Thank you for your interest. This is a copy of The Finkelstein Group's annual Client Appreciation seminar series. In this document we take a look at the experiences we gained in 2012 and the expectations we have for 2013. Please feel free to take a gander and learn a little bit about investments from 2012-2013 and our investment philosophy.

1. Investing in the New Normal:
2012 Experience
2013 Expectations
Presented by:
Jeff Finkelstein, CIM
Vice President & Portfolio Manager
RBC Dominion Securities
December 4, 2012

2. A Little Market Humor …
2

3. Part A: Corporate Fundamentals Are Generally Fine
3

4. Corporate Profits Never Higher
4

5. Corporate Cash Levels Never Higher
5

6. Aggregate Employee Income Never Better
6

7. Cost of Corporate Borrowing Never Lower
7

8. Part B: 2012 A Retrospective
8

9. Sideways Long-Term Market Continues
S&P 500 (1871 to Present)
10000
1000 +1,258%
18-Yrs
11-Yrs
100
+531%
18-Yrs
+290%
6-Yrs
+141% +161% 14-Yrs
4-Yrs 10-Yrs
10
21-Yrs 19-Yrs
19-Yrs
1
1871
1875
1880
1885
1890
1894
1899
1904
1909
1913
1918
1923
1928
1932
1937
1942
1947
1951
1956
1961
1966
1970
1975
1980
1985
1989
1994
1999
2004
2008
9

10. Psychology Drives Market Performance
10

11. Volatile Cycles Within the Sideways Bear Market
+75%
+90%
-41%
-41%
-49%
July 1999
11

12. Dynamic Balance of Market Forces
LOW VALUATIONS EUROPEAN SLOW DOWN
EXTREME LOW RATES PERSISTENT US
UNEMPLOYMENT
OTHER MONETARY STIMULUS CONSUMER / BUSINESS
CAUTION
STRENGTHENING DOMESTIC FISCAL CLIFF / DEBT CEILING
ECONOMY
STRENGTHENING CONSUMER FEARS OF SOVEREIGN
CONFIDENCE DEFAULTS
Positive Negative
12

13. A Closer Look at the Current Cycle (U.S)
D
C
B 2012
A
A – European Debt Contagion
B – European & US Debt
C – European Debt
D – US Fiscal Cliff
13

14. The TSX Burdened by Resource Emphasis
2012
A B C D
A – European Debt Contagion
B – European & US Debt
C – European Debt
D – US Fiscal Cliff
14

15. But Equity Income is Still Doing Fine
2012
D
C
B
A
A – European Debt Contagion
B – European & US Debt
C – European Debt
D – US Fiscal Cliff
15

16. Part C: Structural Market Dynamics:
Investor Group Psychology
16

17. Cycles are a Fact of Life
17

18. Impact of Pessimism Illustrated
1999 P/E ratio of 43 2012 P/E ratio of 15
-41%
Between 1999 and 2012 – Profits more than doubled
but with no market price growth over the decade
18

19. Impact on RBC Shares
Yield 2.8% Yield 3.2% Yield 4.1%
Dividend $1.62 Dividend $2.00 Dividend $2.28
EPS $4.00 EPS $4.22 EPS $4.96
May 2007 April 2010 November 2012
19

20. Short-Term Market Prices Controlled by Psychology
20

21. Equity Correlation
About 20% of the trading volume of an equity actually
depends upon its fundamentals.
21

22. Index ETFs + Computer Trading Accelerate This
22

23. Large Caps & Defensive Sectors are Most Highly
Correlated
23

24. Part D: Structural Market Dynamics:
Policy and Politics
24

25. United States
DEBT DEBT
MORTGAGES & CREDIT
HELOCS DERIVATIVES
BANKS
NATIONAL GOVERNMENTS
TAXPAYERS CENTRAL BANKS
25

26. Central Bank
Current Objectives:
1. Shrink the relative government debt burden (by stimulating GDP growth)
2. Shrink the government’s debt service cost
3. Increase personal wealth → increased consumer spending → increased
US employment
4. Increase business investment
Current Actions:
1. Force down overnight interest rates – Zero Interest Rate Policy to 2015
2. Force down 10-year Treasury rates - $40B/ month in market buying
3. Force down mortgage bond rates - $40B/ month in market buying
Indirect Consequences:
Financial Repression – prolonged low interest rates punish conservative savers
• Worried retail investors
• Conservative pension funds
26

27. Financial Repression in Action
Lowest rates in history are deliberately punitive for
cautious savers and deliberately supportive for investors
(and other spenders).
10-Year US rate now at 1.61%
27

28. No Impact of Money Printing on Growth or Inflation
28

29. Part E: Search for Yield and Equity Income
29

30. Investors Hunt for Investment Income
SHORT TERM RATES
Frozen to mid-2015
10-YEAR TREASURIES
Operation Twist
AGENCY MBS CORPORATE CREDIT CORPORATE CREDIT
QE Infinity (Investment Grade) (High Yield & Emerging)
EQUITY INCOME EQUITY INCOME
(Dividend Payers) (Dividend Growers)
EQUITY GROWTH
30

31. S&P500 Historical Yield
10.00%
9.00%
8.00%
7.00%
DIVIDEND YIELD
6.00%
80s & 90s bull
5.00%
4.00%
3.00%
2.00% 70s bear
1.00%
2000 bear
0.00%
32
36
40
44
48
52
56
60
64
68
72
76
80
84
88
92
96
00
04
08
12
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
31

32. Long Term Earnings Consistency
Generally earnings, dividends &
dividend growth track the real
economy, not speculative fears.
32

33. Profit & payout consistency for domestic, defensive,
dividend-rich companies
Consistent Annual 2012 Yield: 5.1%
Dividend: $1.54 per
Share
2008 Yield: 7.7%
2011 Yield: 6.4%
2010 Yield: 7.0%
-62%
2009 Yield: 18.5%
33

34. Profit & payout consistency for domestic, defensive,
dividend-rich companies
2010 Yield: 4.7%
5 Years
Dividends Paid: $1.05
Dividend Growth: 25%
Stock Price Growth: 230% 2010 Yield: 6.0%
Dividends Paid: $0.96
2008 Yield: 8.8%
Dividends Paid: $0.84 2010 Yield: 6.9%
Dividends Paid: $0.90
-43% 2009 Yield: 15.0%
Dividends Paid: $0.84
34

35. Long Term Outperformance of Equity Income
35

36. Low Volatility of Equity Income
Notably less
market price
volatility than
the market
36

37. Some Examples of 2012 Dividend Growers
Altagas +4.3%
Brookfield Infrastructure +7.0%
Enercare +1.8%
InterPipeline +5.7%
Bank of Nova Scotia +3.6%
Bank of Montreal +3.0%
TD Bank +5.9%
Canadian Apartments REIT +4.0%
BCE +10.0%
Telus +10.0%
Medical Facilities +2.3%
Apple +1.8% (Initiated 2012)
Nike +17.0%
VF Corp +21.0%
Yum Brands +17.5%
37

38. Equity Income Investments Outperform
3 Year 5 Year 10 Year
S&P/TSX Income Trust Total Return Index 24.3% 12.8% 16.2%
S&P/TSX Capped REIT Total Return Index 23.4% 9.2% 13.1%
S&P 500 Total Return (US) 13.2% 0.4% 6.9%
DJ Stoxx 50 Price Return (Europe) -2.6% -10.3% 2.6%
MSCI World Index Price Return (World) 5.6% -5.0% 5.1%
38

39. Part F: 2013 Outlook
39

40. Continued Strength in Equity Income
REITs
TSX
2012
Strong Dividend Support
40

41. Continued Strength in the U.S.
2012
U.S
Canada
US led by Consumer, Technology
and Health Companies
Canada hindered by Resources
41

42. Expectations of Moderate Growth in Canada
42

43. And in the U.S.
43

44. Recovery Leads to a Mild Increase in Long-Term
Interest Rates in Canada
44

45. And in the U.S.
45

46. Canadian Dollar Remains at Least at Parity
46

47. Inflation is Controlled
47

48. No Crisis in Canadian House Prices Forecast
48

49. Other Macro Future Trends
Demographics
• Powerful growth needed for reliable retirement income “Personal Pension Plans”
• Desire for low volatility; high confidence investments
US Housing Recovery
• Slow turnaround has implications for consumer confidence, retail, resources, job
growth
Technology
• As new technologies mature there is more competition, less dominance among
the consumer brand names
• The new “App Economy” has added 500,000 US jobs
• Growth of the “Cloud”
• Technology infrastructure has an interesting risk / reward (telecom services,
broadcast towers and data storage)
49

50. Energy
• Based on new drilling technologies, US oil and gas production will eventually
outpace Saudi Arabia
• Giant need for new infrastructure (e.g. pipelines)
• Growing environmentalism (indirect impact of Hurricane Sandy)
• US manufacturing benefits from decreased energy input costs
• Will Canada’s oil and gas be stranded?
Consumer
• Increasing wealth transfer to emerging Asia (and they love consuming global
brands)
• Slow recovery of NA middle class
• Southeast US labor rates increasingly competitive with Shenzhen
• Global lifestyle changes
50

51. Health Care
• Aging population requires increased services
• “Obamacare” in US, now ratified, increases by 15% the eligible clientele for
health services
Financial Services
• Tighter government controls leads to slower long term growth (and renewed
interest in the retail client)
• Growing international reputation and global presence of Canadian banks
• RBC sixth in world in wealth management, twelfth in total assets
• Relative decline of the US and European banks
• Fun thought: Toronto as the next Zurich?
Emerging Markets
• New growth centres emerging (SE Asia, East Europe) – but highly speculative
51

52. Any further questions?
56

53. 2013 Client Service Additions
www.TFGBLOGSPOT.com TFG Newsletter

54. What to Expect from Our Enhanced
Client Communications…
Client focused content generated to keep you informed
of…
• Economic and Market Trends and Updates
• Current and Relevant Wealth Management News
• Administrative Changes and Client Service Updates
• The Finkelstein Group Updates and Items of Interest
All accessible to you online
24 hours a day, 7 days a week!

55. Thank You from The Finkelstein Group

56. Investment Trust Units are sold by RBC Dominion Securities Inc. There may be
commissions, trailing commissions, management fees and expenses associated with
Investment Trust investments. Please read the prospectus before investing.
Investment Trusts are not guaranteed, their values change frequently and past
performance may not be repeated. This commentary is based on information that is
believed to be accurate at the time of writing, and is subject to change. All opinions
and estimates contained in this report constitute RBC Dominion Securities Inc.’s
judgment as of the date of this report, are subject to change without notice and are
provided in good faith but without legal responsibility. Interest rates, market
conditions and other investment factors are subject to change. Past performance may
not be repeated. The information provided is intended only to illustrate certain
historical returns and is not intended to reflect future values or returns. RBC
Dominion Securities Inc. and its affiliates may have an investment banking or other
relationship with some or all of the issuers mentioned herein and may trade in any of
the securities mentioned herein either for their own account or the accounts of their
customers. RBC Dominion Securities Inc. and its affiliates also may issue options on
securities mentioned herein and may trade in options issued by others. Accordingly,
RBC Dominion Securities Inc. or its affiliates may at any time have a long or short
position in any such security or option thereon. RBC Dominion Securities Inc.* and
Royal Bank of Canada are separate corporate entities which are affiliated. *Member-
Canadian Investor Protection Fund.