A unique approach delivering lower volatility and steady returns

Chris Vokes, Dealer Relations Team

Introduction Alternative investment specialists Unique investment approach Delivering:

– Principal Protection – Safety

– Low Volatility – Peace of mind

– Steady Returns – Positive monthly statements

– Portfolio Diversification – Stabilize returns

– Tax Minimization – Pay less tax

Agenda Today’s investing environment Absolute return investing What the smart money is doing How Paradigm can make your money smart money

Today’s investing environment

“Every long bull market is followed by a long bear market.“

| Sir John

Templeton

Long bull markets Long bear marketsPeriod

1843-1853

1861-1881

1896-1906

1921-1929

1949-1966

1982-2000

Annual return

12.5%

11.5%

11.5%

24.8%

14.1%

14.8%

Duration

10 years

20 years

10 years

8 years

17 years

18 years

Period

1853-1861

1881-1896

1906-1921

1929-1949

1966-1982

2000- ?

Annual return

-2.8%

3.7%

-1.9%

1.2%

-1.5%

?

Duration

8 years

15 years

15 years

20 years

16 years

?

Source: Secular Market Trends

Changing investor priorities

Investor Priorities Are Shifting Towards Capital protection Fair and steady rate of return Absolute returns vs. relative returns Favourable tax treatment

Your Traditional Options GICs, bonds and savings accounts Money market accounts REITs and income trusts Real estate

An alternative option: absolute return investing?

The safest form of alternative investments which includes: fund of funds, hedge funds, real estate, private equity, etc.

Performs independently to traditional assets Uses various investing strategies not available to mutual

funds to achieve consistent positive performance Provides steady stable returns in all markets

Not a new concept

Proven since 1949 Alfred Jones, professor / financial advisor founded the first

alternative strategy fund in New York Systematically balanced long investments in undervalued

stocks with short positions in overvalued stocks Result: neutralized market risk

Focus of absolute return managers

Provide consistently positive returns month over month regardless of how markets perform

A conservative approach Mandate: positive monthly returns and wealth preservation Take advantage of a number of different investing strategies to

achieve their mandate

The difference between relative and absolute managers

Relative Return Manager Absolute Return Manager

Goal: deliver better returns than relative benchmark (e.g. beat the TSE)

Success: measured by how well a fund performs relative to a benchmark regardless of how benchmark performs

Result: Managers may be deemed successful even if they lose money provided the benchmark would have lost more

Goal: deliver steady stable returns month after month

Success: measured by ability to provide positive returns regardless of market movements.

Result: Managers are only deemed successful if the value you investment increases

Comparative returns – Absolute investments beat traditional investments

*Absolute Return Managers are represented by the Lyxor Global Index. The net of fees return is derived from deducting the estimated fees and expenses of the BancNoteTM Trust from the monthly returns of the Lyxor Global Index. Bonds are represented by the Scotia McLeod Bond Universe. Stocks are represented by the S&P/TSX Composite Index.

$150,000

$225,000

$300,000

Oct-98 Jun-99 Feb-00 Oct-00 Jun-01 Feb-02 Oct-02 Jun-03

Absolute Return ManagersAverage annual return (net of all fees) 8.69%*

Bonds*

Stocks*

Absolute Return funds*

S&P / TSX Composite Index

-15%

-20%

-5%

-10%

5%

0%

Jan‘98

Jan‘99

Jan‘00

Jan‘01

Jan‘02

Jan‘03

Period from January 1998 to June 2003

Jun‘03

Jun‘02

Jun‘01

Jun‘00

Jun‘99

Jun‘98

Portfolio impact – Absolute returns smooth out your returns

*The Lyxor Global Index was used in the calculation for illustration purposes, and the performance of the Lyxor platform may differ from the performance of absolute return investments.

Sources: GICs: Bank of Canada average 5 year GIC, rebalanced annually (since 1984), Market neutral funds: CSFB/Tremont Equity Market Neutral Fund Index (since 1994), Bond funds: FundMonitor.com Canadian Bond Fund Index (since 1973), Income trusts: FundMonitor.com Cdn Income Trust Index (since 1996), Hedge funds: FundMonitor.com Alternative Strategies Index (since 1995), Stock funds: FundMonitor.com Global Equity Fund Index (since 1973).

Downside risk - Less risk with absolute return

Inception to 2003

0% - 6% - 9% - 12% - 30%

GICsBond funds

Income trusts

Hedge funds

Stock funds

Downside risk as measured by biggest drop since inception

- 4%

Absolutereturnfunds

What the smart money is doing

Dale Richmond

President & CEO

Ontario Municipal Employees

Retirement System

(third largest pension fund in the country)

“Our fixed income and alternative investments offset some of the

losses, but we look at adjusting our asset mix and continue to

diversify into alternative assets that offer the potential for more

stable returns.”

As Quoted in the National Post

0%

15%

10%

5%

College Endowments

25%

20%

35%

30%

Financial Advisors

Allocation to absolute return managers –Conservative institutional endowments are early adopters

So why Paradigm?

“I believe that stable, consistent returns should be more than a goal for Canadian investors. Its what they should expect from their investments.”Boaz Manor, Chief Investment Officer

Because we believe

Steady returns over a reasonable period of time and protecting your investment us an admirable goal

Individual investors should have access to the same sophisticated form of alternative investments used by endowments and institutional investors

Absolute return investments are the safest form of alternative investments

Fund of funds of absolute investment deliver returns regardless of what happens in the world

Paradigm: a unique approachto creating a fund of fund

Paradigm’s 5 Step Fund Manager Selection Process

Database Utilization: Accessing performance records of 14,000 fund managers in proprietary database

Talent Identification: Remove the effects of leverage and directional market exposure to identify true performance

Talent Verification: Meet with identified top managers in person to ensure clear sustainable competitive advantage

Talent Demonstration: Paradigm opens test accounts to gauge performance first-hand before clients invest

Performance Stabilization: Managers with the lowest volatility receive the greatest portion of the investment

STEP1

STEP2

STEP4

STEP5

STEP3

† Paradigm Global Advisors, LLC - historical average annual return over 12 years. Past performance is not necessarily indicative of future results.Source: Bloomburg L.P.

Stable Consistent Returns

Paradigm Global Advisors Average compound annualized returns: 8.53%

S&P TSX Composite Index* Average compound annualized returns: 6.94%

†

*

Available by referral for both RSP & Non-RSP Accounts Short 5-year term 100% principal protection at maturity Returns tied to elite absolute return managers Weekly pricing Tax deferral until disposition then treated as capital gains Considered 100% Canadian content for registered plans Closing date: April 30th, 2004

What you experience

Principal Protection – Safety Steady Returns – Peace of Mind Lower Volatility – Positive Monthly Statement Portfolio Diversification – Stability Tax Minimization – You pay less taxes

Ena Yu, Client Services Team

Experience principal protection

Clients receive 100% capital protection if held to maturity (5 yrs) If a client invests $50,000 they will, at minimum, receive

$50,000 at maturity

Only Withdrawals reduce capital protection on a proportionate basis If a client originally invests $50,000 which increases to $67,000

in four years and wants to remove $25,000 prior to maturity, the original capital protection would be reduced by $18,656.

Experiencesteady returns with lower volatility

Experience consistent positive monthly returns regardless of market movement

Experience an annual return of 8-12% Based on our selection criteria of ability to reduce volatility The net result: peace of mind and capital growth

BancNote™ Trust

GICs

Money Marker Funds

Bond Funds

YEAR 2

–

46%

46%

46%

YEAR 3

–

46%

46%

46%

YEAR 4

–

46%

46%

46%

YEAR 5

23%

46%

46%

46%

YEAR 1

–

46%

46%

46%

Experience Tax efficiency

All taxes are deferred for 5 years Taxed at half the rate of GICs Potential return of 8-12% taxed as capital gain

Annual Taxes Payable

Summary Alternative investment specialists Unique investment approach Delivering:

– Principal Protection – Safety

– Low Volatility – Peace of mind

– Steady Returns – Positive monthly statements

– Portfolio Diversification – Stabilize returns

– Tax Minimization – Pay less tax

This communication is under no circumstances is to be construed as an invitation to make an investment in BancNote™ Trust, nor does it constitute a public offering of the units of the Trust.

The BancNote™ Trust is not regulated under the Bank Act, and its units are not insured by the Canada Deposit Insurance Corporation or any other government deposit insurer. Subscriptions for units of the BancNote™ Trust will be subject to the terms of the offering memorandum of the Trust.

There is no guarantee of performance and past or projected performance is not necessarily indicative of future results. There are fees and expenses associated with the BancNote™ Trust which will affect returns. The information contained in this material is subject to change without notice and Paradigm will not be held liable for any inaccuracies or misprints.

Thank You