quarterly investment update: first quarter 2014 dimensional fund advisors

Quarterly Investment Update

Dimensional Fund Advisors Canada ULC (“DFA Canada”) is not affiliated with [insert name of Advisor]. DFA Canada is a separate and distinct company.

First Quarter 2014

2

Market Update: A Quarter in Review

Data is in Canadian dollars. Market segment (index representation) as follows: Canadian stocks: Large Cap (S&P/TSX 60), Small Cap (MSCI/Barra Canadian Small), Growth (MSCI/Barra Canadian Growth), Value (MSCI/Barra Canadian Value); US stocks: Large Cap (S&P 500), Small Cap (Russell 2000), Growth (Russell 3000 Growth), Value (Russell 3000 Value); International stocks: Large Cap (MSCI EAFE [net div]), Small Cap (MSCI EAFE Small Cap [net div]), Growth (MSCI EAFE Growth [net div]), Value (MSCI EAFE Value [net div]), Emerging Markets (MSCI Emerging [net div]); Real Estate: Global REITs (S&P Global REIT [net div]); Fixed Income: Canadian (Canadian 1-month T-bills), Short Term Bonds (FTSE TMX Canada Short-Term Bond), Intermediate Bonds (FTSE TMX Canada Universe Bond), Global Bonds-Hedged (Citigroup World Government Bond Index 1-5 Years [hedged to CAD]). Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance does not guarantee future returns. S&P/TSX data provided by S&P/TSX. MSCI data copyright MSCI 2014, all rights reserved. The S&P data are provided by Standard & Poor's Index Services Group. Russell data copyright © Russell Investment Group 1995-2014, all rights reserved. Canadian fixed income data provided by FTSE TMX Global Debt Capital Markets Inc., all rights reserved. Citigroup bond indexes copyright 2014 by Citigroup.

March 31, 2014

CANADIAN STOCKS

US STOCKS REAL ESTATE AND FIXED INCOME

INTERNATIONAL STOCKS

Large Cap Small Cap Growth Value Large Cap Small Cap Growth Value Emerging

+5.52% +8.50% +7.92% +4.29% +4.76% +7.37% +4.17% +5.34% +3.62%

Large Cap Small Cap Growth ValueGlobal REITs

1-Month T-Bills

Short-Term Bonds

Intermediate Bonds

Global Bonds (hedged)

+5.95% +5.23% +5.18% +7.11% +11.38% +0.20% +1.06% +2.77% +0.78%

3

Survey of Long-Term Performance

Data is in Canadian dollars. MSCI EAFE Small Cap Index return is price-only prior to January 1999 data inception. MSCI Emerging Markets Index return is gross dividends prior to January 1999 data inception. S&P Global REIT Index return is gross dividends prior to January 2001 data inception. S&P/TSX data provided by S&P/TSX. MSCI data copyright MSCI 2014, all rights reserved. The S&P data are provided by Standard & Poor's Index Services Group. Russell data copyright © Russell Investment Group 1995-2014, all rights reserved. Canadian fixed income data provided by FTSE TMX Global Debt Capital Markets Inc., all rights reserved. Citigroup bond indexes copyright 2014 by Citigroup. Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

March 31, 2014

Annualized (%)

Asset Class Index 1 Year 3 Years 5 Years 10 Years 20 YearsSince

InceptionInception

date

CANADIAN STOCKS

Large Cap S&P/TSX 60 15.73 3.53 12.36 8.30 9.25 8.92 Feb-87

Small Cap MSCI/Barra Canadian Small 15.45 0.08 19.09 6.57 8.12 9.61 Jul-90

Growth MSCI/Barra Canadian Growth 14.10 -0.52 9.41 6.91 6.94 7.36 Jan-82

Value MSCI/Barra Canadian Value 18.28 6.12 17.28 9.24 11.43 11.58 Jan-82

US STOCKS

Large Cap S&P 500 32.58 19.77 18.01 5.57 8.31 11.02 Feb-51

Small Cap Russell 2000 35.89 18.24 21.09 6.67 8.26 11.78 Jan-79

Growth Russell 3000 Growth 34.40 19.64 18.78 6.09 7.47 10.77 Jan-79

Value Russell 3000 Value 32.36 19.75 18.72 5.77 8.85 12.37 Jan-79

INTERNATIONAL STOCKS

Large Cap MSCI EAFE (net div.) 27.90 12.00 13.00 4.70 4.36 9.39 Jan-70

Small Cap MSCI EAFE Small Cap (net div.) 33.92 14.11 18.56 6.68 4.10 6.33 Jan-93

Growth MSCI EAFE Growth (net div.) 25.04 12.00 12.87 4.74 3.26 9.21 Jan-75

Value MSCI EAFE Value (net div.) 30.83 11.94 13.10 4.58 5.35 12.32 Jan-75

Emerging Markets MSCI Emerging Markets (net div.) 7.25 1.47 11.51 8.22 4.78 11.11 Jan-88

REAL ESTATE

Global REITs S&P Global REIT (net div.) 10.03 13.21 20.48 4.44 7.80 8.07 Jul-89

FIXED INCOME

Canadian Bills Canadian 1-Month T-Bills 0.95 0.91 0.71 1.86 3.07 6.55 Jun-73

Canadian Short-Term Bonds FTSE TMX Canada Short-Term Bond 1.92 3.06 3.16 3.88 5.63 8.22 Jan-80

Canadian Bonds FTSE TMX Canada Universe Bond 0.84 4.98 5.04 5.12 6.92 9.32 Jan-80

Global Bonds (hedged)Citigroup World Government Bond

Index 1-5 Years 1.78 2.77 2.40 3.27 4.78 6.74 Jan-85

Weights

Number of Countries

Number of Stocks

Total Value March 31, 2014

Change fromPrevious Year

01/90-03/14Average

Canada 1 327 1.64 Trillion 3.74% -0.59% 3.15%

United States 1 2,435 20.89 Trillion 47.65% 5.66% 44.56%

Developed Markets 21 3,067 16.16 Trillion 36.85% -8.28% 46.00%

Emerging Markets 21 2,624 5.15 Trillion 11.75% -14.53% 6.28%

Total 44 8,453 43.84 Trillion 100.00%

Value of Stock Markets around the World

4

Data is in US dollars and values are beginning of month. The proxies for the Canadian and US equity markets are based on the respective country markets from the MSCI All Country World IMI Index. The international developed market proxy is the MSCI All Country World IMI ex USA ex Canada Index. The proxy for emerging markets is the MSCI All Country World IMI Index (Emerging Markets). MSCI data copyright MSCI 2014, all rights reserved.

January 1990–March 2014

1990 1993 1996 1999 2002 2005 2008 20110%

10%

20%

30%

40%

50%

60%

70%

80%

Emerging MarketsMaximum 15.68%September 2010

CAN Stock MarketMaximum 5.07%March 2011

Intl. Developed MarketsMaximum 67.07%January 1990

US Stock MarketMinimum 29.89%January 1990

Emerging MarketsMinimum 0.72%January 1990

US Stock MarketMaximum 54.85%January 2002

Intl. Developed MarketsMinimum 34.51%May 2012

CAN Stock MarketMinimum 2.11%December 1998

Global market capitalization weights are not static; they change across time.

5

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

14.09 9.45 5.60 3.33 5.12 8.97 11.71 5.16 7.02 7.59 13.67 6.31 9.26 13.67 11.38 ?

12.78 8.15 3.43 2.48 1.49 6.18 10.52 2.25 4.07 6.59 10.18 2.52 6.25 9.01 6.12 ?

12.59 4.03 2.41 1.05 0.23 3.59 8.56 0.58 3.27 4.81 7.59 0.24 4.15 7.29 6.06 ?

10.26 3.49 0.50 1.01 -7.92 2.09 8.43 0.23 2.60 1.72 3.34 -0.14 3.58 5.00 4.76 ?

7.80 3.33 0.23 0.23 -8.54 1.49 4.39 -1.16 1.24 1.21 0.69 -1.02 0.68 2.09 3.62 ?

3.15 0.23 -0.05 -0.56 -11.97 0.65 0.71 -5.22 0.96 0.59 0.68 -2.36 0.26 0.45 2.77 ?

0.93 -0.30 -0.27 -1.68 -12.02 0.43 0.20 -5.67 0.23 0.30 0.44 -4.08 0.11 0.38 0.78 ?

0.09 -0.71 -0.78 -5.15 -15.72 0.21 -0.21 -7.02 -0.21 0.24 0.21 -4.84 -2.23 0.24 0.20 ?

The Randomness of Quarterly Returns

Data is in Canadian dollars. Indexes represented as follows: Canadian stocks (S&P/TSX Composite Index), US stocks (Russell 3000 Index), International Developed Markets (MSCI EAFE Index), Emerging Markets (MSCI Emerging Markets Index), Global REIT (S&P Global REIT Index), Canadian 1-Month T-Bills, Canadian Bonds (FTSE TMX Canada Universe Bond Index), Global Bonds (Citigroup World Government Bond Index Canada 1-5 Years). Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. S&P/TSX data provided by S&P/TSX. MSCI data copyright MSCI 2014, all rights reserved. The S&P data are provided by Standard & Poor's Index Services Group. Russell data copyright © Russell Investment Group 1995-2014, all rights reserved. Canadian fixed income data provided by FTSE TMX Global Debt Capital Markets Inc., all rights reserved. Citigroup bond indexes copyright 2014 by Citigroup.

March 31, 2014

HighestReturn

Lowest Return

This table shows from top to bottom the highest returning asset classes each quarter over the last 15 quarters. Each asset class is color coded based on the legend below.

The lack of a pattern indicates that picking which asset classes will be the best or worst performers is virtually impossible.

Portfolios combining these various investments will avoid extreme returns.

Canadian Stocks

US Stocks

International Developed Markets

Emerging Markets

Global REITs

Canadian 1-Month T-Bills

Canadian Bonds

Global Bonds

Currency

6

Data is in Canadian dollars. The market for the United States, International Developed Markets, and Emerging Markets is defined as: Russell 3000 Index, MSCI EAFE Index, and MSCI Emerging Markets Index, respectively. The S&P data are provided by Standard & Poor's Index Services Group. Russell data copyright © Russell Investment Group 1995-2014, all rights reserved. MSCI data copyright MSCI 2014, all rights reserved. Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. FX Rates courtesy of Federal Reserve of New York.

March 31, 2014

CHANGE IN FOREIGN EXCHANGE RATES (%)

FX/$CAD

Currency Q1 2014 One Year Three Years

$ US Dollars -3.85% -7.91% -12.06%

€ Euro -4.07% -14.27% -9.42%

£ Pounds -4.49% -16.01% -15.32% ¥ Yen -5.91% 0.71% 9.41%

IMPACT OF CURRENCY FLUCTUATIONS

Annual Returns in CAD and Local Currency Three-Year Annualized Returns in CAD and Local Currency

US Stocks Int'l Stocks Emerging Markets

33.21

28.10

7.04

22.61

15.82

3.60

UnitedStates

US Stocks Int'l Stocks Emerging Markets

19.55

12.19

1.31

14.62

9.48

1.38

CAD

Local Currency

ONE YEAR RETURNS IN CAD AND LOCAL CURRENCY

Return in CAD

Return in Local

CurrencyImpact of Currency

1. Greece 84.22% 57.98% 26.24%

2. Italy 71.59% 47.15% 24.44%

.

13. United States 33.13% 22.54% 10.59%

.

.

27. Canada 16.31% 16.31% 0.00%

.

.

43. Chile -21.14% -15.26% -5.88%

44. Turkey -23.06% -16.28% -6.78%

FIRST QUARTER 2014 RETURNS

Return in CAD

Return in Local

CurrencyImpact of Currency

1. Indonesia 27.23% 14.33% 12.91%

2. Greece 23.16% 18.53% 4.63%

.

.

.

.

27. Canada 6.10% 6.10% 0.00%

28. United States 5.88% 1.93% 3.96%

.

43. Hungary -5.03% -5.42% 0.38%

44. Turkey -11.26% -8.65% -2.61%

MSCI Country Returns in Canadian Dollars and Local Currency

7MSCI data copyright MSCI 2014, all rights reserved. Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

March 31, 2014

UnitedStates

UnitedStates

8

ColombiaEgypt

IndonesiaPhilippines

PeruDenmark

BrazilMexico

ThailandSouth Africa

ChinaIndia

MalaysiaCzech Republic

Singapore Sri Lanka

SwedenAustralia

ChileArgentina

NorwayPakistan

Hong KongSwitzerland

GermanyKorea

Poland

New ZealandMorocco

TurkeyNetherlands

Spain

UKFranceIsreal

BelgiumTaiwanRussiaFinlandJapan

HungaryItaly

PortugalJordanAustriaIrelandGreece

-15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0

MSCI Country Returns

Data in Canadian dollars gross of fees. MSCI data copyright MSCI 2014, all rights reserved. Indexes are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Country Rankings—Ten-Year Annualized Returns as of March 31, 2014

Canada

United States UnitedStates

Percent Return

Bond Returns

9

March 31, 2014

Return (%)

Index Q1 2014One Year

Three Years Annualized

Canadian 1-Month T-Bills 0.20% 0.95% 0.91%

FTSE TMX Canada Short-Term Bond Index 1.06% 1.92% 3.06%

FTSE TMX Canada Mid-Term Bond Index 3.22% 1.17% 6.04%

FTSE TMX Canada Long-Term Bond Index 5.12% -1.11% 7.51%

FTSE TMX Canada Universe Bond Index 2.77% 0.84% 4.98%

Citigroup World Government Bond Index 0.78% 1.78% 2.77%

(1-5 years hedged)

CAN Treasury Yield Curve

3M 6M 1YR 2YR 3YR 5YR 10YR 30YR0%

1%

2%

3%

4% 12/31/2012 6/28/2013 12/31/2013

Data is in Canadian dollars. Canadian fixed income data provided by FTSE TMX Global Debt Capital Markets Inc., all rights reserved. Data provided by Citibank. Treasury yield data provided by Bank Of Canada; copyright © 1995-2014, Bank of Canada.

Mar-13 Jun-13 Sep-13 Dec-13 Mar-14$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50Balanced Portfolio T-Bills Canadian Bonds

International Stocks Emerging Markets Stocks US Stocks

Global Real Estate Canadian Stocks

Growth of Wealth

10

In Canadian dollars. T-Bills is Canadian 1-Month T-Bills, Canadian Bonds is FTSE TMX Canada Universe Bond Index, International Stocks is MSCI EAFE Index (net div.), Emerging Markets Stocks is MSCI Emerging Markets Index (gross div.) from 01/1988 to 12/1998 and MSCI Emerging Markets Index (net div.) from 01/1999, US Stocks is S&P 500 Index, Global Real Estate is S&P Global REIT Index (gross div.) from 07/1989 to 12/2000 and S&P Global REIT (net div.) from 01/2001 and Canadian Stocks is S&P/TSX Composite Index. Balanced Portfolio is 10% T-Bills, 30% Canadian Bonds, 20% Canadian Stocks, 15% US Stocks, 15% International Stocks, 5% Emerging Markets Stocks and 5% Global Real Estate. Canadian fixed income data provided by FTSE TMX Global Debt Capital Markets Inc., all rights reserved. MSCI data copyright MSCI 2014, all rights reserved. The S&P data are provided by Standard & Poor’s Index Services Group. S&P/TSX data provided by S&P/TSX. Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

One Year as of March 31, 2014

$1.07

$1.16

$1.01

$1.13

$1.01

$1.10

$1.32

$1.28

Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14$0.80

$1.00

$1.20

$1.40

$1.60

$1.80




$1.45

$1.40

Growth of Wealth

11

In Canadian dollars. T-Bills is Canadian 1-Month T-Bills, Canadian Bonds is FTSE TMX Canada Universe Bond Index, International Stocks is MSCI EAFE Index (net div.), Emerging Markets Stocks is MSCI Emerging Markets Index (gross div.) from 01/1988 to 12/1998 and MSCI Emerging Markets Index (net div.) from 01/1999, US Stocks is S&P 500 Index, Global Real Estate is S&P Global REIT Index (gross div.) from 07/1989 to 12/2000 and S&P Global REIT (net div.) from 01/2001 and Canadian Stocks is S&P/TSX Composite Index. Balanced Portfolio is 10% T-Bills, 30% Canadian Bonds, 20% Canadian Stocks, 15% US Stocks, 15% International Stocks, 5% Emerging Markets Stocks and 5% Global Real Estate. Canadian fixed income data provided FTSE TMX Global Debt Capital Markets Inc., all rights reserved. MSCI data copyright MSCI 2014, all rights reserved. The S&P data are provided by Standard & Poor’s Index Services Group. S&P/TSX data provided by S&P/TSX. Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Three Years as of March 31, 2014

$1.04$1.11

$1.03

$1.26

$1.16

$1.72

Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14$0.90

$1.10

$1.30

$1.50

$1.70

$1.90

$2.10

$2.30

$2.50




$2.29

$1.84

$1.28

$1.90

$1.04

$1.67$1.72

$2.54

Growth of Wealth

12


Five Years as of March 31, 2014

Growth of Wealth

13


Ten Years as of March 31, 2014

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14$0.50

$0.70

$0.90

$1.10

$1.30

$1.50

$1.70

$1.90

$2.10

$2.30




$1.20

$1.78$1.72$1.65

$2.18$2.20

$1.54$1.58

$2.35

$3.81

$2.54

$4.50

$5.16

$1.83

$4.94

$3.92

Growth of Wealth

14


Twenty Years as of March 31, 2014

Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14$0.00

$1.00

$2.00

$3.00

$4.00

$5.00




15

When the media raises the subject of beating the market

through astute stock picking, the name Warren Buffett is

usually cited. But what does this legendary investor actually

say about the smart way to invest?

Buffett is considered to have such a track record of picking stock winners and

avoiding losers that his annual letter to shareholders in his Berkshire Hathaway

conglomerate is treated as a major event by the financial media.1

What does he think about the Federal Reserve taper? What could be the

implications for emerging markets of a Russian military advance into Ukraine?

What does an economic slowdown in China mean for developed markets?

Buffett has a neat way of parrying these questions from journalists and

analysts. Instead of offering instant opinions about the crisis of the day, he

recounts in his most recent annual letter a folksy story about a farm he has

owned for nearly 30 years.2

Has he laid awake at night worrying about fluctuations in the farm’s market

price? No, says Buffett, he has focused on its long-term value. And he

counsels investors to take the same sanguine, relaxed approach to liquid

investments such as stocks as they do to the value of their family home.

“Those people who can sit quietly for decades when they own a farm or

apartment house too often become frenetic when they are exposed to a

stream of stock quotations,” Buffett wrote. “For these investors, liquidity is

transformed from the unqualified benefit it should be to a curse.”

While many individuals seek to ape Buffett in analyzing individual companies

in minute detail in the hope of finding a bargain, he advocates that the right

approach for most people is to let the market do all the work and worrying

for them.

“The goal of the non-professional should not be to pick winners,” Buffett wrote.

“The ‘know-nothing’ investor who both diversifies and keeps his costs minimal

is virtually certain to get satisfactory results.”

As to all the predictions out there about interest rates, emerging markets,

or geopolitics, there will always be a range of opinions, he says. But we are

under no obligation to listen to the media commentators, however distracting

they may be.

“Owners of stocks . . . too often let the capricious and irrational behavior of

their fellow owners cause them to behave irrationally,” Buffett wrote. “Because

there is so much chatter about markets, the economy, interest rates, price

behavior of stocks, etc., some investors believe it is important to listen to pundits

—and, worse yet, important to consider acting upon their comments.”

The Buffett prescription isn’t rocket science, as one might expect from an

unassuming, plainspoken octogenarian from Nebraska. He rightly points out

that an advanced intellect and success in long-term investment don’t necessarily

go together.

“You don't need to be a rocket scientist,” he has said. “Investing is not a

game where the guy with the 160 IQ beats the guy with 130 IQ.”3

Not Rocket Science

1. “Buffet Warns of Liquidity Curse,” Bloomberg, Feb 25, 2014.2. Berkshire Hathaway Inc. shareholder letter, 2013, www.berkshirehathaway.com/letters/2013ltr.pdf.3. “The wit and wisdom of Warren Buffett,” Fortune, November 19, 2012, management.fortune.cnn.com/2012/11/19/warren-buffett-wit-wisdom/.Adapted from “Not Rocket Science” by Jim Parker, Outside the Flags column on Dimensional’s website, March 2014. Diversification neither assures a profit nor guarantees against loss in a declining market. Investing involves risks including potential loss of principal and fluctuating value. All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products or services. Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

March 31, 2014

quarterly investment update: first quarter 2014 dimensional fund advisors

Economy & Finance