Global stock markets finish off the year on a strong note

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1 Market Indices Performance Returns % % % 9.4% 10.7% 9.1% 8.2% 9. 2% 7.3% % 5.9% 6.2% 6.8% % 5.6% % 1.2% -0.7%-1.2% -2.6% -0.1% %-0.8% -4.6% -6.8% 3 months 3 years 5 years DEX Universe DEX Long Term S&P/TSX Capped Composite BMO Small Cap. (ex. Inc. Trusts) S&P 500 (C$) MSCI EAFE (C$) MSCI World (C$) MSCI World, Small Cap (C$) MSCI Emerging Market (C$) Global stock markets finish off the year on a strong note During the fourth quarter of 2010, the financial markets continued to make progress and did not appear to be affected by Ireland s sovereign debt problems or by the slow economic recovery in several countries. The main stock indices recorded gains in Canadian dollars ranging from 3.3% for the MSCI EAFE to 22.6% for the BMO Small Cap Index. In the bond market, the increase in bond rates along the entire curve (see following page) was reflected in the returns: -0.71% for the DEX Universe Index and -1.17% for the DEX Long Term Index. The price of gold also continued its uptrend, finishing off the quarter at $1,405 an ounce, up 7. during the quarter and up 29.3% for the entire year. During the quarter, the markets benefited from positive economic news, as well as from the announcement on November 3 that the U.S. Federal Reserve would be undertaking a new program of quantitative easing, thus allaying certain fears about short-term global growth. However, over the longer term, negative factors remain, including excessive debt levels and the aging population in the industrial countries. For the entire year, stock market returns thus benefited from the sharp rebound in the second half of the year. However, it should be noted that investors had to wait for several months after the beginning of 2010 to witness a return to positive territory (in local currencies): in July (Canada, Emerging Markets), in September (U.S., U.K., Continental Europe) and in December (Japan). Nevertheless, a key market bucked the uptrend: China shed more than 2 in 2010 due to inflationary fears and monetary policy tightening. Despite the contribution of the emerging markets, any return to worldwide economic growth still depends on the strength of the U.S. recovery. Accordingly, the market continued to closely monitor economic data relating to employment and housing prices. During the last quarter, the U.S. economy created 358,000 jobs, excluding job variation relating to the 10- year census. With 1,108,000 jobs created in 2010, a lot of ground must still be recovered to offset the 8.5 million jobs lost in the recession of In Canada, 40,300 jobs were created during the quarter, with 368,500 created since the beginning of the year. In the U.S. real estate sector, the annual variation in the S&P Case-Shiller Index fell from 4. to 0.2% during the quarter (i.e. to mid-2003 level), with cumulative losses of 2. during the last three months. In Canada, the variation fell from 12.36% to 6.02% (Teranet House Price Index), with cumulative losses of 1. during the last two months. Canada United States GDP Growth (annualized) Inflation (y/y growth) Core Inflation (y/y)* Job Creation (QTD) 40, Job Creation (YTD) 368,500 1,108,000 Unemployment Rate * Core inflation, excluding food and energy

2 Canadian Bond Market During the fourth quarter, Canadian bond rates rose along the entire curve despite the announcement of the U.S. Federal Reserve s new quantitative easing program. The variation in the yield of Canadian bonds was 0.3 for 2-year bonds, 0.4 for 5-year bonds, 0.36% for 10-year bonds and 0.17% for 30-year bonds (long term). Against a general backdrop of rising interest rates, long-term bonds generated the worst quarterly return (-1.17%), but still posted the best return for 2010 with 12.52%. As at December 31, 2010, yields for 2-year, 10-year and 30-year federal bonds were 1.68%, 3.12% and 3.53% respectively, while the yield for 91-day Treasury bills was 0.98%. 4% Canadian Federal Bond Yield Curve 1 Performance by Maturity 12.52% 3% 2% 1% 91 day 2 years 3 years 5 years 7 years 10 years Long-term 31/12/ /12/ /09/ /12/2010 The DEX Universe Index posted a return of -0.71% during the quarter, while the Index s yield to maturity rose from 2.8 to 3.11% during the quarter. The worst performing segment was federal bonds, while the best was corporate bonds % 0.54% % % -1.17% 91 Day T-Bills 1-5 years (Short Term) 5-10 years (Mid Term) 10+ years (Long Term) During the fourth quarter, credit spreads continued to narrow despite Ireland s debt problems, which briefly shook up the markets before order was quickly restored. Since the beginning of the year, tighter credit spreads have primarily favoured bonds with lower credit ratings. Bonds with a BBB rating turned in the best performance in 2010 (9.51%) % -0.91% Performance by Sector (DEX Universe) 8.56% 8.19% 6.74% 7.34% 5.38% -0.63% Universe Federal Provincial Municipal Corporates Performance by Quality 8.36% 9.51% 5.38% % -0.54% -0.29% -0.62% Federal AAA/AA A BBB During the quarter, the Bank of Canada maintained its key rate at 1.0 following its two quarterly meetings. The market is anticipating a pause of several months. South of the border, the Fed maintained the Fed funds rate at a target ranging from to 0.2 at its two quarterly meetings

3 Canadian Equity Market During the fourth quarter of 2010, the uptrend recorded in the previous quarter continued, briefly interrupted by negative returns in April and June due to Greece s sovereign debt crisis. As a result, the S&P/TSX Index posted a return of 9.4% for the quarter and of 17.6% for the full year. During the quarter, large cap equities, as measured by the S&P/TSX 60 Index, were outperformed by small cap equities (BMO Small Cap Index, exincome trusts) supported by a return of investors appetite for risk. The spread in returns between both indices was 14.3% during the fourth quarter and 26.7% for the year, with both periods favouring small cap equities. The S&P/TSX s fourth-quarter and annual performance for 2010 stemmed more from smaller cap equities (S&P/TSX Completion) than from larger cap equities (S&P/TSX 60) Returns of Main Canadian Stock Market Indices 17.6% 13.8% 9.4% 8.3% 13.1% 30.3% 22.6% 40. S&P/TSX S&P/TSX 60 S&P/TSX Completion BMO Small Cap. (ex. Income Trusts) S&P/TSX Sector Returns (%) 3 years Energy % 13.33% 1.48% Materials % 36.53% 10.43% Industrials % 16.87% 3.61% Consumer Discretionary % 25.34% -2.32% Consumer Staples % 10.28% 3.8 Health Care % 13.8 Financials % 10.48% 0.74% Information Technology % % Telecommunications Services % 22.42% -0.64% Utilities % 18.39% 3.87% During the fourth quarter, all of the S&P/TSX Index sectors posted positive returns. For a second quarter in a row, the best sector was Materials, with an increase of 14.24%, nearly half of which was attributable to three stocks: Teck Resources, Barrick Gold and Silver Wheaton. The second best sector was Energy (13.58%), thanks in particular to Suncor, Cenovus, Canadian Natural Resources and Cameco. Coming in third was Information Technologies (13.08%), helped along by RIM s resurgence (+15.9%). Fourth place went to Health Care (11.6), with almost half of the gains stemming from a single stock (Valeant Pharmaceuticals). The Telecommunications sector (0.48%) was the quarter s worst performer, dragged down by Rogers (-10.2%). For the entire year, every sector generated positive returns, with the exception of Information Technologies (-11.61%), which was affected by RIM s poor performance (-18.2% in 2010)

4 U.S. Equity Market In U.S. currency, the S&P 500 Index appreciated by 10.8% during the fourth quarter of However, the greenback s fall against the loonie (finishing the period at parity) reduces the return to 7.3% when converted into Canadian dollars. The stock market seems confident that the U.S. economy will benefit from the Fed s decision concerning its second quantitative easing program, as well as from the decision to maintain the Bush era tax cuts. Small cap equities, as measured by the Russell 2000 Index, outperformed large cap equities (S&P 500) by 11.9% in % Returns of Main U.S. Stock Market Indices () 7.3% % 16.3% 12.6% During the quarter, value style outperformed for both small and large caps. As regards small caps, the Russell 2000 Value Index (11.83%) outperformed the Russell 2000 Growth Index (10.54%) by 1.29%. As for large caps, the Russell 1000 Value Index (17.11%) outperformed the Russell 1000 Growth Index (15.36%) by 1.7. S&P 500 Sector Returns (in US$) (%) 3 years Energy % 20.46% -3.7 Materials % Industrials % 26.73% -2.72% Consumer Discretionary % 27.66% 6.26% Consumer Staples % 14.11% 3.5 Health Care % % Financials % 12.13% Information Technology % 10.19% 0.44% Telecommunications Services % 18.97% -3.42% Utilities % 5.46% -5.71% % S&P 500 Dow Jones Industrial S&P 400 Russell 2000 Average US$ C$ American Indices Performance Returns (Year-To-Date) 26.6% 26.9% % 15.1% 14.1% 9.1% 8.2% S&P 500 Dow Jones Industrial S&P 400 Russell 2000 Average US$ C$ During the fourth quarter, all 10 of the S&P 500 Index sectors generated positive returns. The best performer was Energy (21.48%), with more than half of the gains coming from ConocoPhillips, Chevron, Occidental, Schlumberger and Exxon Mobil. Materials (19.03%) was number two, thanks to the fine performances of Freeport McMoran, Monsanto, Dow Chemical, Dupont and Alcoa. Consumer Discretionary (12.63%) came in third, with noteworthy contributions by Ford, Comcast, Walt Disney and Amazon. In contrast, the two worst performing sectors were Utilities (1.09%) and Health Care (3.64%). For the entire year, all sectors generated positive returns, with Consumer Discretionary (27.66%) the top performer and Health Care (2.9) the worst

5 International Equity Markets In local currencies, the MSCI EAFE Index posted a return of 5.6% during the quarter. Due to the Canadian dollar s appreciation against most foreign currencies, the Index s return was 3.3% in Canadian dollar terms. The MSCI World Index generated a return of 8.3% in local currencies and 5. in Canadian dollar terms. The MSCI World Small Cap Index gained 10.7% during the quarter in Canadian dollars, while the MSCI Emerging Markets Index added 4. in Canadian dollars. Returns of Main International Stock Market Indices () MSCI EAFE Region United Kingdom Europe ex-uk Japan Pacific ex-japan Returns (in local currency) (%) 3 years % 12.18% 0.78% % -8.93% % % % 6.01% -3.72% In local currencies, only four of the 21 countries in the MSCI EAFE Index posted negative quarterly returns: Italy (-0.67%), Belgium (-1.9), Spain (-7.12%) and Greece (-8.61%). The top performers were Austria (13.69%), Germany (11.43%) and Norway (11.01%) % 10.7% 8.3% 5.6% % 3.3% 4. MSCI EAFE MSCI World MSCI World Small Cap MSCI Emerging Market Local Currency C$ International Indices Performance Returns (Year-To-Date) % 12.7% % 5.9% MSCI EAFE MSCI World MSCI World Small Cap MSCI Emerging Market Local Currency C$ MSCI EAFE Sector Returns (in local currency) (%) 3 years Energy % Materials Industrials % 7.52% -9.18% Consumer Discretionary % % Consumer Staples % Health Care % % Financials % % Information Technology % Telecommunications Services % 2.72% -5.96% Utilities % % During the quarter, all 10 sectors turned in positive performances. The top performer was Materials (16.2), thanks to fine showings by BHP Billiton, Anglo American, BASF and Rio Tinto. Energy was second (10.2), with noteworthy contributions by Royal Dutch Shell, BG Group, BP and Total. Third place went to Industrials (9.43%), helped by good performances by Siemens, Komatsu, Schneider and Fanuc. In contrast, the worst sector was Financials (0.3), due to the poor performances of Banco Santander, BBVA, BNP Paribas and Barclays. Other lagging sectors were Health Care (1.13%), Telecommunications (2.13%) and Utilities (2.63%)

6 Alternative Investments and Currencies % 15.3% GSCI Light Energy (Commodity) Returns of Main Alternative Investment Indices (in local currency) 3.4% 15.4% EPRA/NAREIT* (Global REITs)* % UBS 50:50 Inf. & Util. (Infrastructure) Returns in C$** 11.3% 2.8% % 1.6% YTD 11.3% 14.1% 4.3% 6.4% 8.7% * UBS and EPRA/NAREIT in local currency, others in US$. ** Return of UBS in local currency (not available in canadian dollar). 5.9% 12.3% HFR FoF Comp. (Hedge Funds) 4.7% 11. Cred. Suisse Trem. (Hedge Funds) In local currencies, the best quarterly performance came from the commodity index (GSCI Light Energy), which posted an increase of 15.3%, and the worst was recorded by the EPRA/NAREIT Real Estate Index (3.4%) % -5.2% Returns of Main Currencies Against Canadian Dollar 8.8% -4.8% -11.4% -3.8% -8.1% % -0.2% U.S. Dollar Euro Pound Sterling Swiss Franc Yen Australian Dollar During the quarter, the Swiss franc and the Australian dollar appreciated against the Canadian dollar, while the yen turned in the best full-year performance Commodity GSCI l.e. Returns (in US$) (%) 3 years Energy % 1.9% -18. Crude Oil % -0.1% -21.9% Brent Crude Oil % 11.7% -12.3% Unleaded Gas % 15.6% -7. Heating Oil % 8.9% -10.4% Gas Oil % 11.2% -10.9% Natural Gas % -44.4% Industrial Metals % 2. Aluminium % -5.4% Copper % 29.7% 13. Lead % Nickel % 32.4% -3. Zinc % -8.7% -4. Precious Metals % % Gold % 28.7% 18. Silver % 81.8% 26. Agriculture % 0.1% Wheat % 21.2% -18. Red Wheat % 4-1 Corn % 30.7% -2.8% Soybeans % 34.9% 9.3% Cotton % 98.2% 13.8% Sugar % % Coffee % % Cocoa % % Livestock % % Live Cattle % Feeder Cattle % % Lean Hogs % 0.3% -19.2% All five GSCI Light Energy Index sub-sectors posted positive quarterly returns. The best was Agriculture (25.), followed by Base Metals (12.) and Precious Metals (12.2%). In contrast, the worst was Livestock (2.6%). On an individual basis, the best quarterly performance was recorded by Cotton (47.1%), while the worst was posted by Lean Hogs (-3.1%)