Normandin Beaudry's Information Bulletin

We are pleased to present our mid-year review analyzing the performance as at June 30, 2009, of managers comprising the Normandin Beaudry Investment Funds Universe.

NB Bulletin Vol. 12, no 11, August 2009

Review of the institutional fund performances over the first semester of 2009

We are pleased to present our mid-year review analyzing the performance as at June 30, 2009, of institutional managers comprising the Normandin Beaudry Investment Funds Universe. The purpose of this review is to keep you up-to-date on the recent performance of financial markets and institutional managers. You will receive this review each year after the end of the first semester.

All institutional managers included in the Normandin Beaudry Investment Funds Universe must adopt an active portfolio management approach, have a performance history of at least three years and manage a minimum of assets. All performance statistics are presented before management fees.

The median return for balanced funds for the first half of 2009 was 6.86%, and first quartile performance for these funds showed a return of more than 8.04%.

Before analyzing the performance of the different financial markets, we would like to point out the large spread in added value by asset category in the last half of 2008 and the first half of 2009, which reflects the significant volatility in the financial markets over the last 12 months.

Performances for Canadian assets, which account for the main components of balanced funds, are presented in the table below.

Canadian asset performance - from January 1, 2009 to June 30, 2009
Category	Canadian Bonds	Canadian Equities (large cap)

Number of funds	48	61
Benchmark	DEX Universe	S&P/TSX
Benchmark return	2.79%	17.57%
Benchmark percentile rank	89	37

Median
Return	4.15%	16.47%
Value added	1.36%	-1.10%

First quartile
Return	5.51%	19.25%
Value added	2.72%	1.68%

Credit spreads for corporate bonds narrowed over the first half of 2009. Corporate bonds posted a strong return of 10.2%, whereas federal bonds posted a negative return. Security and sector selection largely explain the performance of managers in the first half of 2009. Several managers favoured an overweighting of corporate bonds in comparison with the benchmark, which explains the high added value of the median manager (1.36%).

Because of the events that occurred in the financial markets in the last half of 2008, during which the median manager lost ground (-1.39%) to the benchmark, returns and performance must be analyzed jointly over the period of one year ending on June 30, 2009. First quartile performance in the first half of 2009 generated added value of 2.72% or more.

Large cap Canadian equities posted a return of 17.57% in the first half year despite strong negative returns in January and February. The median added value was -1.10% versus the benchmark in the first half of 2009, which can be explained in part by the strong upturn in the Information Technology sector, more specifically Research in Motion (67%), and the Mines and Metals subsector, which posted a return of 153%. It should be noted that several institutional managers tend to underweight these sectors. We can also note the strong added value of the first quartile manager that outperformed the S&P/TSX index by 1.68%.

The Canadian dollar gained 5.3% on the US dollar, 4.6% on the euro and 11.9% on the yen in the first half of 2009. However, it lost 6.4% to the pound sterling. Foreign stocks also generated positive returns in local currencies, but their performance was not as strong as that of the Canadian market, as indicated in the table below:

Foreign asset performance - from January 1, 2009 to June 30, 2009
Category	U.S. Equities	International Equities	Global Equities	Emerging Markets Equities

Number of funds	81	76	60	33
Benchmark	S&P 500	MSCI EAFE (net)	MSCI World (net)	MSCI EM (net)
Benchmark return (Canadian dollars)	-2.06%	2.48%	0.96%	29.11%

Benchmark percentile rank	63	58	52	26

Benchmark return (local currency)	3.17%	5.11%	4.77%	29.62%

Median
Return	0.27%	3.17%	1.24%	27.52%
Value added	2.33%	0.69%	0.28%	-1.59%

First quartile
Return	4.18%	5.52%	3.79%	29.20%
Value added	6.24%	3.04%	2.83%	0.09%

The median US equity manager obtained an added value of 2.33% in comparison with the S&P 500 index. We can also note the strong added value of the first quartile manager at 6.24%. As regards international equities, the median manager obtained an added value of 0.69%. To obtain a first quartile performance, the manager needed to add more than 3.04% versus the MSCI EAFE Index.

The median global equity manager added 0.28% over the first half of 2009. The performance is explained in part by the exposure to emerging countries that have posted a superior performance (29.11%) since the start of 2009. The first quartile manager added more than 2.83% in comparison with the MSCI World Index. Finally, the median emerging markets equity manager subtracted 1.59% in the first half of 2009. The first quartile manager added more than 0.09% in comparison with the MSCI Emerging Markets Index.

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The Normandin Beaudry Consultants

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