA and Cindy Nam Inception January 1981 Total assets $3,276.3 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 15% 1 5% 5% MLI McLean Budden Fixed Income MB Fixed Income The fourth quarter ended with a continued overweight position in longterm bonds that resulted in a duration that was 0.7 of a year longer than the Index, up 0.1 of a year from the beginning of the period. Relative to the Index, midterm bonds remained overweight by 8% throughout the quarter resulting in an underweight position in short term bonds. There were no net changes in the provincial or corporate sector weights. New additions in the corporate sector included Bank of Nova Scotia, CARDS II Trust Asset Backed Security (ABS), National Bank of Canada and Bank, all with a 5year term and a 7year Enbridge Pipelines position. These were offset with sales of various shorter d bank and ABS paper. The U.S. pay position was increased 1.5% to end the quarter at 7%. The Fund s performance for the quarter was moderately ahead of the Index. The key contribution came from duration management as the Fund maintained a considerably longer duration than the Index during a period of declining yields for longterm bonds. The higher yields provided by the U.S. pay component also added value. $22,000 $20,000 $18,000 $16,000 MLI McLean Budden Fixed Income SC Universe Bond Total Return Index MB Fixed Income $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $20,906* $20,712 Annual compound returns the SC Universe Bond Total Return Index. MLI McLean Budden Fixed Income SC Universe Bond Total Return Index 6.31% 6.99% 6.83% 7.44% 7.2 Jul % % 7.42% Scotia Capital Universe Bond Index + 0.5% (annualized) over a moving fouryear period. 31

32 FIXED INCOME Code 4171 SEAMARK Bond Fund Municipal Bonds 8.11% Other 6.15% Federal Bonds 28.72% Corporate Debentures 34.84% Provincial Bonds 22.18% Province of Ontario, 6.5, March 8, % Gov t of Canada, 5.0, June 1, % Canada Housing Trust, 4.05%, March 15, % Province of British Columbia, 5.62%, August 17, 5.63% 2028 Canada Housing Trust, 3.75%, March 15, % Quebec Housing, 11.38%, September 6, % Toronto Dominion Bank, 5.2, September 4, 4.93% 2012 Citibank Canada, 4.78%, June 15, % Royal Bank of Canada, 7.1, January 25, % Gov t of Canada, 8.0, June 1, % Total 55.58% The Canadian yield curve continued to flatten during the quarter. The two-year bond yield increased 53 basis points to 3.83%, while the 30-year bond yield declined 17 basis points to 4.04%. The rise in the front end of the yield curve was driven by two rate hikes by the Bank of Canada (BoC), increasing the Bank Rate to 3.5. The decline in the longer end of the yield curve reflects an expectation that further rate hikes will dampen future growth prospects. The U.S. Federal Reserve (Fed) in December adopted a less hawkish tone, indicating the end is in sight to the U.S. rate tightening cycle. The BoC appears to have more work to do. While inflation remains benign, tight labour markets and capacity utilization make one or possibly two more BoC rate hikes likely in We therefore expect the shortend of the Canadian yield curve to continue to rise, while the longer end stabilizes near current levels. The Fund is positioned to take advantage of the anticipated upward rate adjustment. It is focused on high credit quality issues out of concern that credit spreads for lower quality borrowers could widen from the current unusually narrow conditions. UNDERLYING FUND > SEAMARK Pooled Canadian Bond Objective The SEAMARK Pooled Canadian Bond Fund is managed to preserve capital while generating current income. The fund will seek to enhance returns through moderate capital gains under appropriate market conditions while seeking to prevent capital losses under adverse conditions. The fund will invest primarily in Canadian dollar denominated fixed income investments. Managed by SEAMARK Asset Management Ltd. Fund managers Tom R. MacLaren, BBA, FCSI, CFA; Rob Weatherston, CFA; Remi Roger, CFA; and Heather Hurshman, MA. Inception June 1997 Total assets $72.3 million deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 15% 1 5% 5% MLI SEAMARK Bond 10.6 $19,000 $18,000 $17,000 $16,000 $15,000 $13,000 $11,000 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec MLI SEAMARK Bond SC Universe Bond Total Return Index SEAMARK Pooled Canadian Bond $18,034 $17,465* Annual compound returns the SC Universe Bond Total Return Index. MLI SEAMARK Bond 5.24% 5.87% 5.84% 6.76% 6.39% Aug 1997 SC Universe Bond Total Return Index 6.46% % 7.42% 5.2 The fund s performance is benchmarked against the Scotia Capital Universe Bond Index. Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party. 32

33 FIXED INCOME Code 4191 MFC Global Pooled Canadian Bond Index Fund Cash 0.06% Municipal Bonds 2.17% Corporate Debentures 29.56% Federal Bonds 44.04% Provincial Bonds 24.17% Gov t of Canada, 5.5, June 1, Gov t of Canada, 6.0, June 1, % Gov t of Canada, 5.5, June 1, % Gov t of Canada, 4.5, September 1, % Gov t of Canada, 5.75%, June 1, % Gov t of Canada, 5.0, June 1, % Gov t of Canada, 5.25%, June 1, % Gov t of Canada, 9.0, June 1, % Gov t of Canada, 4.5, June 1, % Province of Quebec, 6.25%, June 1, % Total 36.37% UNDERLYING FUND > MFC Global Pooled Cdn Bond Index Objective The MFC Global Pooled Canadian Bond Index Fund is managed to provide a rate of return based on the performance of the Scotia Capital Universe Bond Index. This fund seeks to earn returns that replicate, as closely as possible, the Scotia Capital Universe Bond Index. This is a passively managed fund. To achieve its investment objective, the fund will invest directly in bonds and may use derivative instruments in order to replicate the securities of the Scotia Capital Universe Bond Index. Managed by MFC Global Investment Management (Toronto) Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception April 1999 Total assets $120.6 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 15% 1 5% MLI MFC Global Pooled Cdn Bond Indx MFC Global Pooled Cdn Bond Index The Bank of Canada resumed tightening in September, bringing the rate to 3.25% by yearend. The yield curve for Government of Canada bonds flattened significantly; yields on twoyear bonds rose to 3.85%, while yields on 30year bonds fell to 4.04%. The Federal Reserve raised rates eight times in 2005, bringing the rate to 4.25%. Longermaturity Treasuries rallied considerably, with 30year yields declining to 4.53 partly due to a glut in global savings. Demand also stemmed from the recycling of trade surpluses of Asian exporting countries into U.S. Treasuries, demand from asset liability matching activities, and tame core inflation numbers. Fixedincome credit spreads in the U.S. widened; weakness was concentrated in the auto and auto part manufacturing sectors. Credit spreads in Canada were relatively unchanged. A flattening bias in yield curve positioning positively impacted portfolio returns, while the contribution from duration was mixed. The growth of the North American economy is expected to be slower in The housing market and its effect on consumers is expected to lead the slowdown. With core inflation in the U.S. and Canada gradually declining, both central banks have hinted they will soon end their tightening cycles. The Fund managers are reviewing their yield curve and duration strategies to position the portfolio for the new environment. $16,000 $15,000 $13,000 $11,000 MLI MFC Global Pooled Cdn Bond Indx SC Universe Bond Total Return Index MFC Global Pooled Cdn Bond Index $9,000 Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $15,469 $15,269* Annual compound returns the SC Universe Bond Total Return Index. MLI MFC Global Pooled Cdn Bond Indx SC Universe Bond Total Return Index % 6.76% 7.06% Oct % % 7.42% Over the long term, the fund is expected to track the performance of the Scotia Capital Universe Bond Total Return Index. 33

34 Balanced Balanced funds typically aim to provide investors with a balance of capital growth and income. Balanced funds accomplish this by investing in a blend of equity and fixed income securities. Balanced fund managers typically set a long-term target for the mix of bonds and equities in the fund and may make moderate changes to the mix to reflect their outlook on which asset class represents the best opportunity. Balanced funds are ideal for investors who seek a diversified portfolio with an average level of volatility and who do not want to manage the mix of asset classes on their own. Balanced funds are appropriate for investors who are looking for a mix of growth and income over the long-term and are comfortable with some short-term volatility in their investment Balanced FUND PAGE CODE NUMBER Elliott & Page Monthly High Income Fund McLean Budden Balanced Growth Fund Canadian Balanced Ethics Fund McLean Budden Balanced Fund SEAMARK Balanced Fund Trimark Income Growth Fund Jarislowsky Fraser Balanced Fund Leith Wheeler Diversified Pooled Fund Global Balanced CI International Balanced Fund

35 BALANCED Code 5132 Elliott & Page Monthly High Income Fund Other 10.11% Oil & Gas Income Trust 8.1 NonOil & Gas Income Trust 17.29% Stock 38.65% Bond 16.8 Cash 4.75% REIT 4.3 E&P Money Fund I (MFC) 9.42% BCE Inc. 4.0 PetroCanada 3.11% ARC Energy Trust 2.94% TD Bank 2.76% BFI Canada Income Fund 2.51% Bank of Nova Scotia 2.23% Power Financial Corp. 1.95% Sun Life Financial Inc. 1.91% Brookfield Asset Management 1.9 Total 32.73% UNDERLYING FUND > Elliott & Page Monthly High Income Fund Objective The Elliott & Page Monthly High Income Fund seeks to provide investors with a steady flow of monthly income and capital growth through investments in Canadian fixed income and large cap securities. The Fund may also invest in units or royalty trusts and real estate investment trusts. Managed by MFC Global Investment Management (Toronto) Fund managers Alan Wicks, CFA Inception September 1997 Total assets $3,435.9 million deducted. The solid area represents the gross returns of the fund since its in December To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI E&P Monthly High Income Elliott & Page Monthly High Income Every asset class posted positive returns in Income trusts, as measured by the Scotia Capital Income Trust Index Overall, performed best, returning Canadian equities, as measured by the S&P/TSX Index, returned 24.13%. Bonds, as measured by the Scotia Capital Bond Universe Overall, lagged returning 6.46%. Energy prices dominated the news, with the price of oil increasing 4. The Fund managers decision to hold an underweight in energy, based on valuation, had the greatest impact on Fund performance: the managers do not weight energy heavily, not wanting to sacrifice future capital for a higher level of current income. During the year, the Fund s equity allocation was increased to 39%, bonds and cash were increased to approximately 3, and the income trust weighting was decreased to 31%. Equities appeared to be more attractively valued than income trusts. The risk profile of the Fund, however, was not changed significantly, and the asset mix remains 7 equities and income trusts and 3 cash and bonds, compared to 6 equities and 4 bonds for the benchmark. The federal government s announcement that it would leave the tax treatment of income trusts unchanged and increase the dividend tax credit was positive for both income trusts and dividendpaying stocks, and should remain so in In September, the Bank of Canada began raising rates: continued increases and consequent changes in bond prices would prove to be negative for the portfolio, which is highly interest sensitive. The Fund managers will continue to seek securities that are undervalued and provide the best risk return profile. $40,000 $30,000 $20,000 MLI E&P Monthly High Income Blend: 6 S&P/TSX, 4 Scotia Universe Elliott & Page Monthly High Income $0 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $30,506* $17,876 Annual compound returns the composite benchmark, as outlined in the below. MLI E&P Monthly High Income Blend: 6 S&P/TSX, 4 Scotia Universe 15.09% 17.18% Dec % 13.43% 14.37% 6.96% Over the long term, the fund is expected to outperform a benchmark portfolio that is comprised of: 6 S&P/TSX Composite Total Return Index 4 Scotia Capital Universe Bond Index 35

36 BALANCED Code 5161 McLean Budden Balanced Growth Fund International Equity 12.93% Cash 6.16% Bond 34.37% Canadian Equity 31.73% Other 0.12% United States Equity 14.69% MB Global Equity Growth 8.71% Gov t of Canada, 5.75%, June 1, % Gov t of Canada, 4.5, June 1, % Gov t of Canada, 5.25%, June 1, Talisman Energy 1.85% Province of Ontario, 6.5, March 8, % Financial 1.65% Royal Bank of Canada 1.65% Bank of Nova Scotia 1.6 TD Bank 1.6 Total 26.03% UNDERLYING FUND > MB Balanced Growth Objective The McLean Budden Balanced Growth Fund is managed for a balance of security and growth. This fund invests in Canadian and foreign equities and fixed income securities issued by Canadian governments and corporations. This fund provides superior real rates of return both through income and capital appreciation. Managed by McLean Budden Limited Fund managers Tony Magri, CFA, MBA; Doug Andrews; Alan Daxner; John Ackerl, CFA, MBA; and Mary Hallward, BA, MBA Inception January 1997 Total assets $2,226.6 million Gross rates of return are before investment management fees have been deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI McLean Budden Balanced Growth MB Balanced Growth Most global equity markets generated positive returns during the quarter despite continued tightening by several major central banks. The Bank of Canada and the U.S. Federal Reserve increased overnight rates by 50 basis points during the period, while the European Central Bank announced its first interest rate increase in five years, moving the region s benchmark rate off a sixdecade low. The Fund registered a solid 2.7% return for the quarter and outpaced the benchmark with relatively favourable results achieved in all underlying asset classes. Within the Canadian equity component, strong stock selection in energy and materials more than offset negative sector allocation during the period. Globally, strong stock selection within energy, combined with an underweight position in this underperforming sector, drove relative results. The bond portfolio benefited from its long duration position as the yield curve continued to flatten during the period. The impact from asset mix was minimal during the quarter. Asset mix changes during the period were modest. The Fund began the quarter targeting total equity content slightly higher than benchmark, while remaining underweight in bonds and overweight in cash. During the third quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cash levels were raised. As subsequent economic data showed evidence of stabilization, the Fund s targeted cash allocation was reduced by 1. with half of the proceeds used to increase the overweight position in foreign equities and the other half deployed into bonds. Relative to the benchmark, the Fund closed out 2005 with an asset mix target that continued to favour global equities at the expense of Canadian equities, while remaining underweight in bonds and modestly overweight in cash. $22,000 $20,000 $18,000 $16,000 MLI McLean Budden Balanced Growth Blend: MLI McLean Budden Balanced Growth MB Balanced Growth Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $20,504* $19,242 Annual compound returns the composite benchmark, as outlined in the below. MLI McLean Budden Balanced Growth Blend: MLI McLean Budden Balanced Growth % 11.36% 5.72% 7.64% Jul % 11.37% 12.13% 5.09% Over a moving fouryear period, the fund strives to outperform by 1% per year a benchmark portfolio composed of the following: 37% Scotia Capital Universe Bond Index 33% BMO/TSX Composite Cap 1 Index 25% MSCI World Index ($ Cdn) 5% Scotia Capital 91Day Tbill Index 36

37 BALANCED Code 5162 Canadian Balanced Ethics Fund Cash 3.54% Canadian Equity 32.55% Bond 36.36% International Equity 27.55% MB Select Fixed Income 36.36% MB Select Canadian Equity 32.55% MB Select Global Equity 27.55% Total 96.46% UNDERLYING FUND > MB Select Balanced Objective The McLean Budden Select Balanced Fund is managed to provide a superior real rate of return through both income and capital appreciation. This fund invests in Canadian and global equities and fixed income securities issued by Canadian governments and corporations. The fund screens for tobacco, alcohol, and gaming companies. Companies must adhere to employment standards and may not derive more than 1 of their gross annual revenue from armaments. Managed by McLean Budden Limited Fund managers McLean Budden Mgmt. Team Inception September 2000 Total assets $57.4 million Gross rates of return are before investment management fees have been deducted. The solid area represents the gross returns of the fund since its in February To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. MLI Canadian Balanced Ethics MB Select Balanced Most global equity markets generated positive returns during the quarter despite continued tightening by several major central banks. The Bank of Canada and the U.S. Federal Reserve increased overnight rates by 50 basis points during the period, while the European Central Bank announced its first interest rate increase in five years, moving the region s benchmark rate off a sixdecade low. The Fund registered a solid 2.4% return for the quarter and outpaced the benchmark with relatively strong results achieved in all underlying asset classes. Within the Canadian equity component, stock selection bolstered results as key holdings, Dofasco and Placer Dome, were targets of takeover offers. Globally, relatively weak results in telecommunication services were more than offset by strong stock selection in energy. The bond portfolio benefited from its long duration position as the yield curve continued to flatten during the period. The impact from asset mix was minimal during the quarter. Asset mix changes during the period were modest. The Fund began the quarter targeting total equity content slightly higher than benchmark, while remaining underweight in bonds and overweight in cash. During the third quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cash levels were raised. As subsequent economic data showed evidence of stabilization, the Fund s targeted cash allocation was reduced by 1., with half of the proceeds used to increase the overweight position in foreign equities and the other half deployed into bonds. Relative to the benchmark, the Fund closed out 2005 with an asset mix target that continued to favour global equities at the expense of Canadian equities, while remaining underweight in bonds and modestly overweight in cash. $13,000 $11,000 $9,000 $8,000 $7,000 MLI Canadian Balanced Ethics Blend: MLI Canadian Balanced Ethics MB Select Balanced Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $12,627* $10,710 Annual compound returns the composite benchmark, as outlined in the below. MLI Canadian Balanced Ethics Blend: MLI Canadian Balanced Ethics 10.88% 9.72% 11.07% 5.58% Feb % 9.93% 10.58% 3.3 Over a moving fouryear period, the fund strives to outperform by 1% per year a benchmark portfolio composed of the following: 33% S&P/TSX Composite Index 25% MSCI World Index ($ Cdn) 37% Scotia Capital Universe Bond Index 5% Scotia 91Day Tbill Index 37

38 BALANCED Code 5164 McLean Budden Balanced Fund United States Equity 12.61% Cash 5.26% Bond 34.66% Canadian Equity 32.07% Other 0.2 International Equity 15.2 Gov t of Canada, 5.75%, June 1, % Gov t of Canada, 8.0, June 1, % Royal Bank of Canada 1.68% Gov t of Canada, 5.25%, June 1, % Province of Ontario, 6.5, March 8, Gov t of Canada, 4.0, September 1, % Bank of Nova Scotia 1.49% EnCana Corp. 1.45% Financial 1.45% Gov t of Canada, 4.25%, September 1, % Total 17.25% UNDERLYING FUND > MB Balanced Objective The fund aims to provide a superior real rate of return through both income and capital appreciation by investing in a diversified portfolio of equity and fixed income assets. The Canadian equity component is managed on a 50/50 blend of growth and value styles. The foreign equities have a growth bias. Managed by McLean Budden Limited Fund managers Susan Shuter, Ted Thompson, Benoit Paradis, Hans Van Monsjou, Alan Daxner, Doug Andrews, Colin Sinclare, Roger Beachemin and John Ackerl Inception March 1999 Total assets $1,450.6 million Gross rates of return are before investment management fees have been deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 15% 1 5% 5% MLI McLean Budden Balanced MB Balanced Most global equity markets generated positive returns during the quarter despite continued tightening by several major central banks. The Bank of Canada and the U.S. Federal Reserve increased overnight rates by 50 basis points during the period, while the European Central Bank announced its first interest rate increase in five years, moving the region s benchmark rate off a sixdecade low. The Fund registered a solid 2.5% return for the quarter and outpaced the benchmark with relatively strong results achieved in all underlying asset classes. Within the Canadian equity component, stock selection bolstered results as key holdings, Dofasco and Placer Dome, were targets of takeover offers. Globally, relatively weak results in telecommunication services were more than offset by strong stock selection in energy. The bond portfolio benefited from its long duration position as the yield curve continued to flatten during the period. The impact from asset mix was minimal during the quarter. Asset mix changes during the period were modest. The Fund began the quarter targeting total equity content slightly higher than benchmark, while remaining in underweight bonds and overweight in cash. During the third quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cash levels were raised. As subsequent economic data showed evidence of stabilization, the Fund s targeted cash allocation was reduced by 1., with half of the proceeds used to increase the overweight position in foreign equities and the other half deployed into bonds. Relative to the benchmark, the Fund closed out 2005 with an asset mix target that continued to favour global equities at the expense of Canadian equities, while remaining underweight in bonds and modestly overweight in cash. $18,000 $17,000 $16,000 $15,000 $13,000 $11,000 MLI McLean Budden Balanced Blend: MLI McLean Budden Balanced MB Balanced Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $17,070* $15,396 Annual compound returns the composite benchmark, as outlined in the below. MLI McLean Budden Balanced Blend: MLI McLean Budden Balanced 10.86% 11.24% Aug % 11.37% 12.13% 5.09% The rate of return is expected to exceed the benchmark by 1%. The benchmark is composed of: 33% BMO/TSX Comp. Cap 1 25% MSCI World 37% SC Universe Bond 5% SC 91Day TBills 38

39 BALANCED Code 5171 SEAMARK Balanced Fund International Equity 7.9 Cash 0.8 Canadian Equity 35.61% Bond 35.34% United States Equity 20.35% Canada Housing Trust, 3.75%, March 15, % TD Bank Gov t of Canada, 4.5, June 1, % Alberta Municipal Finance, 5.85%, June 1, % Province of Ontario, 5.0, March 8, % Thomson Corporation Royal Bank of Canada Suncor Energy Petro-Canada Sun Life Financial Inc. Total % 2.12% 2.02% % UNDERLYING FUND > SEAMARK Pooled Balanced Objective The SEAMARK Pooled Balanced Fund is managed to preserve capital and minimize market value fluctuations while generating superior longterm returns through capital gains augmented by current income. The fundwill invest in fixed income and equity investments. Managed by SEAMARK Asset Management Ltd. Fund managers Peter Marshall, B.Comm.; Tom R. MacLaren, BBA, FCSI, CFA; George V. Loughery, CGA, CFA; and Lance Speck, CFA. Inception June 1997 Total assets $1,037.4 million deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI SEAMARK Balanced North American markets recovered from a sharp October correction to finish modestly higher for the quarter. The correction was driven by renewed concerns over U.S. inflation and the level of future economic growth. Markets began recovering in late October as inflation and growth concerns eased, and the price per barrel of oil stabilized in the high $50 US range. The Fund returned 1.04% for the quarter. Modest fixed income underperformance resulted from the Fund s defensive positioning with limited exposure to higher risk bonds out of concern that credit spreads could widen from current unusually narrow conditions. The Canadian stock market posted a 2.86% return for the quarter. The Fund was well positioned in general terms, but underperformed our expectations due to disappointing declines towards year end in the price of Quebecor World, Thomson, and BCE. Better performance came from our substantial materials and financials holdings as well as from CN Rail and Gildan Activewear. Financials and materials stocks were the S&P500 s best performers. The Fund s deemphasis on these two sectors, in the U.S., combined with a pullback by technology, health care and consumer holdings, that have generally done well this year, led the Fund s U.S. equities to lag the index. The portfolio s best performing stocks were in financials and energy with JP Morgan and Citigroup both outperforming the S&P 500 Financials' index and Schlumberger, the world s largest oilfield services company, appreciating 15%. $22,000 $20,000 $18,000 $16,000 $8,000 MLI SEAMARK Balanced Blend: MLI SEAMARK Balanced SEAMARK Pooled Balanced Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $20,305* $15,658 Annual compound returns the composite benchmark, as outlined in the below. MLI SEAMARK Balanced 9.65% 7.67% 9.72% 5.58% 8.2 Aug 1997 Blend: MLI SEAMARK Balanced 8.42% 8.08% 8.57% 2.62% The fund s performance is benchmarked against a blend of: 5% Scotia Capital 91Day Tbills 4 Scotia Capital Universe Bond Index 3 S&P/TSX Composite Total Return Index 25% MSCI world (ex Canada) Index ($ Cdn) Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party. 39

40 BALANCED Code 5181 Trimark Income Growth Fund Cash 2.16% International Equity 5.35% Canadian Equity 37.63% Bond 38.42% United States Equity 16.44% Canada Govt 5.75%, June 1, % Bank of Nova Scotia 3.53% TD Bank 3.44% Gov t of Canada, June 1, % BCE Inc. 2.7 Loblaw Companies 2.29% IGM Financial 2.19% Onex Corporation 2.05% CIBC 2.04% Canada Housing Trust, February 15, % Total 28.08% UNDERLYING FUND > Trimark Income Growth Objective The Trimark Income Growth Fund seeks to generate capital growth and income over the long term. The fund invests primarily in Canadian equities, fixedincome securities of Canadian issuers, both government and corporate, and foreign equities and fixedincome securities up to the maximum allowable foreign content limit. Managed by AIM Trimark Investments Fund managers Geoff MacDonald, BBA, MBA, CFA; Alfred Samson; Rex Chong, CFA, MBA; and Anthony Imbesi, CFA, BComm. Inception September 1987 Total assets $1,856.6 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Trimark Income Growth Trimark Income Growth SC Ross Stores Inc. and The Bank of Nova Scotia were major contributors to the Fund s performance in the fourth quarter of Earlier this year, Ross Stores had problems with new inventory management systems that adversely affected results. The stock did well in the fourth quarter, as strong samestoresales results are an indication that these problems are being resolved. The Bank of Nova Scotia has tremendous growth prospects embedded in its Mexican subsidiaryrepresenting a competitive advantage for the bank versus its industry peers. As yields continue to rise, the portfolio management team is maintaining the Fund s modified duration at approximately 0.5 years shorter than the benchmark Scotia Capital Universe Bond Index. Recently, the declining attractiveness of corporate spreads has been such that the Fund s corporate weighting has been reduced slightly, although it remains slightly higher than the benchmark index at 3 versus 26%, respectively. The Fund has underperformed in the short term due to an absence of energy holdings. The Trimark discipline involves investing in businesses with strong opportunities for growth at attractive prices. Investing in a business only at a discount to its true economic value is a key risk management mechanism for the Fund. At the beginning of 1999, the Fund had made significant investments in energy companies that generated strong returns for the Fund from 1999 to Valuations of energy businesses are now very expensive and the team has moved capital into new businesses that it believes will significantly outperform energy stocks over the next three to five years. MLI Trimark Income Growth Blend: 6 S&P/TSX, 4 Scotia Universe Trimark Income Growth SC $28,000 $27,215* $26,000 $24,000 $23,847 $22,000 $20,000 $18,000 $16,000 $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 Annual compound returns the composite benchmark, as outlined in the below. MLI Trimark Income Growth 6.84% 11.22% 12.31% % Oct 1997 Blend: 6 S&P/TSX, 4 Scotia Universe 15.95% 13.43% 14.37% 6.96% To be the top of its respective category over the long term, while striving to outperform a benchmark portfolio composed of: 6 S&P/TSX Composite Index 4 Scotia Capital Universe Bond Index 40

41 BALANCED Code 5241 Jarislowsky Fraser Balanced Fund (Available to Registered Plans Only) International Equity 11.0 Cash 7.9 Bond 35.1 Canadian Equity 33.6 United States Equity 12.4 Bank of Nova Scotia 2.3 Nexen 2.2 Royal Bank of Canada 2.1 Financial 2.0 Talisman Energy 2.0 TD Bank 1.9 Shell Canada 1.6 Canadian Tire Corporation 1.2 Imperial Oil 1.2 TransCanada Corp. 1.2 Total 17.7 UNDERLYING FUND > JF Balanced Objective The Jarislowsky Fraser Balanced Fund is a diversified portfolio consisting of fixed income assets, North American equities and International equities. It seeks to add value through longerterm asset mix positioning and stock selection rather than short term trading. The portfolio s volatility is kept to a minimum by implementing only incremental asset mix changes and buying large cap, bluechip equity holdings and high quality, noncyclical bonds. Managed by Jarislowsky Fraser Ltd. Fund managers Jarislowsky Fraser Mgmt. Team Inception April 1997 Total assets $3,762.6 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 2 15% 1 5% MLI JF Balanced JF Balanced Raw material prices soared as supply shortages materialized with the start of the rebuilding of New Orleans and surrounding areas following the devastating hurricanes. On the other hand, the price of oil slipped below $60 US/barrel for the first time since midsummer in response to early signs of slowing demand. Around the world, in recent years, the real strength in equities has been in smaller companies. Starved for yield as interest rates declined, investors moved down the capitalization spectrum in search of greater capital gains. On the equity side, strong performance continued to mainly come from sectors where we were underexposed. This included stocks that had smaller capitalization or a cyclical element, a trend that has continued for several years. The extended rally in the energy sector also came to an end. In addition, this year s strong run in the Japanese stock market has hampered relative performance in the EAFE portfolio. An inverted yield curve has historically been the harbinger of recession. We do not necessarily anticipate such an outcome at this point in time. However, it is likely that high energy prices, a slowing real estate market, low savings rates, and high borrowing levels will eventually lead to a slowdown in the global economy. It is only a matter of time before the more cyclical companies begin to suffer earnings setbacks. At that time, money will flow out of the high beta stocks in those sectors and into the more defensive, higher quality areas that we favour such as consumer staples and health care companies. Our philosophy points us towards companies that are able to continue to grow earnings in a predictable manner no matter what direction the economy is heading. $24,000 $22,000 $20,000 $18,000 $16,000 MLI JF Balanced Blend: MLI JF Balanced JF Balanced Mar97 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $22,758* $20,510 Annual compound returns the composite benchmark, as outlined in the below. MLI JF Balanced 11.26% 10.43% 10.34% 8.36% Oct 2001 Blend: MLI JF Balanced 12.64% 11.01% 11.77% 5.76% Benchmark changed as at July 1, Over the long term, this fund is expected to outperform a benchmark comprised of the following: 3 S&P/TSX Composite Index, 13% S&P 500 Index ($Cdn), 1 MSCI EAFE Index ($Cdn), 4 Scotia Capital Universe Bond Index, 7% Scotia Capital 91Day TBill Index 41

42 BALANCED Code 5301 Leith Wheeler Diversified Pooled Fund United States Equity 11.22% Cash 4.48% Bond 35.07% Canadian Equity 34.51% International Equity 14.72% Leith Wheeler International Fund 14.72% Nexen 3.22% TD Bank 3.07% Financial 2.96% Canada Housing Trust 5.1%, September 15, % Gov t of Canada, June 1, % Gov t of Canada, June 1, % Gov t of Canada, June 1, % Province of Ontario, March 8, Canada Housing Trust, March 15, Total 37.62% For the third successive year, the Canadian equity market produced double-digit gains resulting in a three-year total market return of almost 22% per annum. International equity performance was also very strong in 2005 with the market gaining 1 for the year. In comparison, the U.S. equity market appreciated 4.9% in $U.S. terms; however, this increase was offset by a decline in the value of the U.S. dollar versus the Loonie resulting in a relatively flat year for U.S. equities. Long-term interest rates continued to fall over the course of the fourth quarter and the year. Overall, declining long term rates had a positive impact on the portfolio. In this market environment, we are pleased by the absolute return achieved by the portfolio in 2005 with the fund returning 11.4% for the year. Over this time frame, the Diversified Fund has been overweighted in Canadian equity and has benefited from this period of exceptional strength. Part of our overweighting in Canadian equities has been funded by underweighting the much weaker U.S. equity market. While the U.S. dollar appreciated against most of the world s major currencies in 2005 (Yen, Euro and Sterling), it continued to decline relative to the Canadian dollar. We now find that the increase in the valuation of many of the companies in our Canadian equity portfolio has reduced their expected return forecasts. This has resulted in a reduction in the Canadian equity weighting of the portfolio to a more neutral position. However, we are expecting reasonable returns, particularily in comparison to bonds, from the stocks we continue to hold. UNDERLYING FUND > Leith Wheeler Diversified Pool Objective The objective of the Leith Wheeler Diversified Pooled Fund seeks to provide investors with a relatively stable, superior longterm rate of return through a balanced portfolio of common shares and fixed income securities. Managed by Leith Wheeler Inv Counsel Ltd. Fund managers Leith Wheeler Inv. Counsel Mgmt. Team Inception February 2001 Total assets $133.1 million Gross rates of return are before investment management fees have been deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. 2 15% 1 5% MLI Leith Wheeler Diversified Leith Wheeler Diversified Pool $16,000 $15,000 $13,000 $11,000 $9,000 MLI Leith Wheeler Diversified Blend: MLI Leith Wheeler Diversified Leith Wheeler Diversified Pool $8,000 Feb01 Dec01 Dec02 Dec03 Dec04 Dec $15,957* $12,889 Annual compound returns the composite benchmark, as outlined in the below. MLI Leith Wheeler Diversified Blend: MLI Leith Wheeler Diversified % 14.81% Oct % % 4.6 The fund s performance is benchmarked against a blend of: 35% S&P/TSX Composite Index 12.5% S&P 500 Index ($ Cdn) 12.5% MSCI EAFE Index ($ Cdn) 35% Scotia Capital Universe Bond Index 5% Scotia Capital 91Day Tbill Index 42

43 GLOBAL BALANCED Code 5231 CI International Balanced Fund Cash 8.1 United States Equity 27.11% International Equity 42.68% Bond 22.12% Government of France, 4.0, April 25, Government of Netherlands, 3.0, January 15, 1.83% 2010 Canada Housing Trust, 5.1, September 15, 1.75% 2007 Republic of Germany, 5.0, January 4, % Microsoft 1.46% Federal Home Loan Bank, 3.63%, June 20, % General Electric 1.13% Government of Mexico, 10.0, December 5, 1.12% 2024 Everest Re Group 1.05% Samsung Electronics 0.99% Total 14.11% International equity markets were a mixed picture in 2005, with the emerging markets and Japan providing strong However, the strength of the Canadian dollar against the U.S. dollar and especially against the Euro and Yen reduced returns for Canadian investors on foreign securities. Looking ahead, we anticipate another year of global economic growth, which should create a constructive backdrop for equity markets even as the composition of growth and relative market performance is likely to shift. We would not be surprised to see foreign markets continue to outpace the U.S. market in Valuations remain more attractive in many foreign markets. Even though interest rates may rise this year in Europe and Japan, monetary policy in those regions is likely to remain more accommodative. Markets in Europe and nonjapan Asia are trading at an attractive 12 to 13 times earnings, while many emerging market stocks still trade on singledigit multiples. With government bond yields still quite low in most nations, comparisons of bond yields to equity earnings yields still suggest that equities on average are still more than 4 undervalued relative to bonds. Accordingly, we continue to favour equities in the Fund, which maintained a target of 7 equities and 3 fixed income. In the Fund, holdings in the consumer discretionary, energy, financial and healthcare sectors added the most relative value over the quarter. An overweight allocation to consumer discretionary stocks and underweight allocation to energy stocks also helped performance. Geographically, the Fund s holdings outperformed the benchmark s regional constituents in all regions, and exposure to emerging market stocks was also beneficial to relative performance. UNDERLYING FUND > CI International Balanced Objective The CI International Balanced Fund is managed to provide maximum long term total return. The fund invests primarily in equities, equityrelated securities and fixed income securities of issuers located throughout the world. The fund is not limited to how much it invests in a country or asset class or keeps invested in each asset class. This will vary according to market conditions. Managed by CI Investments Inc. Fund managers William Sterling, PhD, Robert Beckwitt, BA and Greg Gigliotti Inception October 1994 Total assets $525.0 million Gross rates of return are before investment management fees have been deducted. The solid area represents the gross returns of the fund since its in February To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund. Note: Gross returns have been estimated as net return plus management expense ratio MLI CI International Balanced CI International Balanced $22,000 $20,000 $18,000 $16,000 MLI CI International Balanced Blend: MLI CI International Balanced CI International Balanced $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec $20,506* $15,964 Annual compound returns the composite benchmark, as outlined in the below. MLI CI International Balanced Blend: MLI CI International Balanced % 5.15% % Feb % 2.87% 2.75% 1.08% Over the long term, the fund is expected to outperform a benchmark portfolio that is comprised of: 6 MSCI World Index ($ Cdn) 4 JP Morgan Government Bond Index 43

44 Canadian Equity Canadian Equity funds typically aim to achieve long-term capital growth by investing in a diversified portfolio of shares issued by Canadian companies. Some Canadian Equity funds invest a portion of their assets in shares of foreign companies. A share represents an ownership stake in a company; therefore, how the fund performs depends on the success of the company holdings within the fund. A fund's performance can also be affected by factors such as currency exchange rates and economic and political trends. Canadian Large Cap Equity funds are ideal for investors who have a long-term focus, prefer to invest in Canadian companies, and are comfortable accepting some degree of volatility. Canadian Small/Mid Cap Equity funds are suitable for investors who have a longterm focus, prefer to invest in Canadian companies, and are comfortable accepting a higher degree of volatility. Canadian Large Cap Equity FUND PAGE CODE NUMBER Elliott & Page Canadian Equity Fund Canadian Large Cap Value Equity Fund (MFC) MFC Global Pooled Canadian Index Fund Fidelity Canadian Large Cap Fund McLean Budden Canadian Equity Growth Fund McLean Budden Canadian Equity Fund SEAMARK Canadian Equity Fund Trimark Canadian Fund Canadian Large Cap Top Down Equity Fund (Zechner) Jarislowsky Fraser Canadian Equity Fund Maxxum Dividend Growth Fund (Mackenzie) Canadian Small/Mid Cap Equity Elliott & Page Growth Opportunities Fund Canadian Small Cap Equity Fund (Tattersall)

45 CANADIAN LARGE CAP EQUITY Code 7121 Elliott & Page Canadian Equity Fund Cash 0.5 Industrials 6.9 Other 10.14% Energy 25.35% Financials 26.52% Materials 18.91% Consumer Discretionary 6.7 Information Technology 4.98% Royal Bank of Canada 5.25% Financial 4.65% EnCana Corp. 4.45% TD Bank 4.44% Bank of Nova Scotia 3.72% Talisman Energy 3.46% Falconbridge 3.29% Shell Canada 3.22% TELUS 3.1 Canadian National Railway 3.03% Total 38.61% UNDERLYING FUND > Elliott & Page Canadian Equity Class A Objective The Elliott & Page Canadian Equity Fund seeks to provide longterm capital growth. The fund invests primarily in equity securities of large, established Canadian companies and Canadian securities that offer potential for capital growth. Managed by MFC Global Investment Management (Toronto) Fund managers Shauna Sexsmith, BA, CFA Inception February 1994 Total assets $250.4 million deducted. The solid area represents the gross returns of the fund since its in August Underlying fund was changed on May 21, 2004 from the Elliott & Page Blue Chip Fund to the Elliott & Page Canadian Equity Fund MLI Elliott & Page Canadian Equity Elliott & Page Canadian EquityCl A The Canadian stock market generated a gain of 2.9% in the fourth quarter, finishing the year with a total gain of 24.2%. Market performance was evenly split over the quarter with five sectors posting positive gains and five sectors posting negative gains. Materials led all sectors with a gain of 1, followed by financials (+7.7%) and utilities (+5.9%). consumer staples (7.2%), telecommunications (6.2%) and energy (2.1%) lagged. The stock market began the quarter with a pullback in October that spread across all sectors, but rebounded strongly in November and December as the economy, employment and consumer confidence remained strong. During the quarter the Fund initiated several positions in U.S. equities to compliment the portfolio strategy. The Fund now holds high-quality U.S. growth stocks in the industrial, consumer discretionary, consumer staples and health care sectors. The Fund remains invested in nine out of ten sectors with overweight positions in energy, materials, industrials and consumers (staples and discretionary) and underweight financials, utilities, health care and technology. While it appears that we may be headed toward another minority government, the event itself is unlikely to impact the market to any significant degree. With Canada in an enviable position among G7 nations as the only member with a government surplus, of greater interest is how much the new government will flow back to Canadians and in what form. Over the nearterm, we are likely to see continued interest rate hikes in Canada; continued strong global demand for our energy and commodities, which will keep upward pressure on our dollar; and a moderately strong economy with low unemployment. $40,000 $30,000 $20,000 MLI Elliott & Page Canadian Equity S&P/TSX Total Return Elliott & Page Canadian EquityCl A $0 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $31,707* $26,850 Annual compound returns the S&P/TSX Total Return. MLI Elliott & Page Canadian % 20.57% 6.21% 10.44% Aug 1997 Equity S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% Over the long term, the fund is expected to outperform the S&P/TSX Composite Index. 45

46 CANADIAN LARGE CAP EQUITY Code 7131 Canadian Large Cap Value Equity Fund (MFC) Information Technology 4.84% Other 9.42% Cash 8.46% Energy 18.24% Financials 33.61% Materials 13.68% Consumer Discretionary 6.62% Telecommunication Services 5.13% PetroCanada 4.98% TD Bank 4.49% Royal Bank of Canada 3.86% Talisman Energy 3.86% BCE Inc. 3.76% Bank of Nova Scotia 3.68% Power Corp of Canada 3.46% Power Financial Corp. 3.44% Sun Life Financial Inc. 3.33% Husky Energy 3.17% Total 38.03% UNDERLYING FUND > MLI Cdn Large Cap Val Equity (MFC) Objective The Fund is managed to achieve above average longterm capital growth, primarily through investment in common shares of listed Canadian companies with relatively large market capitalization. Managed by Financial Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception January 1999 Total assets $480.5 million deducted. The solid area represents the gross returns of the fund since its in July The underlying fund was changed on September 30, 2002 from the Elliott & Page Pooled Canadian Equity Fund to the Canadian Large Cap Value Equity Fund MLI Canadian Large Cap Value Equity The past year was strong for Canadian investors and the S&P/TSX Composite Index returned 24.13%. Energy, returning 63.43%, utilities, returning 38.29%, and financials, returning 23.93%, were the bestperforming sectors; the laggards were health care, returning 2.65% and information technology, returning 15.77%. Energy prices dominated the news in 2005, as the price of oil increased 4. The energy sector was by far the top performing sector of the stock market, accounting for more than half of the year s gain on the S&P/TSX Index. The Fund managers decision to hold an underweight in energy, based on valuation, had the greatest impact on Fund performance. The Fund s turnover remains low, and few changes were made to the portfolio during the year. The most significant change was the addition of income trusts. During the year, Precision Drilling converted from an equity to an income trust, thus becoming the first income trust held by the portfolio. The risk profile of the Fund has not changed significantly, and the asset mix, relative to the S&P/TSX Index, remains unchanged at 9 in equities and 1 in cash. Standard & Poor announced in September that it would include income trust units in the S&P/TSX Composite Index in two steps, after the close on December 16, 2005, and on March 17, This move increases the Fund s investment universe and should provide greater investment opportunities in The addition of 72 trusts to the TSX Index will boost the energy sector s weighting to approximately 3 of the TSX Index. It is unlikely that the Fund would ever overweight the energy sector, unless valuations became extremely compelling. The Fund will continue to purchase goodquality companies at attractive valuations and sell companies that become overpriced. $22,000 $20,000 $18,000 $16,000 MLI Canadian Large Cap Value Equity S&P/TSX Total Return $8,000 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $20,020* $19,502 Annual compound returns the S&P/TSX Total Return. MLI Canadian Large Cap 24.31% 22.57% 23.71% 11.26% 7.25% Jul 1997 Value Equity S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% The fund is expected to outperform the S&P/TSX Composite Total Return Index over moving threeyear annualized period by 1.5% per year. 46

47 CANADIAN LARGE CAP EQUITY Code 7132 MFC Global Pooled Canadian Index Fund Cash 1.32% Consumer Discretionary 6.4 Other 7.6 Energy 25.76% Financials 31.72% Materials 16.82% Industrials 5.99% Information Technology 4.39% Royal Bank of Canada 5.14% Financial 4.73% Bank of Nova Scotia 4.0 EnCana Corp. 3.95% TD Bank 3.81% Suncor Energy 2.94% Bank of Montreal 2.85% Canadian Natural Resources 2.71% Sun Life Financial Inc. 2.38% BCE Inc. 2.26% Total 34.77% UNDERLYING FUND > MFC Global Pooled Canadian Index Objective The MFC Global Pooled Canadian Index Fund seeks to achieve investment results that approximate the total return of the S&P/TSX Composite Index, one of the most watched indexes of the Canadian Equity Market. Managed by MFC Global Investment Management (Toronto) Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception January 1998 Total assets $129.8 million deducted. The solid area represents the gross returns of the fund since its in January MLI MFC Global Pooled Cdn Index For the calendar year ending December 31, the S&P/TSX Composite Index advanced 24.13%. Almost all of the ten sectors increased over the course of the year, save for information technology, health care, and consumer staples, returning 15.77%, 2.65%, and 1.09%, respectively. The bestperforming sectors were energy, utilities, and financials, returning 63.43%, 38.29%, and 23.93% respectively. Given the large weightings in the S&P/TSX Index for energy, financials, and materials, it is not surprising that the market did so well, as these were among the best performers for the year. For example, the energy, mining, banks, and insurance sectors all rose in excess of 2 in The Canadian economy continues to grow at a steady pace, evidenced by real GDP growth rising at a 3.2% yearover year rate in October. The labour market finished 2005 with the unemployment rate at 6.5% which, while an increase, still represents multidecade lows. The new housing market finished strong despite shortterm interest rate hikes and rising home prices. Headline inflation slowed to an annual pace of 2% in November from 2.6% in October. The core rate, however, came in a tick ahead of market expectations. An above consensus core rate of 1.6% does not sound alarm bells, but the threat of tight labour markets and rising inflation expectations warrant further action by the Bank of Canada. $20,000 $18,000 $16,000 MLI MFC Global Pooled Cdn Index S&P/TSX Total Return $8,000 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $19,464* $19,193 Annual compound returns the S&P/TSX Total Return. MLI MFC Global Pooled Cdn 24.22% 19.23% 21.64% 6.53% 8.68% Jan 1998 Index S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% Over the long term, the fund is expected to track the performance of the S&P/TSX Composite Index. Canada s international trade surplus stood at $7.2 billion in October. Higher natural gas prices helped push the value of total exports up by 1% to $40 billion and imports rose by 1.2% to $33 billion. This trade report shows that the Canadian economy has carried forward momentum from the third quarter into the fourth. 47

48 CANADIAN LARGE CAP EQUITY Code 7141 Fidelity Canadian Large Cap Fund Cash 1.3 Information Technology 5.0 Other 7.4 Energy 30.5 Financials 32.4 Materials 14.2 Consumer Discretionary 4.9 Telecommunication Services 4.3 Bank of Montreal Canadian National Railway Canadian Natural Resources EnCana Corp. Imperial Oil Research In Motion Sun Life Financial TD Bank TELUS Talisman Energy Total 44.6 UNDERLYING FUND > Fidelity Canadian Large Cap Objective The Fidelity Canadian Large Cap Fund aims to achieve longterm capital growth by investing primarily in equity securities of Canadian companies with a focus on large companies. The portfolio manager searches for investment opportunities by using Fidelity s traditional bottomup investment style, selecting securities for the fund on a stockbystock basis. Managed by Fidelity Investments Canada Ltd. Fund managers Doug Lober Inception February 1988 Total assets $73.1 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Fidelity Cdn Large Cap Fidelity Canadian Large CapA The Canadian equity market, as represented by the S&P/TSX Composite Index, posted a modest gain of 2.4% over the quarter, bringing the year-to- total return to 21.9%. Materials rose 9.4% as prices of precious metals such as gold and copper rallied in response to indications that constrained resource supply would be insufficient to meet global demand, particularly from China and India. Financials gained 7.1% as the banks continued to report strong earnings in a slow rising interest rate environment. The industrials and utilities sectors both gained during the quarter as investors purchased dividend stocks following the late November government announcement of an increase in the dividend tax credit. Energy fell for the first time this year by 2.4% as global oil and gas supply improved for the first time since the hurricanes and prices subsequently retreated to lower levels. As corporate spending on research and development remained constrained, the healthcare and tech sectors lagged in performance during the quarter, and ended the year down 3.5% and 15.8% respectively. The Canadian dollar remained near its high of $86 US, while the Bank of Canada kept a hawkish stance on inflation by tightening the lending rate by 50 basis points during the quarter. The Fund rose 1.8% for the quarter ending December 30, compared to benchmark at 2.9%, bringing the oneyear total return to 28.7%. Large cap stocks have outperformed the broader market recently. Doug Lober believes this will likely continue as investors seek sector leadership, the earnings growth and consistant dividend yield. With Bank of Canada s tightening stance on interest rates and potential uncertainty in consumer spending, he remains focused on companies that can exceed estimates while trading at reasonable valuations, and willing to concentrate on fewer quality names rather than general broad market exposure. $30,000 $25,000 $20,000 $15,000 MLI Fidelity Cdn Large Cap S&P/TSX Total Return Fidelity Canadian Large CapA $5,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $29,904* $26,850 Annual compound returns the S&P/TSX Total Return. MLI Fidelity Cdn Large Cap 32.73% 23.75% 24.39% 9.73% 11.03% Jul 1997 S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% Over the long term, the fund is expected to outperform the S&P/TSX Composite Index. 48

49 CANADIAN LARGE CAP EQUITY Code 7161 McLean Budden Canadian Equity Growth Fund Cash 2.0 Consumer Discretionary 11.44% Information Technology 11.0 Energy 19.65% Financials 25.54% Materials 13.74% Other 9.72% Industrials 6.91% Talisman Energy 6.3 TD Bank 5.11% Royal Bank of Canada 5.06% Bank of Nova Scotia 4.96% Financial 4.85% Magna International 4.18% Research In Motion 3.94% Cameco Corp. 3.93% Canadian National Railway 3.85% Canadian Natural Resources 3.83% Total 46.01% UNDERLYING FUND > MB Canadian Equity Growth Objective The McLean Budden Canadian Equity Growth Fund is managed for a balance of security and growth over a period of at least four years. This stock fund invests in a diversified portfolio of Canadian stocks and convertible securities. The fund was developed to provide superior rates of return, primarily through capital appreciation, by investing in a diversified portfolio of Canadian equities. Managed by McLean Budden Limited Fund managers Bill Giblin; Bruce Murray; Mary Hallward, BA, MBA; Doug Andrews; John Durfy; and Miranda Hubbs Inception September 1980 Total assets $2,422.5 million deducted. The solid area represents the gross returns of the fund since its in July In order to provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI McLean Budden Cdn Equity Growth MB Canadian Equity Growth The Fund increased its commitment to information technology during the quarter. The Index s inclusion of income trusts (at half weight), in December resulted in a change in the weight of a number of sectors, most notably energy (increased) and financials (decreased). The remaining weight in income trusts will be added midmarch At the Fund level, these moves resulted in an increase in the underweight position in energy. Fund activity saw energy holdings, Canadian Natural Resources, Cameco and Talisman, reduced following strong price gains while there was buying in EnCana. In industrials, the elimination of Canadian Pacific Railway more than offset additions to Canadian National Railway and Finning. Materials saw some buying in Novelis, while Dofasco was reduced on a sharp jump in value, as it was the target of two suitors, Arcelor and ThyssenKrupp. Thomson and Magna were increased in consumer discretionary, while the only activity in health care was a reduction in Biovail as the stock rallied strongly on news of the U.S. Food and Drug Administration s approval of its pain relief medication Tramadol ER. In financials, was increased. Information technology holding Research In Motion was increased while ATI Technologies was reduced. The Fund continues to favour information technology while maintaining a relatively low exposure to materials, financials and energy. The Fund posted a solid absolute return and outperformed the Index for the quarter due to good stock selection in energy (Cameco) and materials (Dofasco and Alcan), which more than offset weak results in consumer discretionary (Thomson and Magna). Sector allocation had a modestly negative impact with a high commitment to consumer staples combined with low exposure to financials the most notable factors. $40,000 $30,000 $20,000 MLI McLean Budden Cdn Equity Growth BMO/TSX Composite Cap 1 Index Total MB Canadian Equity Growth $0 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $35,900* $33,726 Annual compound returns the BMO/TSX Composite Cap 1 Index Total. MLI McLean Budden Cdn Equity Growth BMO/TSX Composite Cap 1 Index Total % 21.56% 9.28% 10.5 Jul % % 7.57% This fund is expected to outperform the BMO/TSX Composite Cap 1 Index over a moving fouryear annualzed period by 1.5% per year. 49

50 CANADIAN LARGE CAP EQUITY Code 7164 McLean Budden Canadian Equity Fund Cash 3.72% Other 12.37% Consumer Discretionary 7.94% Energy 17.64% Financials 27.36% Materials 16.96% Industrials 7.08% Information Technology 6.93% Royal Bank of Canada 5.37% Bank of Nova Scotia 4.57% Financial 4.31% EnCana Corp. 4.26% Canadian National Railway 3.64% Alcan Inc. 3.58% TD Bank 3.54% CIBC 3.43% Magna International 2.87% Talisman Energy 2.84% Total 38.41% UNDERLYING FUND > MB Canadian Equity Objective The Fund aims to provide superior real rate of return primarily through capital appreciation, by investing in a diversified portfolio of Canadian equities. Security selections will emphasize companies which are undervalued or have prospects for above average earnings growth. Managed by McLean Budden Limited Fund managers Benoit Paradis; Hans Van Monsjou, BComm, CFA; Doug Andrews; Alan Daxner; Colin Sinclare; Susan Shuter, CFA, MBA; Ted Thompson; John Ackerl, CFA, MBA; and Roger Beachemin. Inception March 1998 Total assets $2,465.0 million deducted. The solid area represents the gross returns of the fund since its in April In order to provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI McLean Budden Canadian Equity MB Canadian Equity The Fund increased its commitment to materials during the quarter while the S&P/TSX Composite Index s reclassification of Rogers Communications from consumer discretionary to telecommunication services had little impact on the Fund s relative exposure to the two sectors. The Index s inclusion of income trusts (at half weight), in December resulted in a change in the weight of a number of sectors, most notably energy (increased) and financials (decreased). The remaining weight in income trusts will be added midmarch At the Fund level, these moves resulted in an increase in the underweight position in energy. Other Fund activity saw Canadian Natural Resources, Cameco and Talisman all reduced within energy. In industrials, buying in Canadian National Railway, Finning and Quebecor World was offset by reductions in Canadian Pacific Railway. The materials sector was increased as buying in Inco, NOVA Chemicals and Novelis offset trimming in Placer Dome and Dofasco, each experiencing a sharp jump on takeover offers. Consumer staples holdings, George Weston and Shoppers Drug Mart, were reduced. MDS was a new addition to health care. In financials, there was an increase in. In information technology, additions to Research In Motion more than offset the elimination of GEAC following its acquisition by a private equity firm, and a reduction in ATI Technologies. Finally, there was some buying in TELUS within telecommunication services. The Fund continues to favour information technology and remains significantly underweight the energy sector and to a lesser extent financials. $24,000 $22,000 $20,000 $18,000 $16,000 $8,000 MLI McLean Budden Canadian Equity S&P/TSX Total Return MB Canadian Equity $6,000 Mar98 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $22,681* $16,947 Annual compound returns the S&P/TSX Total Return. MLI McLean Budden 21.34% 16.65% 23.59% Apr 2003 Canadian Equity S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% The gross rate of return over a full economic cycle is expected to exceed the S&P/TSX Composite Index. 50

51 CANADIAN LARGE CAP EQUITY Code 7171 SEAMARK Canadian Equity Fund Consumer Discretionary 15.44% Cash 1.14% Industrials 8.58% Energy 17.74% Financials 28.84% Materials 16.72% Other 7.28% Telecommunication Services 4.26% TD Bank n 8.74% Royal Bank of Canada 7.39% PetroCanada 5.58% Thomson Corporation 5.31% Alcan Inc. 4.62% Suncor Energy 4.56% BCE Inc. 4.26% Sun Life Financial Inc. 4.24% GreatWest Lifeco 4.2 Bank of Montreal 4.14% Total 53.04% UNDERLYING FUND > SEAMARK Pooled Canadian Equity Objective The SEAMARK Pooled Canadian Equity Fund is managed to preserve and enhance capital through longterm capital gains with some current dividend income. The fund will invest primarily in Canadian equity securities. Managed by SEAMARK Asset Management Ltd. Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Chad King, CA, CFA. Inception June 1997 Total assets $196.5 million deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI SEAMARK Canadian Equity This quarter, for the first time in 2005, the energy sector did not lead the market, giving way to the materials and financial sectors. The Fund was well positioned in general terms, but underperformed our expectations for the quarter due to disappointing declines towards year end in the stock price of Quebecor World, Thomson, and BCE. Better performance came from our substantial materials and financial holdings, as well as from CN Rail, Gildan Activewear, and CHC Helicopter. Strong demand from Asia drove base metals higher. Aluminum and zinc surged over 2, benefiting Alcan and Teck Cominco. Newmont Mining performed well as gold continued to climb. We also saw increased M&A activity, a potential harbinger of more gains to come, as Barrick Gold purchased Placer Dome to form the world s largest gold producer. Banks and life insurance companies reported good financial results, benefiting from strong consumer demand for credit and investment products, low levels of loan losses, and good expense management. Major Fund holdings TD Bank, Royal Bank and Bank of Montreal all exceeded the financials sector return. The outlook for the Canadian market remains generally positive, with strong corporate earnings environment supported by good economic growth. This could be tempered by renewed strength from the Canadian dollar, rising interest rates, or unforeseen geopolitical events. $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 $8,000 MLI SEAMARK Canadian Equity S&P/TSX Total Return SEAMARK Pooled Canadian Equity Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $25,434* $20,131 Annual compound returns the S&P/TSX Total Return. MLI SEAMARK Canadian 19.92% 14.88% 18.67% 11.14% 11.0 Aug 1997 Equity S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% The fund s performance is benchmarked against the S&P/TSX Composite Total Return Index. Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party. 51

52 CANADIAN LARGE CAP EQUITY Code 7181 Trimark Canadian Fund Cash 1.93% Other 13.33% Materials 9.21% Consumer Discretionary 18.09% Financials 28.9 Consumer Staples 13.34% Industrials 9.03% Telecommunication Services 6.17% Bank of Nova Scotia 4.97% TD Bank 4.97% Thomson Corporation 4.22% BCE Inc. 3.42% Power Corp of Canada 3.25% Royal Bank of Canada 3.23% Molson Coors Canada 2.81% Barrick Gold Corp. 2.69% Toromont Industries 2.66% PetroCanada 2.58% Total 34.8 UNDERLYING FUND > Trimark Canadian SC Objective The Trimark Canadian Fund seeks to provide strong capital growth with a high degree of reliability over the long term; it invests primarily in common shares of Canadian companies. Managed by AIM Trimark Investments Fund managers Ian Hardacre, CFA, MBA Inception September 1981 Total assets $1,320.4 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Trimark Canadian Trimark Canadian SC Kinross Gold Corp. and The TorontoDominion Bank were major contributors to the Fund s performance in the fourth quarter. Kinross stock benefited from higher gold prices in the quarter, as well as optimism over the company s new CEO. Strategic moves made by TD Bank s management earlier this year - such as TD Waterhouse s merger with Ameritrade and TD Bank North s acquisition of Hudson United Bancorp, a regional bank in northeastern United States - have brought attention to the bank s growth strategy. The Fund s management team views the increased concentration of the Canadian market as increasingly risky for investors. Energy alone now represents over 25% of the S&P/TSX Composite Index. To have 25% of the Fund s assets in a relatively narrow and volatile sector that has already experienced huge returns would expose unitholders to the possibility of significant capital loss. The Fund is a concentrated portfolio, but is welldiversified by business line and is wellpositioned to offer better downside protection than funds that more closely mimic the S&P/TSX Composite Index. The Fund is further diversified through foreign investments that provide exposure to sectors under represented in Canada. MLI Trimark Canadian S&P/TSX Total Return Trimark Canadian SC $28,000 $26,850 $26,000 $26,133* $24,000 $22,000 $20,000 $18,000 $16,000 $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 Annual compound returns the S&P/TSX Total Return. MLI Trimark Canadian 11.31% 11.27% 15.16% 8.24% 8.0 Oct 1997 S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% To be the top of its respective category over the longterm, while striving to outerform the S&P/TSX Composite Total Return Index. 52

53 CANADIAN LARGE CAP EQUITY Code 7192 Canadian Large Cap Top Down Equity Fund (Zechner) Telecommunication Services 8.69% Energy 11.75% Consumer Discretionary 11.1 Cash 14.14% Financials 22.78% Other 13.22% Materials 9.39% Industrials 8.93% TD Bank 4.81% Royal Bank of Canada 4.57% BCE Inc. 4.45% TELUS 4.23% Rogers Communications 3.78% Financial 3.32% Sun Life Financial Inc. 3.04% PetroCanada 2.98% Falconbridge 2.22% Nortel Networks Corp. 2.13% Total 35.53% UNDERLYING FUND > MLI Cdn Lg Cap Top Dn Eq (Zechner) Objective The fund is managed to achieve above average longterm capital growth, primarily through investment in common shares of listed Canadian companies with relatively large market capitalization. The fund employs a mix of growth and sector rotation and is driven by topdown sector themes while also incorporating bottomup security selection. This fund has the ability to shift completely out of sectors as well as carry very large weights (up to 40 of TSX weight in some cases) in attractive sectors. Managed by Financial Fund managers J. Zechner Associates Mgmt. Team Inception July 2001 Total assets $166.6 million deducted. The solid area represents the gross returns of the fund since its in October MLI Cdn Large Cap Top Down Equity For the fourth quarter of 2005 the SP/TSX composite index was up by 2.87%. Sector performance was mixed with five sectors up and five sectors down. The basic materials sector was the big winner with a 9.44% quarterly gain on a 14.75% increase in the gold subsector. Financials were also strong while telecom, staples, health care and energy lagged the market as they all fell during the quarter. With a return of 2.83% the Fund performance was right in line with the market averages for the quarter. The Fund had a relatively high cash position as many stocks reached our shortterm price targets. Value was added by being underweight energy stocks and overweight golds during the quarter and through strong stock picking in financials and basic materials. Within the stock market we still have a defensive posture with overweight sector positions in consumer staples, telecom and health care. We also remain overweight in technology as the companies are still growing and generating cash while valuations look more attractive than they have since the early 1990s. The largest alpha generating names in the portfolio for the year ahead include Rogers and Telus in wireless communications, mid sized gold stocks such as Glamis, Goldcorp, Agnico and Lamgold as well as the travel stocks which, in our view, should benefit from a rising Canadian dollar and falling oil prices. Our stock strategy is premised on the view that global economic growth is in the process of slowing down due to the combined impact of record debt levels and rising interest rates. Commoditiy prices are being artificially sustained at high levels due to an influx of financial investors into those markets. Commodity prices could fall sharply as these funds ultimately move elsewhere. With over 3 of the Canadian market in energy, this index could be extremely volatile and we expect it to be lower by yearend. $16,000 $15,000 $13,000 $11,000 $9,000 $8,000 $7,000 $6,000 MLI Cdn Large Cap Top Down Equity S&P/TSX Total Return MLI Cdn Lg Cap Top Dn Eq (Zechner) Dec01 Dec02 Dec03 Dec04 Dec05 $15,798 $14,660* Annual compound returns the S&P/TSX Total Return. MLI Cdn Large Cap Top 17.35% 17.16% 22.11% 14.13% Oct 2001 Down Equity S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% The fund is expected to outperform the S&P/TSX Composite Total Return Index over moving three year annualized period by 1.5% per year. 53

54 CANADIAN LARGE CAP EQUITY Code 7241 Jarislowsky Fraser Canadian Equity Fund Cash 1.7 Consumer Staples 7.7 Consumer Discretionary 7.7 Energy 31.3 Financials 32.0 Materials 4.8 Other 10.1 Industrials 4.7 Bank of Nova Scotia 6.9 Nexen 6.4 Royal Bank of Canada 6.3 Financial 5.9 Talisman Energy 5.9 TD Bank 5.5 Jarislowsky Special Equity Fund 5.3 Shell Canada 4.6 Imperial Oil 3.5 GreatWest Lifeco 3.4 Total 53.7 UNDERLYING FUND > JF Canadian Equity Objective Jarislowsky Fraser s equity style emphasizes buying longterm growth at a reasonable price. Internal resources are primarily relied on to generate investment ideas. Each year, the investment professionals contact and interview more than 200 Canadian companies. The portfolio focuses on industry leaders with strong balance sheets and cash flow as well as depth and quality at the management level. Managed by Jarislowsky Fraser Ltd. Fund managers Jarislowsky Fraser Mgmt. Team Inception April 1997 Total assets $3,864.2 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI JF Canadian Equity JF Canadian Equity Raw material prices soared as supply shortages materialized, with the start of the rebuilding of New Orleans and surrounding areas following the devastating hurricanes. On the other hand, the price of oil slipped below $60 US/barrel for the first time since midsummer in response to early signs of slowing demand. In Canada, cyclical stocks extended their yearlong rally as investors focused on several high profile takeover situations in the fourth quarter. The rally in gold stocks was also a major factor in the fourth quarter and year as a whole. After an extended period of strong performance, our Canadian equity portfolios lagged the S&P/TSX index during the fourth quarter. Our overweight position in high quality, large capitalization oil and gas companies has helped generate substantial outperformance over the past few years. However, these same stocks were caught in the downward revaluation of the sector as a whole, during the sudden decline in the price of oil in October. An inverted yield curve has historically been the harbinger of recession. We do not necessarily anticipate such an outcome at this point in time. However, it is likely that high energy prices, a slowing real estate market, low savings rates, and high borrowing levels will eventually lead to a slowdown in the global economy. It is only a matter of time before the more cyclical companies begin to suffer earnings setbacks. At that time, money will flow out of the high beta stocks in those sectors and into the more defensive, higher quality areas that we favour. Our philosophy points us towards companies that are able to continue to grow earnings in a predictable manner, no matter what direction the economy is heading. $50,000 $40,000 $30,000 $20,000 MLI JF Canadian Equity S&P/TSX Total Return JF Canadian Equity $0 Mar97 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $44,825* $22,254 Annual compound returns the S&P/TSX Total Return. MLI JF Canadian Equity % 18.32% Oct 2001 S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% Over the long term, this fund is expected to outperform the S&P/TSX Composite Index. 54

55 CANADIAN LARGE CAP EQUITY Code 7351 Maxxum Dividend Growth Fund (Mackenzie) Other 8.09% Industrials 2.41% Consumer Staples 7.68% Consumer Discretionary 15.71% Financials 41.64% Cash 14.24% Information Technology 2.78% Energy 7.45% Financial 5.71% TD Bank 5.23% Ensign Energy Services 5.0 Citigroup 4.51% Bank of Nova Scotia 4.04% CIBC 3.35% TJX Companies 3.13% Yellow Pages Income Fund 2.92% Magna International 2.68% Reitmans (Canada) 2.61% Total 39.18% UNDERLYING FUND > Mackenzie Maxxum Dividend Growth Objective The Maxxum Dividend Growth Fund, managed by Mackenzie Financial, seeks a satisfactory return from a balance between longterm growth securities and current income securities. This fund is a conservative Canadian equity fund with a bias towards stocks currently offering an attractive dividend yield. The fund will also invest in growth companies and lowyielding stocks that exhibit good longterm potential for capital gains. Managed by Mackenzie Financial Corporation Fund managers Bill Procter, MBA Inception May 1975 Total assets $1,255.6 million deducted. The solid area represents the gross returns of the fund since its in January To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Maxxum Dividend Growth (Mack) Mackenzie Maxxum Dividend Growth The Mackenzie Maxxum Dividend Growth Fund returned 5.1% for the sixmonth period ending Dec 31, 2005, well short of the S&P/TSX Composite Index (TSX) of 14.8%. The shortfall relative to the broad Canadian market was primarily due to the Fund s very low exposure to the resource sectors. The two other factors were a cash position of approximately 15% and the foreign holdings, accounting for 18% of the Fund which mirrored the performance of the U.S. market. Not surprising, the best performers were energy stocks, led by Ensign Energy Services (+59%) followed by Talisman Energy (+35%). However, as mentioned, the Fund s total exposure to oil and gas stocks was very low at only 8% compared to the Canadian benchmark of 27%. The largest industry exposure at 37% remains financial services which has been a core part of the portfolio for many years. The group once again delivered solid performance, led by Royal Bank (+21%) and Financial (+18%). The only disappointment in the group was Fairfax (13%) which was negatively impacted by Hurricane Katrina. Global growth is likely to moderate this year, in response to a midcycle U.S. consumerled slowdown but a recession should be avoided and inflation is benign. The exceptional gains experienced this year in Canada are unlikely to be repeated but equity prices should make further gains given reasonable valuation levels, low interest rates and sustained global economic growth. As well, given the U.S. has underperformed Canada for the last four consecutive years, one could certainly argue for a reversal of fortunes which would assist the Fund s relative performance. As always, the Maxxum team continues to search for high quality, attractively valued dividendpaying stocks. $40,000 $30,000 $20,000 MLI Maxxum Dividend Growth (Mack) S&P/TSX 60 Total Return Index Mackenzie Maxxum Dividend Growth Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $37,324* $30,251 Annual compound returns the S&P/TSX 60 Total Return Index. MLI Maxxum Dividend Growth (Mack) S&P/TSX 60 Total Return Index 12.78% 12.78% Jan % % 5.74% Over the long term, the fund is expected to outperform the S&P/TSX 60 Index. 55

56 CANADIAN SMALL/MID CAP EQUITY Code 7122 Elliott & Page Growth Opportunities Fund Cash 1.28% Financials 6.16% Industrials 11.29% Energy 23.69% Materials 27.45% Other 19.8 Consumer Discretionary 5.27% Health Care 5.06% E&P Money Fund I (MFC) 9.35% Teck Cominco Ltd. 2.33% Mullen Group Income Fund 2.18% Yamana Gold Inc. 2.14% Geac Computer Corporation 2.11% Real Resources 2.1 Trican Well Service 2.0 Penn West Energy Trust 1.97% Trinidad Energy Services 1.79% Russel Metals 1.77% Total 27.74% UNDERLYING FUND > Elliott & Page Growth Opportunities Fund Objective The Elliott & Page Growth Opportunities Fund seeks longterm capital growth. The fund invests primarily in highquality securities and convertible instruments of small and mid cap Canadian companies. Managed by MFC Global Investment Management (Toronto) Fund managers Ted Whitehead, B.Comm, CFA Inception November 1998 Total assets $730.8 million deducted. The solid area represents the gross returns of the fund since its in August The underlying fund was changed on June 1, 2003 from the Elliott & Page Emerging Growth Fund to the Elliott & Page Growth Opportunities Fund MLI E&P Growth Opportunities It was an exceptional year for the markets, commodities, and the currency. The S&P/TSX Composite Index climbed over 24.13%, nearing record levels not seen since Meanwhile, the Nesbitt Burns Small Cap Index (NBSCI) rose % and closed the year at an alltime high. A record crude price of $70.85 a barrel was reached on August 30, the day after Hurricane Katrina hit. Incessant investor demand drove gold to $541 an ounce, its highest price since January Meanwhile, commodities such as copper, zinc, and silver continued their uptrends, driving the Canadian dollar to its highest level since January Strong gains for the Elliot & Page Growth Opportunities Fund were driven by strength in the resources and interest sensitive sectors. The energy, financials, and materials sectors appreciated significantly in the NBSCI, rising 62.1%, 31.2%, and 18.9%, respectively. In 2006, material changes will be made to the Fund, due to the adoption of a new benchmark. Effective January 1, the Fund will be using the blended NBSCI, which will include income trusts representing nearly onethird of the benchmark. Sectors with significant adjustments include energy, materials, and financials. The energy and financial sector weightings will increase by approximately 4% each, while the materials sector weighting will decline by nearly 8%. The Fund managers are optimistic about the beginning of Nearterm momentum remains positive, the period is seasonally strong, inflation remains benign, valuations remain reasonable, and it appears that the Fed could be near the end of its tightening phase, with the real estate market cooling. $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 MLI E&P Growth Opportunities BMO Nesbitt Burns Cdn Small Cap Index Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $27,315 $25,346* Annual compound returns the BMO Nesbitt Burns Cdn Small Cap Index. MLI E&P Growth Opportunities BMO Nesbitt Burns Cdn Small Cap Index 22.29% 22.18% 26.04% 13.99% 8.74% Aug % 16.87% 24.92% 14.85% Over the long term, the fund is expected to outperform the Nesbitt Burns Canadian Small Cap Index. 56

57 CANADIAN SMALL/MID CAP EQUITY Code 7191 Canadian Small Cap Equity Fund (Tattersall) Information Technology 3.04% Energy 10.67% Cash 12.7 Industrials 18.26% Materials 22.56% Other 15.92% Consumer Discretionary 9.91% Financials 6.94% Lundin Mining 3.34% Gentry Resources 2.87% NQL Energy Services 2.32% GSI Group 2.06% Martinrea International 2.01% Enerflex Systems 1.99% Intertape Polymer Group 1.99% Aur Resources 1.96% Canadian Hydro Developers 1.88% Total 20.42% UNDERLYING FUND > MLI Cdn Small Cap Equ (Tattersall) Objective The fund is managed to achieve above average longterm capital growth, primarily through investment in common shares of listed Canadian companies with relatively small market capitalization. The manager uses a valueoriented investment style to select stocks that will, as a group, out perform market averages over time. Managed by Financial Fund managers Howson Tattersall Mgmt. Team Inception January 1999 Total assets $287.7 million deducted. The solid area represents the gross returns of the fund since January To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Canadian Small Cap Equity The Canadian equity markets were able to achieve a modest gain during the fourth quarter. A decline in the price of oil and uncertainty over the federal election outcome presumably sent investors to the sidelines, in spite of reassuring words from the Finance Minister about income trusts and lower taxes on dividend income. The portfolio increased by 4.4% for the quarter about in line with the index but lagged for the year with a gain of only 12.5%. Our performance was restrained by a growing underexposure to the energy sector, minimal exposure to income trusts, several problem stocks in the industrial products category, plus our ongoing preference for microcap names. Buying and selling were about in line with E&P Small Cap Value during the quarter, and the cash reserve increased from 1% to 1 as of December 31. As the fixation with energy stocks and income trusts begins to wane, we are hoping for improved relative performance from the fund. We recognize that the price of oil will likely remain high by historical standards, but the recent escalation in the price of energy will lead to conservation, alternative sources and increased production from existing wells. This will have a moderating effect on the price of oil, but we are not convinced that this possibility is included in the price of many oil stocks. So, we expect to replace our sale candis in the energy sector of the portfolio, but not increase the exposure significantly. $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 MLI Canadian Small Cap Equity BMO Nesbitt Burns Cdn Small Cap Index $8,000 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $27,651* $25,788 Annual compound returns the BMO Nesbitt Burns Cdn Small Cap Index. MLI Canadian Small Cap Equity BMO Nesbitt Burns Cdn Small Cap Index 15.51% 16.65% 22.34% 18.31% 15.64% Jan % 16.87% 24.92% 14.85% The fund is expected to outperform the NB Small Cap (Weighted) Total Return Index over moving threeyear annualized period by 2. per year. 57

58 U.S. Equity U.S. Equity funds are a form of foreign equity and invest in shares of U.S. companies. These types of funds typically aim to achieve long-term capital growth by investing in shares of companies based in the United States. A share represents an ownership stake in a company; therefore, how the fund performs depends on the success of the company holdings within the fund. The fund s performance can also be affected by such factors as currency exchange rates and economic and political trends. These funds are ideal for investors who have a long-term focus, want to include U.S. holdings in their portfolios, and are comfortable with a higher-than-average level of volatility. U.S. Equity funds can vary greatly depending on such factors as the size and types of companies in which they invest and the criteria the manager uses to decide the best companies to invest in. U.S. Large Cap Equity FUND PAGE CODE NUMBER MFC Global Pooled U.S. Index Fund MFC Global Pooled U.S. Equity Fund Fidelity Growth America Fund SEAMARK U.S. Equity Fund U.S. Equity Fund (Bernstein) Legg Mason U.S. Value Fund

59 U.S. LARGE CAP EQUITY Code 8131 MFC Global Pooled U.S. Index Fund Cash 4.32% Consumer Discretionary 11.8 Health Care 12.24% Other 15.3 Financials 20.77% Information Technology 15.12% Industrials 11.3 Energy 9.15% General Electric 3.23% Exxon Mobil 3.05% Citigroup 2.14% Microsoft 2.09% Procter & Gamble 1.69% Bank of America 1.62% Johnson & Johnson 1.56% American International Group 1.54% Pfizer 1.5 Altria Group Inc. 1.36% Total 19.78% UNDERLYING FUND > MFC Global Pooled U.S. Equity Index Objective The Fund aims to achieve investment results that approximate the total return of the S&P 500 Stock Index, one of the most wellregarded benchmarks for the U.S. equity market. This is a passively managed fund. To achieve its investment objective, the fund will invest directly in common shares and may use derivative instruments such as futures in order to replicate the returns of the S&P 500 Stock Index. The fund may also invest a portion of its funds in cash. Managed by MFC Global Investment Management (Toronto) Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception January 1998 Total assets $98.4 million deducted. The solid area represents the gross returns of the fund since its in January MLI MFC Global Pooled U.S. Index Financial markets performed largely as expected in The S&P 500 generated a modest 4.91% (U.S.) total return, small and mid cap stocks outperformed large cap while growth and value performed in line with each other. The Fed continued to tighten and earnings growth moderated. Energy prices dominated the news as oil rose 4 to close the year at $61 per barrel. As a result, the energy sector was by far the topperforming sector of the stock market. While GDP growth seems likely to moderate as we move further into 2006, there is plenty of positive economic news. Payroll employment is growing, consumer sentiment is strong, wages are growing, business investment is strong, and inflation remains well behaved. In 2006, some of the bearish factors that held back stocks in 2005 may improve. Above normal energy inventories may cause oil prices to moderate; the second year of the Presidential cycle is somewhat better for stocks; the Fed will likely soon end its policy of tightening; and the deterioration of both the trade and budget deficits may moderate. In each of the past two years, the stock market provided positive but modest returns as strong earnings growth was offset by a declining P/E ratio. For the coming year, there appears to be a good chance for both strong earnings growth and an increase in the market s valuation, thereby resulting in only the second year of positive doubledigit returns since $17,000 $16,000 $15,000 $13,000 $11,000 MLI MFC Global Pooled U.S. Index S&P 500 Composite Total Return Idx($Cdn) $9,000 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $11,856 $11,738* Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI MFC Global Pooled U.S. Index S&P 500 Composite Total Return Idx($Cdn) 1.31% 2.11% 2.92% 4.91% 2.02% Jan % 2.43% 3.37% 4.4 Over the long term, the fund is expected track the performance of the S&P 500 Total Return Index ($ Cdn). 59

60 U.S. LARGE CAP EQUITY Code 8132 MFC Global Pooled U.S. Equity Fund Health Care 12.02% Consumer Discretionary 12.11% Information Technology 18.08% Financials 22.85% Other 17.01% Industrials 9.07% Energy 8.86% Bank of America 3.69% Microsoft 2.82% Citigroup 2.65% Medtronic Inc. 2.63% Wachovia 2.61% Fannie Mae 2.6 Johnson & Johnson 2.51% ConocoPhillips 2.43% General Electric 2.4 Pepsico Inc. 2.17% Total 26.51% UNDERLYING FUND > MFC Global Pooled U.S. Equity Objective The MFC Global Pooled U.S. Equity Fund is managed for aggressive growth over a period of at least four years. The fund is invested broadly, principally in large and midcapitalization stocks. Managed by MFC Global Investment Management (Toronto) Fund managers MFC Global Invest Mgmt (Tor)Mgmt Team Inception January 1998 Total assets $9.5 million deducted. The solid area represents the gross returns of the fund since its in September To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI MFC Global Pooled U.S. Equity MFC Global Pooled U.S. Equity Financial markets performed largely as expected in The S&P 500 generated a modest 4.91% (U.S.) total return, small and mid cap stocks outperformed large cap while growth and value performed in line with each other. The Fed continued to tighten and earnings growth moderated. Energy prices dominated the news as oil rose 4 to close the year at $61 per barrel. As a result, the energy sector was by far the topperforming sector of the stock market. While GDP growth seems likely to moderate as we move further into 2006, there is plenty of positive economic news. Payroll employment is growing, consumer sentiment is strong, wages are growing, business investment is strong, and inflation remains well behaved. In 2006, some of the bearish factors that held back stocks in 2005 may improve. Above normal energy inventories may cause oil prices to moderate; the second year of the Presidential cycle is somewhat better for stocks; the Fed will likely soon end its policy of tightening; and the deterioration of both the trade and budget deficits may moderate. In each of the past two years, the stock market provided positive but modest returns as strong earnings growth was offset by a declining P/E ratio. For the coming year, there appears to be a good chance for both strong earnings growth and an increase in the market s valuation, thereby resulting in only the second year of positive doubledigit returns since $22,000 $20,000 $18,000 $16,000 MLI MFC Global Pooled U.S. Equity S&P 500 Composite Total Return Idx($Cdn) MFC Global Pooled U.S. Equity $8,000 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $12,635* $11,856 Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI MFC Global Pooled U.S. Equity S&P 500 Composite Total Return Idx($Cdn) 5.32% 6.99% 5.08% 7.39% 1.72% Sep % 2.43% 3.37% 4.4 Over the long term, the fund is expected to outperform the S&P 500 Total Return Index ($ Cdn). 60

61 U.S. LARGE CAP EQUITY Code 8142 Fidelity Growth America Fund Cash 0.4 Consumer Discretionary 13.6 Financials 11.7 Energy 18.3 Information Technology 24.8 Other 13.9 Health Care 10.1 Consumer Staples 7.2 BJ Services Exxon Mobil Genentech Inc. KLATencor Liz Claiborne Noble Corp. Peabody Energy Corp Sprint Nextel Corp. Texas Instruments UnitedHealth Group Total 25.1 UNDERLYING FUND > Fidelity Growth AmericaA Objective The Fund seeks to achieve longterm capital growth by investing primarily in equity securities of U.S. companies. The fund may invest in small, medium and large companies. The portfolio manager searches for investment opportunities by using Fidelity s traditional bottomup investment style, selecting securities for the fund on a stockbystock basis. Managed by Fidelity Investments Canada Ltd. Fund managers John Power Inception September 1990 Total assets $143.7 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Fidelity Growth America Fidelity Growth AmericaA U.S. equity markets, as represented by the S&P 500 index rose 2.9% in Canadiandollar terms during the fourth quarter of The markets rose as energy prices moderated, allowing U.S. consumer to continue to be the engine of economic growth. The market rallied towards yearend on speculation that the U.S. Federal Reserve will soon end their tightening cycle. In the fourth quarter, the Fund gained 1.6%, underperforming its benchmark by 1.3% and effective stock selection in the energy and industrials sectors was the greatest contributor to the Fund s return, while an unfavourable overweight position in the energy sector and an unfavourable underweight position in the financials sector were the greatest detractors from the Fund s return. At the end of the period, the Fund s largest overweight positions, relative to its benchmark index, were in the information technology and energy sectors respectively. The most notable change in exposure occurred within the telecommunication services sector, which was modified from a modest underweight to a modest overweight position. The Fund s largest underweight positions at the end of the period were in the financials and industrials sector respectively. The portfolio manager, John Power, believes the longterm outlook for U.S. energy companies is extremely positive, as continued supply constraints coupled with steadily increasing global demand will serve to keep energy prices at historically high levels. His notable overweight position within the information technology sector is based on his belief that corporations are poised to increase their technology spending. Within this sector, he favours the semiconductor industry. Conversely, he has taken a very selective approach to the industrial and financial sectors, which he believes have less favourable growth prospects and may, in many instances, be overvalued. $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 MLI Fidelity Growth America S&P 500 Composite Total Return Idx($Cdn) Fidelity Growth AmericaA Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $19,551 $18,679* Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI Fidelity Growth America 8.03% 5.46% 6.99% 2.18% 3.76% Jul 1997 S&P 500 Composite Total Return Idx($Cdn) 1.61% 2.43% 3.37% 4.4 The fund seeks to achieve returns comparable to, or better than, the S&P 500 Total Return Index ($ Cdn). 61

62 U.S. LARGE CAP EQUITY Code 8171 SEAMARK U.S. Equity Fund Cash 2.07% Financials 11.97% Industrials 11.5 Consumer Discretionary 26.22% Information Technology 23.78% Other sectors 3.05% Other 2.09% Health Care 19.32% Citigroup 4.05% General Electric 4.0 Amgen 3.93% Time Warner Inc. 3.86% Comcast Corp. 3.42% Agilent Technologies Inc. 3.2 Cisco Systems 3.11% McGrawHill Companies 3.0 Biomet Inc. 2.99% Wyeth 2.95% Total 34.51% UNDERLYING FUND > SEAMARK Pooled U.S. Equity Objective The SEAMARK Pooled U.S. Equity Fund is managed to preserve and enhance capital through longterm capital gains with some current dividend income. The fund will invest primarily in U.S. equity securities. Managed by SEAMARK Asset Management Ltd. Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Lance Speck, CFA. Inception June 1997 Total assets $140.6 million deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI SEAMARK U.S. Equity (As at December, ) The S&P 500 recovered from a sharp correction in October to finish modestly higher for the quarter. The correction was driven by renewed concerns over U.S. inflation and the level of future economic growth. The Fund returned 1.78% (U.S.$), for the quarter, with the best performing stocks in financials and energy. JP Morgan and Bank of America both outperformed the S&P 500 Financials index and Schlumberger, the world s largest oilfield services company, appreciated 15%. Record cash flows for oil companies, maturing oilfields and future development from more remote and less conventional sources, bode well for Schlumberger going forward. As in Canada, financials and materials stocks were the S&P 500 s best performers. A pullback by technology, health care and consumer holdings, that have generally done well this year, led the Fund to lag the index. Heading into 2006, the Fund is focused on health care, media and entertainment, and technology. In health care, earnings growth for pharmaceutical companies is set to re accelerate as revenue losses from patent expirations subside and companies continue to restructure their cost bases. In media & entertainment, companies such as Viacom and Time Warner continue to restructure in order to unlock shareholder value. With increasing demand for content and historically low valuations these stocks provide solid value. In technology, we like the prospects for Teradyne and Applied Materials, two semiconductor equipment stocks which were weak in 2005 as the semiconductor industry struggled with excess inventory and manufacturing capacity. With excess inventory worked off and a transition underway to faster and more complex chips, these companies should benefit from increased industry spending. $24,000 $22,000 $20,000 $18,000 $16,000 MLI SEAMARK U.S. Equity S&P 500 Composite Total Return Idx($Cdn) SEAMARK Pooled U.S. Equity Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $19,000* $13,565 Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI SEAMARK U.S. Equity 1.19% 1.02% 3.61% 2.19% 6.58% Aug 1997 S&P 500 Composite Total Return Idx($Cdn) 1.61% 2.43% 3.37% 4.4 The fund s performance is benchmarked against the S&P 500 Total Return Index ($ Cdn). Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party. 62

63 U.S. LARGE CAP EQUITY Code 8191 U.S. Equity Fund (Bernstein) Consumer Discretionary 13.29% Consumer Staples 12.4 Other 16.22% Financials 24.94% Information Technology 13.6 Industrials 10.49% Energy 9.06% General Electric 3.72% Citigroup 2.72% Exxon Mobil 2.7 Microsoft 2.63% Procter & Gamble 2.08% Bank of America 2.05% Altria Group Inc. 1.93% Intel 1.87% Pfizer 1.58% IBM 1.57% Total 22.85% UNDERLYING FUND > MLI U.S. Equity (Bernstein) Objective The fund is managed to achieve longterm capital appreciation, primarily through investments in equity securities of large, wellcapitalized U.S. corporations. The manager s approach is research based and valueoriented. Managed by Financial Fund managers Alliance Bernstein Inv Mgmt.Mgmt. Team Inception January 1999 Total assets $318.9 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI U.S. Equity MLI U.S. Equity (Bernstein) The S&P 500 increased 2.8% for the quarter as increased hopes that the Federal Reserve is nearing the end of its rate tightening cycle offset concerns of an economic slowdown in Positive economic data provided an additional boost to U.S. and global equity markets. Specifically, reports indicated that economic growth, retail sales excluding automobiles and consumer confidence were all higher. Growth stocks outperformed their value counterparts as the Russell 1000 Growth Index rose 3.7% compared to a 1.9% increase for the Russell 1000 Value Index. Cyclically sensitive stocks gained, including industrial resources and transportation stocks. In contrast, energy shares fell as oil prices retreated from their recent highs. Within the U.S. equity market, valuation differences between attractivelypriced and expensive stocks are unusually compressed and the value opportunity remains below average. A central tenet of our strategy is to keep the risks in the portfolio proportional to the value opportunity we identify. We continue to use our large, bottomup research effort to uncover value opportunities that do exist among individual stocks. $13,000 $11,000 $9,000 $8,000 MLI U.S. Equity S&P 500 Composite Total Return Idx($Cdn) MLI U.S. Equity (Bernstein) $7,000 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $8,741* $8,610 Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI U.S. Equity 1.38% 2.35% 2.86% 0.33% Oct 2001 S&P 500 Composite Total Return Idx($Cdn) 1.61% 2.43% 3.37% 4.4 The fund is expected to outperform the S&P 500 Total Return Index ($ Cdn) over moving threeyear annualized period by 1.5% per year. 63

64 U.S. LARGE CAP EQUITY Code 8261 Legg Mason U.S. Value Fund Financials 16.2 Telecommunication Services 9.9 Health Care 17.6 Consumer Discretionary 26.3 Information Technology 16.7 Industrials 7.5 Other 5.8 Sprint Nextel 6.44% UnitedHealth Group 5.69% Amazon.com 5.58% Tyco International 5.52% Google 4.38% AES Corp. 4.16% JP Morgan Chase & Co 3.8 ebay 3.42% Aetna 3.28% Qwest Communications Intl. 3.21% Total 45.48% UNDERLYING FUND > Legg Mason U.S. Value Pool Objective The Legg Mason U.S. Value Fund is managed to invest primarily in common shares of companies based in the United States that the portfolio advisor views as undervalued and that offer potential for above average total returns in the form of capital gains over a longerterm. A portion of the fund may invest in large foreign companies traded on nonu.s. exchanges. Managed by Legg Mason Canada Inc. Fund managers Bill Miller, CFA and Mary Chris Gay Inception May 2000 Total assets $626.8 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Legg Mason U.S. Value Legg Mason U.S. Value Pool The Fund s fundamental investment objective is investments primarily in equity securities of companies based in the United States that the portfolio advisors view as undervalued and that offer potential for above average total returns in the form of capital gains over a longer term. A portion of the fund may invest in large foreign companies traded on nonu.s. exchanges. The major U.S. equity market indices posted respectable returns for the fourth quarter of 2005, primarily driven by strong returns in November. A powerful rally in both absolute and relative terms led this Fund s manager to the fifteenth consecutive calendar year of outperformance relative to the S&P 500 Index. Holdings in the electronic commerce sector rallied strongly. Google (+31.1%) posted strongerthanexpected quarterly results, Expedia (+21.) responded to strong revenue and profit growth along with a turnaround at its Hotels.com subsidiary, while Yahoo (+15.8%) saw its differentiation strategy bear fruit. The longterm growth potential for the managed care industry was recognized in steady performance by these holdings. Substantial cost savings from the repurchase of Qwest s highcoupon bonds was rewarded with a nearly 4 advance in that stock in the quarter. Stocks have advanced by less than their underlying earnings growth rate for the last two years, resulting in a compression of valuations. An optimistic economic outlook and the anticipated end to Federal Reserve Board tightening should allow for some multiple expansion in Combined with profit growth of roughly 1, and a couple of points of dividend yield, this should result in returns in the 12% to 15% range for the year. We think largecapitalization will outperform small caps, on a combination of more attractive valuation and superior cash flow generation, and also that growth stocks will outperform value stocks. $9,000 $8,000 $7,000 $6,000 MLI Legg Mason U.S. Value S&P 500 Composite Total Return Idx($Cdn) Legg Mason U.S. Value Pool $5,000 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $9,087* $7,259 Annual compound returns the S&P 500 Composite Total Return Idx($Cdn). MLI Legg Mason U.S. Value 4.03% 4.43% 8.73% 2.67% Oct 2001 S&P 500 Composite Total Return Idx($Cdn) 1.61% 2.43% 3.37% 4.4 Over the longterm, the fund is expected to outperform the S&P 500 Index ($ Cdn).

65 International/Global Equity International Equity funds invest in shares of non-north American companies. Global Equity funds typically aim to achieve long-term capital growth by investing in shares of companies in Asia, Europe and the Americas. A share represents an ownership stake in a company; therefore, how the fund performs depends on the success of the company holdings within the fund. The fund s performance can also be affected by such factors as currency exchange rates and economic and political trends around the world. International/Global Equity funds are ideal for investors who have a long-term focus, want to include foreign holdings in their portfolio, and are comfortable with a higher degree of volatility. These funds vary greatly depending on such factors as the size and types of companies in which they invest, the countries or regions in which they invest, and the criteria the fund manager uses to decide the best companies to invest in. International Equity FUND PAGE CODE NUMBER SEAMARK International Equity Fund International Equity Fund (Templeton) Jarislowsky Fraser International Equity Fund BGI International Equity Index Fund Global Equity Fidelity International Portfolio Fund McLean Budden Global Equity Fund Trimark Fund

66 INTERNATIONAL EQUITY Code 8172 SEAMARK International Equity Fund Mexico 9.05% Spain 4.93% Japan 7.99% Other 20.9 United Kingdom 35.67% Switzerland 10.43% Netherlands 5.68% Germany 5.35% Telefonica SA 4.93% Royal Bank Scotland Group PLC 4.55% Barclays Bank PLC 4.43% Pearson PLC 4.32% Nestle 4.24% Nokia 4.1 Cemex 4.0 XL Capital 3.89% Canon Inc. 3.47% Rio Tinto 3.28% Total 41.21% UNDERLYING FUND > SEAMARK Pooled International Equity Objective The SEAMARK International Equity Fund is managed to preserve and enhance capital through longterm, capital gains with some dividend income. The fund invests primarily in the equity securities of companies domiciled outside of Canada and the United States. Managed by SEAMARK Asset Management Ltd. Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Lance Speck, CFA. Inception June 1997 Total assets $63.8 million deducted. The solid area represents the gross returns of the fund since its in August To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI SEAMARK International Equity Stock selection, rather than country allocation, remains the key focus of the International Equity Fund as we believe this a better source of value added over longer periods of time. The Fund outperformed the index during the quarter despite a low exposure to Japan, which was the strongest performing global market during the period. From its low at the end of July, the Japanese market has gained more than 36%. Such a macro driven move of an equity market is rare and should not be considered sustainable or even stable. Fundamentals are indeed on the mend in Japan but they have not improved nearly as much as the market has appreciated in the past three months. The health of most Japanese companies continues to lag their global peers. Looking out into 2006 we expect the market to reward companies that deliver steady growth over time without a reliance on a strong upward trend in commodity prices. The portfolio is well-positioned to benefit from current strength in base metal prices through our holdings in BHP Billiton and Rio Tinto. As the commodity cycle continues, there may be an opportunity to capture these gains. $24,000 $22,000 $20,000 $18,000 $16,000 $8,000 $6,000 MLI SEAMARK International Equity MSCI EAFE ($ Cdn) SEAMARK Pooled International Equity Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $19,886* $12,977 Annual compound returns the MSCI EAFE ($ Cdn). MLI SEAMARK 6.13% 4.17% 5.74% % Aug 1997 International Equity MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% 0.22% The fund s performance is benchmarked against the MSCI EAFE Index ($ Cdn). Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party. 66

67 INTERNATIONAL EQUITY Code 8192 International Equity Fund (Templeton) Switzerland 4.99% Netherlands 9.13% France 7.29% United Kingdom 22.99% Other 30.68% Japan 13.28% Korea 5.99% Hong Kong 5.65% Kookmin Bank 1.94% BAE Systems Canada 1.91% Nomura Holdings Inc. 1.88% Cheung Kong Hld 1.64% Samsung Electronics 1.61% UBS AG 1.58% ING Groep NV 1.54% CI Master LP 1.53% Accor Sa Adr 1.51% Securitas AB B 1.5 Total 16.64% UNDERLYING FUND > MLI International Equ (Templeton) Objective The fund is managed to achieve longterm capital appreciation, primarily through investments in equity securities of companies outside Canada and the United States. Franklin Templeton s investment philosophy is based on identifying undervalued companies that, over time, may produce the greatest share price returns with minimum risk. Bottom up analysis and a worldwide network of experienced research professionals are used to identify undervalued stocks. Managed by Financial Fund managers Franklin Templeton Mgmt Mgmt. Team Inception January 1999 Total assets $350.8 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI International Equity MLI International Equ (Templeton) In a year marked by recordbreaking energy prices, the fourth quarter posted a good performance. During that same period, the European Central Bank raised rates 25 basis points to 2.25% for the first time in 29 months due to excess liquidity concerns and the more solid footing of the economy. Crude oil prices declined slightly while natural gas became the topic of a bitter dispute between Moscow and Kiev over Russian natural gas exports transiting through Ukraine. Meanwhile corporate profit growth in the U.S., Japan, and Germany was very strong. Stock market performance, particularly in the nonu.s. markets, continued to reflect the good news. Foreign investors helped push the Nikkei Index beyond the mark with an inflow of capital into Japanese equities. However, only a select group of Japanese companies have met our valuation parameters for stock selection, and as such we have added them to our bargain list. We have found increasing value in the global telecommunications industry, particularly in Europe. Over the past several years, telecom companies have focused on cutting costs, repairing balance sheets, and growing cash flow and are now returning cash to shareholders. Indeed, the dividend yield for many telecommunications stocks is now more attractive than European utility stocks, a phenomenon not seen in the past ten plus years. We believe that the broadbased economic expansion should continue over the foreseeable future. In our view, populating our portfolios with stocks that we consider undervalued is the correct approach to address our clients investment needs. $13,000 $11,000 $9,000 $8,000 $7,000 MLI International Equity MSCI EAFE ($ Cdn) MLI International Equ (Templeton) $6,000 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $13,569* $10,619 Annual compound returns the MSCI EAFE ($ Cdn). MLI International Equity 9.85% 12.12% 13.27% 6.55% Oct 2001 MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% 0.22% The fund is expected to outperform the MSCI EAFE Total Return Index ($ Cdn) over moving threeyear annualized period by 2. per year. 67

68 INTERNATIONAL EQUITY Code 8241 Jarislowsky Fraser International Equity Fund Other 60.0 United Kingdom 25.3 Japan 14.7 ING Groep NV 3.8 AXA 3.6 Total SA 3.6 Reed Elsevier NV 3.1 Banco Santander S A 3.0 Fresenius Med Care Hlds Pfd 3.0 Nestle 2.9 Royal Bank of Scotland Group 2.9 Air Liquide(L) 2.8 HSBC Holdings PLC 2.8 Total 31.5 UNDERLYING FUND > JF International Equity Objective The Jarislowsky Fraser International Equity Fund focuses on the large capitalization multinationals, which have demonstrated global leadership in their sector and which have a minimum of $1 billion US of market capitalization. These companies have consistent growth records and high returns on invested capital and dominant market positions. Managed by Jarislowsky Fraser Ltd. Fund managers Jarislowsky Fraser Mgmt. Team Inception April 1995 Total assets $2,477.0 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI JF International Equity JF International Equity World economies remain unbalanced with the heavily indebted American consumer on the demand side and the Chinese producer on the supply side. With a U.S. current account deficit nearing $800 billion (7 of the world s external deficits), the state of disequilibrium in the world is increasingly precarious. So far, those imbalances have been sustained by Asia s huge savings surplus as well as the oil exporting countries. The year 2006 could be the time when U.S. consumption finally slows. The effects would be felt worldwide with lesser developed economies hurting the most. The Jarislowsky Fraser International Equity Fund returned 2.3% compared with 4.8 % for the MSCI EAFE Index ($ Cdn) for the fourth quarter of We believe it will be problematic for value and cyclical stocks to extend their 2005 rally into 2006 as it will be difficult to sustain the same level of earnings growth. Another characteristic of our portfolio is its greater exposure to large capitalization stocks than the MSCI EAFE Index. Large capitalization stocks have significantly underperformed the Index over the last few years and are currently inexpensive relative to small capitalization stocks. The expected slowing in earnings momentum for the overall market should therefore bode well for the relative outperformance of large capitalization stocks and our portfolio. $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 MLI JF International Equity MSCI EAFE ($ Cdn) JF International Equity $8,000 Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $22,294* $15,381 Annual compound returns the MSCI EAFE ($ Cdn). MLI JF International Equity 4.97% 5.43% 5.81% 1.26% Oct 2001 MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% 0.22% Over the long term, this fund is expected to outperform the MSCI EAFE Index ($ Cdn). 68

69 INTERNATIONAL EQUITY Code 8321 BGI International Equity Index Fund Netherlands 4.9 Switzerland 6.86% France 8.95% United Kingdom 22.78% Japan 25.65% Other 18.94% Germany 6.71% Australia 5.21% BP PLC 2.18% HSBC Holdings PLC 1.77% Toyota Motor Corporation 1.47% GlaxoSmithKline PLC 1.44% Total SA 1.37% Vodafone Group PLC 1.33% Royal Dutch Shell PLC 1.21% Novartis AG 1.19% Nestle SA 1.18% Roche Holdings 1.03% Total 14.17% UNDERLYING FUND > BGI Daily EAFE Equity Index Objective The BGICL Daily EAFE Equity Index Fund s objective is to match the returns of the MSCI EAFE Index ("index") as closely as possible. BGICL uses an indexing approach, where they own assets to match those of the index, in about the same names, weights, sectors, and countries. The index currently contains over 1000 of the world s largest publicly traded firms, in 21 countries that are in the developed markets outside North America. This fund is considered foreign in registered plans. Managed by Barclays Global Investors Canada Ltd. Fund managers Rajiv Silgardo Inception April 1999 Total assets $288.1 million deducted. The solid area represents the gross returns of the fund since its in November To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI BGI International Eq Index BGI Daily EAFE Equity Index Continental Europe seems to be experiencing a recovery with solid gains in France, Germany and Switzerland. Business confidence has returned across the region, unemployment has begun to fall and corporate earnings are better than expected. Consumer spending tends to lag due to the cumbersome labour laws in Europe, but as unemployment slowly decreases, spending will improve. In the UK, consumer spending picked up in the fourth quarter, but is expected to be sluggish going forward. Some of the reasons include large consumer debt burdens, low unemployment and weak productivity growth. Other non Continental countries such as Norway continue to see rising equity markets as demand for oil (Norway) and financial services (Switzerland) continue to increase. Over the past six months, foreigners net investment in Japanese equities have surged to the strongest level in more than a decade, helping to explain why Japan s stock market has leapt almost 4 since its low back in April. An upturn in consumer spending and hiring has kindled hopes that this time Japan s recovery may be sustained, while its exportdominated stock market is expected to benefit from the global upswing. $13,000 $11,000 $9,000 $8,000 $7,000 MLI BGI International Eq Index MSCI EAFE ($ Cdn) BGI Daily EAFE Equity Index $6,000 Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $10,614 $9,962* Annual compound returns the MSCI EAFE ($ Cdn). MLI BGI International Eq 11.25% 11.24% 13.29% Nov 2003 Index MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% 0.22% Over the long term, this fund is expected to track the return and risk profile of the MSCI EAFE Index ($ Cdn). 69

70 GLOBAL EQUITY Code 8141 Fidelity International Portfolio Fund United Kingdom 9.7 Australia 2.9 Canada 5.4 Other 18.6 United States 41.7 Japan 14.7 Switzerland 3.2 Germany 3.8 BP PLC Ericsson LM Telephone Genentech Inc. GlaxoSmithKline PLC Goldman Sachs Monster Worldwide Novartis AG Peabody Energy Corp Total SA Univision Communication Total 10.1 UNDERLYING FUND > Fidelity International PortfolioA Objective This fund invests primarily in equity securities of companies anywhere in the world with the objective of achieving longterm capital growth. The fund is not subject to any geographic constraints with regard to the allocation of portfolio assets among different markets. Managed by Fidelity Investments Canada Ltd. Fund managers Richard Habermann, BA, MBA. Inception November 1987 Total assets $1,337.2 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Fidelity Int l Portfolio Fidelity International PortfolioA Global equity markets performed well during the fourth quarter of 2005, with the MSCI World index gaining 3.7% (all returns in Canadiandollar terms). The Japanese equity market posted strong gains, advancing (+13%), followed by the Asia exjapan region (+7.) and the U.S. (+2.9%). The European equity market lagged the other regions but still posted positive returns (+2.6%). Japanese equities mirrored the strong gains of the previous quarter, surging to a fiveyear high. Improving economic conditions and earnings growth continued to attract overseas investors to Japanese equities. The financials, industrials, and materials sectors performed particularly well with the latter sector benefiting from rising gold prices, which broke through the $500 US barrier in December. Weaker performance was seen in the energy and telecommunicationservices sectors. Energy prices fell to more moderate levels due to a softening in demand. The Fund rose 3.7% during the fourth quarter, trailing the return of its benchmark index slightly. Security selection was the primary driver of relative returns, particularly within the Japanese market. The largest detractor from performance was being overweight the underperforming energy sector. Lead portfolio manager, Dick Habermann, continues to observe differing levels of strength in global economies. Persistently high oil prices and strong raw material demand in China are continuing themes. Mr. Habermann is underweighted in the U.S. where continued interest rate hikes and sustained high energy prices have negatively impacted consumer sentiment. European stocks are also underweighted, despite improved corporate earnings, structural problems persist. Japan is overweight in the Fund and Mr. Habermann remains positive in his outlook for the Japanese market. $24,000 $22,000 $20,000 $18,000 $16,000 MLI Fidelity Int l Portfolio MSCI World ($ Cdn) Fidelity International PortfolioA Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $21,922* $17,129 Annual compound returns the MSCI World ($ Cdn). MLI Fidelity Int l Portfolio 11.77% 9.31% 10.69% 0.57% 5.57% Jul 1997 MSCI World ($ Cdn) 6.58% 6.96% 7.78% 2.41% The fund seeks to achieve returns comparable to, or better than, the MSCI World Index ($ Cdn). 70

71 GLOBAL EQUITY Code 8161 McLean Budden Global Equity Fund Japan 10.27% Sweden 2.18% Germany 7.25% Other 14.44% United States 43.85% United Kingdom 13.22% France 3.61% Switzerland 5.18% Citigroup 2.95% Pfizer 2.37% BP PLC 2.08% Deutsche BkAdr 1.94% Toyota 1.94% Microsoft 1.86% Fannie Mae 1.76% Alcoa 1.72% Nestle 1.49% HSBC Holdings PLC 1.48% Total 19.59% UNDERLYING FUND > MB Global Equity Objective The McLean Budden Global Equity Fund is managed to provide a superior rate of return, primarily through capital appreciation. The fund invests in a diversified portfolio of 6080 noncanadian equities. Security selections emphasize large companies with prospects for above average earnings growth. Managed by McLean Budden Limited Fund managers Mary Hallward, BA, MBA; Bruce Murray; Bill Giblin; Brian Dawson, BA, CFA; Bruce MacNabb; and Benoit Paradis. Inception June 1996 Total assets $1,505.6 million deducted. The solid area represents the gross returns of the fund since its in July To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI McLean Budden Global Equity MB Global Equity Most global equity markets generated positive returns during the quarter despite continued tightening by several major central banks. The Bank of Canada and the U.S. Federal Reserve increased overnight rates by 50 basis points during the period, while the European Central Bank announced its first interest rate increase in five years moving the region s benchmark rate off a sixdecade low. The Fund posted a solid absolute return and outperformed the Index for the quarter due to good stock selection in energy (Transocean and Schlumberger) which more than offset weak results in telecommunication services (France Telecom and NTT). Overall sector allocation was relatively neutral. There was a significant amount of activity during the quarter as six companies were added and seven eliminated. The Fund increased its weighting in materials and utilities while lowering exposure to consumer discretionary and financials. There was no significant activity in energy, however, exposure to industrials was raised as the addition of Fanuc and buying in Deutsche Post offset selling in Fluor and the elimination of ABB. $22,000 $20,000 $18,000 $16,000 $8,000 MLI McLean Budden Global Equity MSCI World ($ Cdn) MB Global Equity Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $19,235* $16,384 Annual compound returns the MSCI World ($ Cdn). MLI McLean Budden Global 5.69% 5.58% 6.56% 1.41% 5.45% Jul 1997 Equity MSCI World ($ Cdn) 6.58% 6.96% 7.78% 2.41% The fund is expected to outperform the MSCI World Index ($ Cdn) over a moving fouryear annualized period by 1. per year. 71

72 GLOBAL EQUITY Code 8181 Trimark Fund Other 7.64% France 4.78% Ireland 7.39% United Kingdom 21.0 United States 37.55% Mexico 11.16% Netherlands 5.38% Japan 5.1 Cemex 5.1 WPP Group 4.48% Reed Elsevier PLC 4.41% Grupo Televisa 4.01% SherwinWilliams Co. 3.23% Engelhard Corp. 3.16% Smiths Group PLC 3.14% Canon Inc. 3.11% Oracle 3.1 Compass Group PLC 3.07% Total 36.81% UNDERLYING FUND > Trimark Fund Objective The Trimark Fund seeks to achieve strong capital growth with a high degree of reliability over the long term. The fund invests primarily in equities of companies anywhere in the world. Managed by AIM Trimark Investments Fund managers Tye Bousada, CFA; and Dana Love, MSc, CFA. Inception September 1981 Total assets $2,578.6 million deducted. The solid area represents the gross returns of the fund since its in October To provide further historical information, the shaded area represents the returns of the underlying fund for the period before the start of the fund MLI Trimark Trimark Fund SC Today, there is a consensus that the world is running out of oil, natural gas and base/precious metals, and as such, buying into companies that will benefit from these rising commodity prices is the smart thing to do. However, the portfolio management team believes that consensus can be very dangerous for investing. The consensus on emerging markets 10 years ago and "new economy" businesses in the technology, media and telecommunications sectors five years ago have proven to be destructive to returns over long periods of time. The team maintains they are not experts in forecasting commodity prices in the short term. As such, they have shied away from investing in businesses whose fortunes depend on commodity prices. The higher the price goes, the more people will look for a substitute or just simply use less of it. At the same time, the higher priced commodity leads to more supply coming on stream as producers of the commodity try to capitalize on the high prices. The combination of falling demand and increasing supply always leads to lower prices of a commodity product. The team does not believe this time is different. Looking forward, the team is encouraged by the progress of the companies in the Fund and their longterm prospects. In a market that continues to be increasingly focused on short term results and "consensus" investing, the team continues to firmly believe that investors who can think in terms of longer time periods, such as three to five years, should stand to benefit. As always, the portfolio management team continually strives to upgrade the quality of the portfolio with the long term in mind. $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 MLI Trimark MSCI World ($ Cdn) Trimark Fund SC Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 $26,561* $17,129 Annual compound returns the MSCI World ($ Cdn). MLI Trimark 6.78% 6.67% 7.59% 5.95% 8.22% Oct 1997 MSCI World ($ Cdn) 6.58% 6.96% 7.78% 2.41% To be the top of its respective category over the long term, while striving to outperform the MSCI World Index ($ Cdn). 72

73 i-watch The philosophy The Investment Management Services (IMS) team focuses on quality, not quantity. They believe past performance is not an accurate indicator of future performance, but rather high-quality investment firms who adhere to documented investment policies and procedures are more likely to deliver superior results over time. It is their job to monitor the fund managers on 's platform so investors don t have to. They understand how important it is for Financial s stakeholders to have sufficient information to make prudent investment decisions. This is why i-watch exists. Investment Management Services One of Financial s core competencies is providing investment management services in the countries in which we operate, including the U.S., Canada, Hong Kong, Japan, and other countries in the Far East. In Canada, the Investment Management Services team is comprised of a team of analysts and industry professionals whose credentials match professionals in the most respected investment consulting firms. By operating objectively and independently of any business units, the IMS team ensures fund partners meet stringent requirements for fund management. Given that money management is a global concern, team members often consult with their counterparts throughout the world. Fund partners adhere to the same best practices particularly when IMS is selecting or monitoring investment funds representing non-north American mans. i-watch Fund selection Funds available through Financial are screened and selected using a strict process. Performance is one screening criterion, but is not the most important determinant of future In IMS view, the consideration of an investment firm s qualitative aspects, together with its quantitative aspects, is a better indicator of the fund s longterm viability. Reflecting this viewpoint, Financial s selection process includes an in-depth review of factors that determine the underlying quality of the fund manager. IMS emphasizes their qualitative review in the decisionmaking process and screens for the following qualities: The stability of the organization, including succession planning and adherence to a code of ethics. The depth, quality and overall experience level of the people managing the assets. A clearly defined investment process that has been applied consistently over time. A record of performance that compares favourably to appropriate benchmarks and peer managers. Risk characteristics that are in line with investment mans. The IMS team of independent professionals get behind the numbers by visiting and interviewing fund managers on a regular basis, probing issues in a way that can only come from years of experience. Ongoing monitoring process While the selection process is important, the ongoing monitoring process makes i-watch unique. Once an investment fund is selected, the IMS team continues to apply the same level of analysis used to select the fund manager originally. With regular on-site due diligence meetings, the IMS team conducts ongoing systematic reviews of every fund available through Financial. The due diligence review includes a comprehensive examination of the evolving characteristics of the fund and face-to-face meetings with the fund manager. We believe in forming long-term relationships with our manager partners. If a fund fails to live up to its man, we will work with the fund manager to address specific concerns. If these additional steps fail to address our expectations, the fund manager will be replaced or the man will be capped. The choice of actions is based on minimizing any disruption to investors. 73

74 Statement of Investment Policies, Procedures and Goals Pension legislation requirements Pension law requires plan sponsors to establish appropriate policies and investment strategies for their pension plan assets. A sound governance plan includes a statement of investment policies, procedures and goals that is commonly referred to as the SIPP&G. This documentation helps ensure the pension plan is operating in the best interests of its plan members. A sound governance plan outlines the steps and processes plan sponsors need to follow to set-up and maintain a pension plan. As part of their responsibilities, plan sponsors must exercise due diligence in selecting and monitoring investment managers; offer a range of investment alternatives; give plan members the opportunity to make regular investment changes; and provide plan members with detailed investment information. Clearly identifying and defining the roles and responsibilities of each participant in the governance and operation of the pension plan is an important part of this plan management. Pension management roles and activities are identified in the lists that follow. Plan sponsor obligations The plan sponsor is required to: Select the fund custodian to administer the pension fund assets. Communicate with plan members on plan documentation. Establish and review, a statement of investment policies, procedures and goals annually or as required. Educate and inform plan members about the risk and return characteristics of each asset class and the benefits of diversification. Communicate information on historic rates of return and fees for each investment option, the expected future returns and the importance of diversification. Monitor fund performance and report results to the plan members. Select the classes of assets and investment alternatives that are appropriate investments for the pension fund. Provide plan members information received from the investment agencies in connection with the various investment alternatives offered under the plan. Review and approve any benefit payments from the plan. Maintain overall responsibility for the administration of plan member accounts. Financial s obligations As the plan fiduciary and fund custodian, is required to: Establish and maintain records for each plan member. Maintain detailed records of all plan transactions. Select and monitor the investment agencies. Establish, monitor and review performance benchmarks for the investment funds. Select and offer an appropriate range of investment funds to allow for an acceptable level of liquidity and to provide for investment diversification to maximize return and minimize risk. Process allocations to the funds and disbursements of benefit payments from the fund as directed by the plan sponsor. Provide plan sponsors with regular investment reviews obtained by investment agencies. Fund manager obligations As the investment agency, the fund manager is required to: Present current economic analysis and related investment strategy. Be responsible for the timing and selection of individual securities. Be responsible for maintaining an appropriate level of liquidity through diligent cash management and timely scheduling of maturities. Present regular reviews in investment performance. Monitor the investment performance of the individual securities to meet or exceed established performance benchmarks and to maximize return and minimize risk. 74

75 Information available currently offers the Guaranteed Interest Accounts and market-based investment funds described in this report to help achieve the specific objectives of plan sponsors. Plan sponsors may use the information provided in this Group Investment Report to establish a customized statement of investment policies, procedures and goals, based on their plan s specific investment strategies. General information regarding the market-based funds for a pension plan s statement of investment policies, procedures and goals is provided below. Information specific to each fund is found on the fund description pages in this report. Market-based funds All funds are established and maintained under the authority of the Insurance Companies Act. The funds may invest in underlying mutual funds or other segregated funds in accordance with applicable guidelines established by Canadian securities regulators. We intend to maintain a reasonable portfolio diversification. We do not intend to invest in securities for the purpose of exercising control or management. No fund may purchase more than 1 of the common stock of any one corporation unless the investment is made through a mutual or pooled fund that complies with applicable investment regulations. Limitation on loans There will be no plan loans from the funds. Limitation on share ownership No single security will represent more than 1 of the book value of any fund, with the exception of the index funds. Derivatives A derivative is a financial instrument whose characteristics and value depend on the value of such underlying instruments or assets as stocks, bonds or cash. Two examples are futures and options. A future is a standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency or stock index at a specified price on a specified future. An option is the right, but not obligation, to buy (a call option) or sell (a put option) a specific amount of a given stock, bond, currency, index or debt at a specified price during a specified period of time. The funds may, from time to time, invest in or use derivative instruments consistent with their investment objectives to the extent, and for the purposes, permitted by Canadian securities regulators. The market-based funds do not invest directly in derivatives. However, except where otherwise specified, the underlying fund may invest in derivatives for hedging or achieving the duration target. In particular, the use of derivative instruments is prohibited in the acquisition of investment exposures not otherwise permitted in the underlying fund s investment objectives and description. Voting rights The fund manager will exercise any voting rights on the shares in the best interests of the investment objectives of the fund. Valuation of investments not regularly traded Securities and other investments will be valued using the best available quotation in Financial s estimation. Conflict of interest No employee of or any fund manager shall act on investment knowledge or information of the fund to his or her direct or indirect benefit, unless the knowledge or information has been generally disclosed to the public and the employee satisfies all the requirements of s Code of Business Conduct and Conflict of Interest Statement. 75

76 A secure website designed to help you. At you can: find your plan level Investment Management Fees on-line, get a duplicate RRSP tax receipt, check account balances, view personal rates of return, receive detailed investment information on the funds offered, see current unit values and Guaranteed Interest Accounts (GIA) rates, view your transaction history, and much more. You need your customer number and your personal identification number (PIN) to access this service. If you need a PIN, or have forgotten it, call toll-free and press '0' to speak with a Customer Service Representative. Group retirement and savings products and services are offered through Financial (The Manufacturers Life Insurance Company). Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Financial Corporation trades as MFC on the TSX, NYSE and PSE, and under 0945 on the SEHK. Financial can be found on the Internet at Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Financial Corporation. Available 24 hours a day, 7 days a week at GP0083E (12/2005)