Report Card Quarter Ending March 31, 2014

Compliments of:

Frank Dakos

IPC Investment Corporation

1100-100 Conestoga College Boulevard

Kitchener, ON, N2P 2N6

Phone: 1-800-513-8374

Email: fdakos@ipckitchener.com

Website: www.ipcc.ca

The Report Card provides a comprehensive review of past, current and potential factors that may impact your investments. Our goal is to continuously monitor your investments to help you meet your financial objectives.

About This Report• Comments in Report Card refer to last three and 12 months.

• Market discussions related to indices and do not analyze or reflect personal investments.

• We review performance, risk management and overall effectiveness of each sub-advisor and underlying fund manager.

• Counsel investment solutions adopt a long-term approach to investing. Each portfolio solution diversified to reflect appropriate:

– Asset mix

– Geographic allocation

– Investment style

• Benchmarks for each Counsel investment solution can be found at end of presentation.

Agenda

1. Market and economic overview

2. What our investment specialists say

3. Review of Counsel investment solutions

4. Benchmarks and Disclaimers

1. Market and Economic Overview

Global Stock Markets: Index Movements

Performance is calculated using local currency. Data as at: March 31, 2014Source: Morningstar Direct, Counsel Portfolio Services

• The Fear of the end of quantitative easing (QE) hurt those markets most levered to QE

• Leaders: Canada, Ireland, Portugal (QE somewhat immune)

• Mediocre: rest of Europe (sense of recovery still there)

• Laggards: Japan, U.S., Emerging markets (QE reduction fear)

• Risk: This soap opera called QE – will she or won’t she… and equity valuations

• Other influences – weather, Crimea

Source: Morningstar

1 Year

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

EDIT CHART TITLE

S&P/TSX Composite TR S&P 500 TR CAD MSCI EAFE GR CAD DEX Universe

Over the last year, the impact of QE in U.S. or EAFE, has been the wind under the wings of the equity markets.

Source: Morningstar

3 Months

0.00

1.00

2.00

3.00

4.00

5.00

6.00

January-14 February-14 March-14

EDIT CHART TITLE

S&P/TSX Composite TR S&P 500 TR CAD MSCI EAFE GR CAD DEX Universe

Over the last quarter, the fear of QE ending hurt equities. Once the U.S. Feds reassured markets that the reduction of QE is not imminent or that it means less support from the Feds, the equity markets returned to their liquidity-induced market appreciation.

Canadian Dollar PerformanceCAD vs. U.S. Dollar CAD vs. Euro

Source: Bank of Canada

• Fears of QE reduction caused a drop in the U.S. dollar vs. Canada and Europe – fears are that the stimulus being provided would be stopped resulting in a brake on liquidity.

• Oil prices and commodities moved up on the Russian takeover of Crimea.

• Continued European efforts to stabilize its economies has helped.

• Risk: Valuations are high in the equity markets and any retreat inequities would affect the U.S. dollar – if global equities fall, we could see a flight to safety to treasuries and the U.S. dollar.

Short-term: Equities vs. Bonds Long-term: Equities vs. Bonds

Canada: Equities vs. Bonds

Source: Globe and Mail

• QE stimulus and the Zero Interest Rate Policy (ZIRP) of the U.S. Fed has led to a global race to lower rates.

• Higher yields in dividend stocks vs. Bonds have made equities more attractive.

• RISK: Valuations in the markets are expensive, a reversion to their norms would make fixed income more attractive.

Canadian Market OverviewInvestment Style Market Cap

Source: Morningstar Direct Source: Morningstar Direct

Market SectorYear-on-

YearYear-to-

dateQ4

2013Energy 21.04 9.65 9.65Materials - 13.25 9.65 9.65Industrials 22.62 2.11 2.11Consumer Discretionary 32.54 4.32 4.32Consumer Staples 25.56 7.34 7.34Healthcare 33.08 6.25 6.25Financials 24.26 2.45 2.45Info. Technology 25.92 7.30 7.30Telecom Services 4.50 3.49 3.49Utilities 3.73 8.70 8.70

• Canada recovered more than the U.S.

• Russia’s move into the Crimea helped with commodities.

• A cold winter meant higher energy usage.

• Earnings on corporations have been strong.

• Dividend yields on Canadian stocks have been attractive.

U.S. Market Overview

• A fear of QE led to a run to safety – utilities and materials.

• Obamacare continues to help Healthcare stocks.

• Valuations in the markets are concerning.

• RISK: A revision to the mean

Investment Style

Returns measured in U.S. dollar terms

Market Cap

Source: Morningstar Direct Source: Morningstar Direct

Market SectorYear-on-

YearYear-to-

dateQ4

2013Energy 11.80 0.19 0.19Materials 20.53 2.30 2.30Industrials 24.54 - 0.39 - 0.39Consumer Discretionary 22.15 - 3.16 - 3.16Consumer Staples 7.66 - 0.16 - 0.16Healthcare 26.92 5.40 5.40Financials 22.68 2.15 2.15Info. Technology 23.38 1.86 1.86Telecom Services - 2.30 - 0.73 - 0.73Utilities 6.01 9.02 9.02

International Market Overview

• Japan affected by the global fear of a reduction in QE.

• China is slowing down, and concerns exist for a lack of internal consumer demand.

• The fears of QE also caused for a run to safer equity positions like Utilities.

• Europe, particularly Germany displayed higher industrial production.

• RISK: Reduction in QE and valuations.

Investment Style

Returns measured in Canadian dollar terms

Source: Morningstar Direct

Market SectorYear-on-

YearYear-to-

dateQ4

2013Energy 14.79 1.91 1.91Materials 9.48 1.89 1.89Industrials 22.31 - 0.03 - 0.03Consumer Discretionary 24.60 - 2.09 - 2.09Consumer Staples 8.91 0.67 0.67Healthcare 26.91 5.99 5.99Financials 19.89 0.78 0.78Info. Technology 25.57 1.90 1.90Telecom Services 22.00 - 0.89 - 0.89Utilities 16.17 8.62 8.62

We’ve jumped a lot of hurdles in the past few years, but we still have a few more to go till we get to a normal economy.

Cold weather and storms generally hurt growth: construction projects were delayed, and many people were unable to get to work and/or shop.

This winter has been unusually cold, striking ill prepared regions like Florida.

Colder and longer than normal

• Putin takes over Crimea.

• People of Crimea vote to be Russian.

• Concerns are that we may be seeing another Cold War.

• Russia has large commodities deposits – lower commodity prices hurt the Russian economy.

• The U.S. stock market has been rising based on stimulus provided by the U.S. Fed.

• The U.S. Fed has been Issuing more debt, and buying its own treasuries (debt).

• Issuing debt and buying debt back – makes you look richer than you are.

• You are NOT as rich as you think!

QE is expected to cease by the end of the year

The fear is that QE stops or is slowed down. Each time this happened in the past, the markets have fallen – only to be re-excited by further QE.

Janet Yellen is following the policies of Ben Bernanke – expect stimulus to still be part of the recovery – it may not be called QE though.

Market valuations are now at the same point as those of 2007

S&P reaching two standard deviations – this is a high valuation

This is above the 2008 market

Valuations as determined by P/E is high, only time higher was prior to the tech crash in 2000

The P/E is higher than the 10 year and 36 year average – no way you can say P/E is cheap. And if you look at median P/E ratios, this moment looks even richer.

Trading volumes should go up in a Bull market, but this time it didn’t – this means less and less investors are participating – this is concerning

Risk appetite has revved higher, from outright reluctance at the start of 2013 to a risk seeking attitude today

U.S. households weighting in equities is at the highest level since 1999, when the public fell in love with tech stocks – this was followed by the Tech crash. This is a sign of over confidence and overweighting due to a rising market. Rebalance is needed.

During the first quarter of 2014 the U.S. market fell 8% and recovered from there.

In fact every year has had some negative return in it – but that does not mean it ended the year negatively.

The secret is balance and then rebalance

It’s not different this time

Remaining balanced, and utilizing rebalancing methodology is one of the best ways to remain rational in volatile times.

No negative returns for a balanced portfolio over any 5 year period from 1950 to now.

2. What our Investment Specialists Say

Our view is the U.S. economy is now in “self-sustaining” mode. This

is all good news for Canada. The approximately 15% drop in the Canadian dollar from its highs is a net positive, however, it will take time for those effects to permeate through the broader Canadian economy. Commodity producers are the early beneficiaries and we have seen this improved sentiment reflected in share prices.

Canadian Dividend Equities

Global Dividend

While there is continued recovery from the depths of the debt crisis for the countries most severely impacted, growth has been modest elsewhere.  France with its large debt burden casts a persistent shadow over the entire euro zone; however, Germany's economic leadership remains a bright spot.  Eastern European nations are clearly the most acutely at risk for economic impact from the uncertain situation in Ukraine going forward.

Income and Growth

We believe that equities may be due for a material correction given that the current five-year bull market is becoming more mature with higher valuations and optimism, and the last material correction was almost three years ago. Despite that, however, markets still offer favourable prospects over the medium term and we would view a correction as a buying opportunity.

The portfolio management team believes rising equity markets have led to an increase in valuation of many businesses, which may not be warranted. An ominous sign is the investing public is taking on record levels of margin debt at a time when markets reach record highs. At the same time, we are witnessing an avalanche of initial public offerings with negative earnings, which is reminiscent of 2007 and 2000 market highs. As 2014 unfolds, the team believes this year should be a time for sobriety, and the team will continue to focus on investing only in quality businesses when there is a margin of safety to do so.

U.S. Small Cap

Bond markets rallied in the first quarter on fears of slower economic growth in the U.S. and China. Also helpful to the rally was uncertainty from the escalating political tensions in Ukraine and turmoil in a number of emerging markets which was spurred by the plunge in the Argentine peso. Investors pulled back from some risky assets and fled to the safety of government bonds including U.S., Europe and Canada; long duration bonds saw the largest price increases. While tensions seemed to wane toward the end of the quarter, investors remained cautious waiting to see if the softer U.S. data could simply be blamed on an unusually harsh winter.

Canadian Core Fixed Income

Overall, we see recovery in Europe with positive flows, emerging markets appear to be bottoming out having had strongly negative flows, and there is less structural concern about the EU and Japan. We are excited about the diverse set of what we consider to be quality companies that we own in the portfolio and their long-term future.

International Small Cap

3. Review Of Counsel Investment Solutions

* Target asset allocation weights adjusted following annual review of Counsel portfolios and with the renewal of the Simplified Prospectus.This Portfolio is managed using a multi-manager process. The current sub-advisor or underlying mutual fund manager for each mandate is listed beside the mandate for which it provides portfolio management / sub-advisory services. This Portfolio invests in underlying mutual funds (which may be managed by Counsel) currently sub-advised by the sub-advisors listed beside each investment mandate. For information on the underlying funds, please refer to the Simplified Prospectus, which is available on our websiteat www.counselservices.com or on the SEDAR website at www.sedar.com.

Mandate Target Allocation (Oct 2009)*

Current Target Allocation*

Canadian short term fixed income n/a 7.00%Fixed income 40.00% 33.00%Canadian value equities 8.00% 7.75%Canadian growth equities 8.00% 7.75%U.S. value equities 7.50% 7.00%U.S. growth equities 7.50% 7.00%International value equities 7.50% 7.00%International growth equities 7.50% 7.00%Global small cap 8.00% 10.50%Global real estate 6.00% 6.00%

Counsel Balanced Portfolio

Counsel Balanced PortfolioEffective Asset Class Mix Effective Top 10 Sector Allocation

Effective Geographic Mix

Positive and negative attribution for Q1 2014

Positive and negative attribution for the 12 months ended March 31, 2014

+ Positive attribution to overall Portfolio, reflecting that the mandate outperformed its relative benchmark on a gross returns basis.

- Negative attribution to overall Portfolio, reflecting that the mandate underperformed its relative benchmark on a gross returns basis.

Period 1 mth 3 mth 6 mth 1 yr 3 yr 5 yr 10 yrIncept.

Return

Incept.

Date

Series 'A' -0.25 3.87 9.71 13.32 6.75 10.82 4.49 4.54 1/15/02Net Benchmark* -0.25 3.96 11.02 16.18 9.98 10.15 4.14 3.38

Performance (%)

Compound Returns vs. Benchmark

Counsel Balanced Portfolio

Mandate

Canadian short term

fixed incomeFixed

income

Cdn value

equities

Cdn growth equities

U.S. value

equities

U.S. growth equities

Int'l value

equitiesInt'l growth

equities

Global small cap

Global real

estate

Portfolio Design &

ConstructionAttribution + + - - + - + + - - +

Mandate

Canadian short term

fixed incomeFixed

income

Cdn value

equities

Cdn growth equities

U.S. value

equities

U.S. growth equities

Int'l value

equitiesInt'l growth

equities

Global small cap

Global real

estate

Portfolio Design &

ConstructionAttribution + + - + + - + - - + -

4. Benchmarks and Disclaimers

Net Benchmarks

Investment Solution Index

Counsel Conservative Portfolio 60% DEX Universe Bond, 40% MSCI World Total Return

Counsel Regular Pay Portfolio 50% DEX Universe Bond, 20% MSCI World Total Return, 30% S&P/TSX Composite Dividend Total Return

Counsel Balanced Portfolio 40% DEX Universe Bond, 60% MSCI World Total Return

Counsel Growth Portfolio 20% DEX Universe Bond, 80% MSCI World Total Return

Counsel All Equity Portfolio 100% MSCI World Total Return

Counsel Managed Yield Portfolio 55% DEX Universe Bond Index, 25% JP Morgan Global Government Bond Index, 20% S&P/TSX Composite Dividend Total Return

Counsel Managed High Yield Portfolio 40% DEX Universe Bond, MSCI AWCI High Dividend Yield, 25% Bank of America Merrill Lynch Global High Yield & Emerging Market Corporate Bond Total Return

Counsel Income Managed Portfolio 40% DEX Universe Bond, 40% S&P/TSX Composite Dividend Total Return, 20% MSCI World Total Return

Counsel Managed Portfolio 40% DEX Universe Bond, 15% MSCI World Total Return, 45% S&P/TSX Composite Total Return

Counsel World Managed Portfolio 40% DEX Universe Bond, 60% MSCI World Total Return

Net benchmark return is calculated using the actual management expense ratio(s) of the equivalent exchange traded fund(s) and weighing that/those MER(s) by the benchmark/hybrid benchmark weight(s). The weighted MER(s) is/are then added to a typical retail management fee of 1%. In February 2009, the typical retail management fee for Counsel Fixed Income was revised from 1% to 0.5%.

Net Benchmarks

Investment Solution Index

Counsel Short Term Bond 100% DEX Short Term Bond Index

Counsel Fixed Income 100% DEX Universe Bond Index

Counsel High Yield Fixed Income 70% Bank of America Merrill Lynch U.S. High Yield Master II Total Return, 30% Bank of America Merrill Lynch Emerging Market Liquid Corporate Plus Total Return

Counsel Canadian Dividend 100% S&P/TSX Dividend Composite Total Return

Counsel Canadian Value 100% S&P/TSX Composite Index

Counsel Canadian Growth 100% S&P/TSX Composite Index

Counsel U.S. Value 100% Russell 1000 Value Index

Counsel U.S. Growth 100% Russell 1000 Growth Index

Counsel International Value 100% MSCI EAFE Value Index

Counsel International Growth 100% MSCI EAFE Growth Index

Counsel Global Dividend 100% MSCI ACWI High Dividend Yield Index

Counsel Global Real Estate 100% FTSE EPRA/NAREIT

Counsel Global Small Cap 100% MSCI World Small Cap Total Return

Net benchmark return is calculated using the actual management expense ratio(s) of the equivalent exchange traded fund(s) and weighing that/those MER(s) by the benchmark/hybrid benchmark weight(s). The weighted MER(s) is/are then added to a typical retail management fee of 1%. In February 2009, the typical retail management fee for Counsel Fixed Income was revised from 1% to 0.5%.

General DisclaimersThis report may contain forward-looking statements which reflect our current expectations or forecasts of future events. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as: “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “preliminary”, “typical” and other similar expressions. In addition, these statements may relate to future corporate actions, future financial performance of a fund or a security and their future investment strategies and prospects. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions which could cause actual events, results, performance or prospects to differ materiality from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, the volatility of global equity and capital markets, business competition, technological change, changes in government regulations, changes in tax law, unexpected judicial or regulatory proceedings, catastrophic events and the ability of Counsel Portfolio Services to attract or retain key employees. The foregoing list of important risks, uncertainties and assumptions is not exhaustive. Please consider these and other factors carefully and not place undue reliance on forward-looking statements.

The forward-looking information contained in this report is current only as of the date of this report. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Simplified Prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. The indices cited are widely accepted benchmarks for investment performance within their relevant regions, sectors or asset class, represent non-managed investment portfolios, exclude management fees and expenses related to investing in the indices, and are not necessarily indicative of future investment returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

To learn more about Counsel’s investment solutions, please speak to your Advisor.

Review Checklist Your portfolio mix remains consistent

with your risk tolerance.

Your portfolio mix has been rebalanced

to your pre-determined mix (see

Portfolio Review).

Your portfolio’s long-term performance

is acceptable given your investment

strategy and financial objectives.

Sub-advisors and underlying fund

managers have been effective in their

respective areas of expertise.

Do you have any questions or

concerns?

Is an action plan required?

We are committed to helping youachieve your financial goals through:

• effective investments

• accountability of all parties

• operating with your objectives and goals as our guide

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