Canadian Equity Core

Our Core Equity fund adheres to a “Core” approach where the overall portfolio is well diversified and relatively style neutral.  The Core Equity Group incorporates elements from separately managed growth and value portfolios to create a portfolio of 60 to 80 securities.  Industry and economic sector ranges, or risk controls, are applied to ensure the construction of a well-diversified core portfolio.  Security selection is biased towards large capitalization companies, primarily selected from the 150 largest companies in the TSE 300 (Cap 10%) Index. 

Diversification is achieved by operating within defined ranges on an industry as well as a broader economic sector (Technology, Consumer, Basic Industries and Interest Sensitive) basis.  Key diversification risk controls are reviewed at least on a weekly basis by the Core Equity Group and include:

• Single Stock Weight:                                                         +/- 3% of the TSE 300 (Cap 10%) Index weight
• Industry Exposure:                                                    50% - 150% of the TSE 300 (Cap 10%) Index weight
• Economic Sector:                                                       75% - 125% of the TSE 300 (Cap 10%) Index weight

Investment Process

Decision Making

McLean Budden stresses fundamental research as the primary method of adding value.  All portfolio managers are also experienced investment analysts.  Canadian equity teams function independently and are responsible for:

·         performing original research

·         evaluating external research

·         attending industry meetings

·         interviewing management

The key criteria for security selection are:

Growth                                                                  Value

Specific issues will normally comprise 1 to 4% of the total portfolio.  Smaller holdings will occur when the managers are in the process of establishing or eliminating a position.  Up to 10% of the portfolio may be invested in small capitalization companies, which are defined as companies with a market capitalization below $500 million.  The portfolio has economic and industry sector commitment ranges to control risk through diversification. The largest percentage holding that any stock can represent is 13%.  No stock position will vary from its index weight by more than +/- 3%.  As a result of this discipline, any stock which has a weight over 3.5% in the TSE 300 (Cap 10%) Index will have at least a 0.5% position in the Core portfolio.

Following are our sector risk control parameters:

The Economic Sectors are classified according to the following:

The ten industry sectors may have a weight between 50% and 150% of their weight in the TSE 300 (Cap 10%) Index. For smaller sectors, such as health care, the sector may be     +/- 3% of its weight on the Index; therefore, any industry with a weight below 3% may not be represented in the portfolio.

Cash and short-term holdings are normally limited to 5% of the Fund.

Security research is divided among sixteen portfolio managers/research analysts. Research responsibilities are organized in line with the ten primary, global industry classifications. There is no regional or geographic distinction, recognizing the reality of today's industrial globalization.  The portfolio manager/research analysts are responsible for generating earnings estimates, earnings multiple estimates, applying our valuation models unique to each company's circumstances and, ultimately, establishing price targets for each of the companies they follow.  Emphasis is placed on the TSE's largest 200 companies as measured by market float. 

The timing of equity trade execution is a function of our sensitivity to the security's current market price, which is determined by our rate of return projections for the stock and its liquidity.  Normally, positions are established or deleted within one week.

Stocks are generally purchased with a 12 to 24 month return horizon.

Equity turnover is approximately 50% per annum.

This portfolio has similar valuation characteristics versus the market but will generally be less volatile (lower beta) than the underlying Index because of style offset benefits.

We evaluate our Canadian equity risk within the context of the benchmark TSE 300 (Cap 10%) Index as calculated by BMO Nesbitt Burns.

Fees

Segregated Fund Management

Canadian Equity "Core"*/"Value"*/
MB Global Equity/EAFE/U.S.
First $25 million		0.40%
Next $25 million		0.30%
Above $50 million		0.25%
Minimum fee $100,000 based on $25 million mandates.
* May include foreign component.

HNW Fees

Private Client

Individual Segregated Portfolios
(including combinations of individual securities and pooled funds)
First $2 million		1.00%
Next $8 million		0.50%
Next $15 million		0.35%
Above $25 million		0.25%
Minimum fee $20,000
* Assets invested in mutual funds will not be subject to this schedule.
Pooled Fund Portfolios
First $2 million		1.00%
Next $8 million		0.45%
Next $15 million		0.35%
Above $25 million		0.25%
Minimum fee for one fund $5,000
Minimum fee for multiple funds $10,000
* Assets invested in mutual funds will not be subject to this schedule.  Fees include
custodial services.

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