www.highstreet.ca

December 31, 2012

BEN LEGGEPresident and Chief Investment Officer

Dear Fellow Investor A watershed year

2012 was a watershed year for Highstreet Asset Management, with

product and process refinements intended to enhance the two

things we already do exceptionally well: manage money and look

after our clients.

To that end, our team got to work early in the year to re-invigorate

our investment process, resulting in significantly upgraded

Canadian Equity models that were implemented in the fourth

quarter, and the launch of three new pooled funds:

Highstreet Global Equity

Highstreet Canadian Focused Equity

Highstreet Dividend Income

Important adjustments were also made to our Balanced Fund

and Conservative Balanced Fund. Clearly the impetus for these

adjustments was the volatility of global market conditions,

in combination with our belief in the importance of capital

preservation. The resulting paradigm shift from passive to tactical

asset class management allows us to more proactively address risk,

through the ability to reallocate funds among asset classes while

maintaining the long-term targets of fixed income and equities.

Global view

Despite obvious volatility, it was a generally positive year for

global markets. Asia returned 20% overall, led by Hong Kong

returning 22%. Europe, clearly the surprise of 2012, returned

14% overall, led by Germany returning over 28% and France

returning 14%.

In Japan we witnessed the latest example of how quickly the

perception of an economy can change, as the Nikkei, which lost

17% in 2011, the year of the major earthquake and tsunami, is

now up almost 23% following a federal election and leadership

change in November. More gains are expected in 2013, as a

weak yen and ongoing political rhetoric spur continued foreign

investment.

Closer to home, North American markets were significantly

outperformed on a global scale, and as such we maintain our

belief in a proper balance of exposure to global equities as

foundational to a sound long-term investment portfolio strategy.

Continued focus on strong companies

While the political landscape is always a consideration, as

fundamental investors our focus at Highstreet remains on

identifying strong companies. We believe this strategy will result

in portfolios that can weather the storm of slower economic

growth and low interest rates.

Global opportunities

For 2013, our models indicate there is considerable opportunity

abroad, both in the developed and developing markets,

particularly in Asia and Japan. If China avoids recession and

begins to grow again, Canadian equities should have a better

year as demand for domestic resources increases. While the US

economy begins another year rather precariously positioned,

we believe in its long-term resilience and in the strength of

its corporations. As Europe was the surprise market this year,

perhaps China and the US will be the surprise markets for 2013.

Additional considerations

In this low interest rate environment, we also believe that investors

should look to supplement capital gains, where possible, with

strong income generating equities. To that end we are focusing

on high yielding companies that can grow their dividends in our

recently launched Highstreet Dividend Income Fund.

Thank you

On behalf of the entire team here at Highstreet, thank you for

your confidence in 2012; and together we look forward to a happy

and prosperous new year.

Dividend Income Fund Q&A Fred Steciuk, CFA Senior Portfolio Manager

Fred is a portfolio manager for Highstreet’s Canadian equity portfolios. Fred joined the investment team at Highstreet in 2002 and since then has made significant contributions to research and the management of both our Canadian and US portfolios. Fred has 13 years of investment experience, including working as an investment analyst within the merchant banking field.

Highstreet is proud to announce that the Highstreet Dividend Income Fund was launched on December 3, 2012.

Who is this Fund designed for?

The Fund is designed for investors who are looking for:

1. A regular flow of income2. More income vs. what can currently be earned in most

bank accounts, money market, GICs, bond funds, etc.3. Less risk versus the broad equity markets 4. Tax efficient income5. A disciplined investment process

Why “Dividend Income”? Why not just dividends?

Due largely to the attractive income levels that are currently being generated by dividend paying companies, all of the Fund’s 35 holdings at this time are in equities. The Fund’s expected pre-tax dividend yield is currently 4.4% annualized, which is about 1.4% higher than its benchmark, the TSX60.

In addition to holding larger, well-established Canadian and US equities, we have designed the Fund to also consider Canadian-based, high investment grade bonds and preferred shares. These will only be considered when they can help the Fund in delivering upon its objectives of providing attractive levels of income on a regular basis, and maintaining lower risk levels than its TSX60 benchmark.

Currently, the yield offered by the bond market, be it high investment grade corporate or government, is well below what is being delivered by large cap dividend paying equities. Presently, the pre-tax yield premium offered by our Dividend Income Fund vs. a 10 year Canadian Government bond is 2.6%. This premium is even higher on an after tax basis due to the favourable tax treatment of Canadian-based dividend income. Our view that we are closer to the end of a bond market bubble, as evidenced by near historic lows in interest rates, tells us that equities are currently a more effective location to generate income for the Fund. As trends change however, we will be ready to change course.

* Expected annualized yields over the next 12 months for the Dividend Income Fund and all indices are as of December 31, 2012. Source: FACTSET and Bloomberg, data as of December 31, 2012.

Note: Performance is historical and not indicative of future returns. Fund performance is gross of portfolio management and administrative fees. Returns include the reinvestment of income and capital gains. Returns do not include Option Overlay Premiums.

What amount of income should I reasonably expect from the Fund?

Currently, the expected yield coming from dividends paid by our holdings is 4.4%. We also expect to enhance the total yield by selectively employing a “covered call option overlay” on a small percentage (up to 35% of the weight) of the Fund. Our research and more than a decade of experience in applying this overlay to similar dividend-focused strategies that we sub-advise on behalf of several larger retail institutions suggests that we can reasonably expect to add another 0.5% of income, which would bring our current overall expected yield closer to 4.9%.

What kind of firms are you investing in? How often are the holdings analyzed?

The Fund’s purpose is to identify companies with sustainable and, ideally, the potential for higher dividend income. We pay particular attention to the trend in a company’s cash flow, margins and sales. A company’s history in growing their dividend is also critical, as our research shows that these are the stocks most likely to continue growing their income distributions into the future. Our continuous assessment of the quality profile for each Fund holding is aimed to identify as early as possible any potential deterioration in earnings outlook, dividend policy or excessive change in risk.

Does the Fund only hold Canadian investments?

No, the Fund is permitted to invest in larger dividend-paying Canadian and US companies.

Currently, 29 of the Funds 35 holdings (representing 83% of the portfolio’s weight) are Canadian-based equities. After considering all of our different investment opportunities,

0.5% YIELDFROM COVEREDCALL WRITING

6%

5%

4%

3%

2%

1%

0% DIVIDEND S&P/TSX 60 DEX DEX S&P 500INCOME FUND* INDEX CORPORATE

CURRENT YIELD AVAILABILITY

Canadian equity yields are currently the most attractive place for our Fund to invest in. The tax advantaged treatment of Canadian Dividend Income Fund further enhances the decision to be primarily invested in this market.

Improved level of sector diversification is a key reason that we are including stocks outside Canada. Our home market carries an elevated level of risk due to the highly concentrated sector exposure. Currently, 75% of our equity market is located within commodity-based and financial sectors, while there are very few companies in traditionally lower risk sectors such as Health Care, Consumer Staples and Information Technology. By considering some larger US dividend paying stocks for the Fund (currently we hold six stocks representing 17% of the portfolio’s weight), such as pharmaceutical giant Eli Lily, and software provider Microsoft, we are able to deliver a more diversified Fund to our investors.

Can you explain some of the potential risks and rewards of the “covered call” writing?

Absolutely, but first it is important to understand that the Fund’s primary characteristics of income generation, capital appreciation and a lower-than-market risk profile primarily comes from being invested within its 35 underlying holdings. The covered call writing overlay process is designed to deliver a modest improvement to the Fund’s overall level of income, while at the same time reducing the Fund’s risk profile.

Potential rewards therefore include:

By selectively selling call options on some of the Fund’s holdings, premium income will be received within the Fund immediately. We will only sell call options on holdings that we believe have limited share price appreciation opportunity over the next 30 day period and where the upfront premium earned is high enough to justify waiting for this option to expire.

Any premium earned from covered call writing is extremely tax efficient, as this income is treated as capital gains for tax purposes.

Potential risks include:

If the share price appreciates over a specific target level that was decided upon when the option was sold, the Fund will not receive any of that gain because it would go to the buyer of the option (who paid the Fund the upfront premium income). Highstreet’s dynamic management of the call option positions help to mitigate this risk, as the portfolio management team may endeavour to re-purchase the option prior to its expiry to prevent the surrender of that capital gain. In this case, the cost to repurchase the option will reduce the amount of income originally received; however the benefit would be that the upside of the stock is now maintained.

Can I take my quarterly income out of my non-registered account(s) or do I have to reinvest? What’s the benefit of reinvesting my income?

The choice is yours: You can withdraw your quarterly income from non-registered accounts, or reinvest. If you do not require the income, the decision to reinvest would provide you with the opportunity to benefit on several fronts, including:

The ability to dollar cost average back into your investment and benefit by purchasing more units of the Fund when prices are lower

Compounded growth: your dividend payout will continue to grow because after reinvesting your regular payout, you will own more units in the Fund

Additional growth: if the Fund’s holdings are consistently raising their dividends paid, your total dividend payout will be growing in combination with the number of additional units you are able to purchase.

2012 TAX INFORMATION

The RRSP contribution deadline for the 2012 tax year is March 1, 2013. Your contribution limit is up to 18% of your earned income during 2011, to a maximum of $22,970; plus any unused contribution room carried forward from previous years, as outlined on your Notice of Assessment from 2011. The maximum RRSP contribution for 2013 increases to $23,820.

Here are the mailing deadlines for RBC Investor Services to send out your tax information slips. Duplicates of these forms will be available online if you are registered for Highstreet Online Access.

RRSP Contribution Receipts Remainder of 2012 January 25, 2013 First 60 days of 2013 March 30, 2013

RBC Dexia Annual Statement 1st week in January 2013

T4 RSP, T4 RIF, T4 LIF & other registered plan forms February 11, 2013

T3 & NR4 tax slips March 25, 2013

TFSA limit for 2013 $5,500 per individual

Maximum TFSA contribution room for unused/withdrawn contributions since 2009 $25,500 per individual

If you have questions or require more information, please contact your Highstreet Relationship Manager.

TELEPHONE 519 850 9500 FACSIMILE 519 850 1214 TOLL FREE 877 850 9500

www.highstreet.ca

Highstreet Bulletin Board

Grant Wang, CFA, PhD, MA Econ. Vice President, Investments

Grant is responsible for overseeing the research team’s initiatives required to develop and enhance Highstreet’s quantitative investment strategies. He plays a key role in facilitating the sharing of ideas between Highstreet’s portfolio managers and quantitative specialists with respect to research proposals and findings. Prior to joining Highstreet

in 2012, Grant managed equity portfolios for one of Canada’s largest pension funds. Grant has 11 years of experience developing predictive statistical models.

All the best to Relationship Manager Amy Gibbons, MBA, CIM, and her husband Ryan who welcomed their first child, a baby girl named Camryn, in early January.

Highstreet Fund UpdatesAs outlined in our September 2012 newsletter (also available at www.highstreet.ca), the asset mix of both the Balanced Fund and

Conservative Balanced Fund were recently changed by our Investment Committee. The logic applied was to reduce interest rate risk

by lowering the exposure to longer-term fixed income and to improve the overall diversification of the funds.

As of January 1, 2013 the asset mixes are:

If you have any questions or require more information, please contact your Highstreet Relationship Manager.

Balanced Fund

Money Market Fund 5% Bond Fund 35% Canadian Equity Fund 25% Dividend Income Fund 5% US Equity Fund 20% Global Equity Fund 5% International Equity A Fund 5%

Conservative Balanced Fund

Money Market Fund 5% Short Term Bond Fund 30% Bond Fund 25% Canadian Equity Fund 20% Dividend Income Fund 5% US Equity Fund 5% International Equity A Fund 5%