Beutel, Goodman & Company Ltd.

Founded in 1967 Beutel Goodman manages over C$13.3 billion* in Canadian, international and US equity, and fixed income assets. The firm has as its clients many of Canada’s most prestigious institutional and individual investors. The firm is majority owned by its operating partners who are directly involved in the management of client assets.

*As at March 31, 2009

Investment philosophy

Since its inception, Beutel Goodman has applied a rigorous value-based investment approach in the management of its assets, an approach designed to add value in all markets, but importantly to protect capital in adverse markets. It is our belief that protecting your investment from downmarket loss is key to successful long term growth of your assets. To achieve this, the firm places emphasis on its research departments, using bond credit rating agency and brokerage research as a source of information only – with investment decisions resting on the firm’s independent research analysis. Cash flow analysis forms the foundation for both equity and fixed income analysis and valuation.

Investment approach

All equity is managed through adherence to a bottom-up value investment approach. We invest in companies that are trading at a discount to their business value. Business value is defined simply as the present value of sustainable free cash flow. This discipline is consistent across all of our mandates. Beutel Goodman believes the determination of a company’s Business Value is best arrived at through reliance on its own independent research conclusions.

The firm works from a foundation that stocks purchased at a discount to business value provide a margin of safety. This combined with a focus on quality companies with stable, growing businesses with strong balance sheets should avoid the possibility of capital loss.

For fixed income mandates, strong free cash flows facilitate debt repayment and safety of principal. The fixed income team place emphasis on a stringent approach which includes a thorough independent research evaluation of fixed income credit to ensure a true measure of a bond's quality. Beutel Goodman’s bond style is active, and assumes moderate risk in seeking to add value to the DEX Universe Bond Index through management of duration, yield curve and credit risk. Credit exposure is gained through the use of high grade corporate bonds. The resulting portfolio based on this core style has a higher quality profile than the Index, with consistent first quartile performance.

The core fixed income process consists of 4 disciplines that are utilized to add value:

• Maturity Structure
• Yield Curve Positioning
• Sector and Security Selection (credit)
• Foreign Pay Bonds

Overall, the firm’s observation is that on a long term, cumulative basis the client is well served by a manager who can protect them from capital loss.