eco strategist in brief extra

EcoStrategist in briefEconomic and Financial Bulletin

ECOFLEXTRA

Sébastien Mc Mahon, M.E.Sc., PRMEconomist • Industrial Alliance Insurance and Financial Services Inc.

[email protected] or inalco.com/economy

August 31, 2014

In the financial world, all eyes are on the European Central Bank. The ECB is currentlyapplying exceptional measures, including a negative interest rate on bank deposits and alow-interest rate lending program to stimulate the credit market. Despite these newmeasures, the possibility that it will also introduce its own quantitative easing programis on everyone’s lips, even though ECB President Mario Draghi has repeatedly stated thathe wants to first assess the impact of the measures already announced. In fact, it is notvery likely that a U.S.-style quantitative easing program would have such a miraculouseffect on the real economy, given that European interest rates are already very low and,especially, that in Europe, business financing tends to come from banks rather than fromthe bond market. On the other hand, with inflation expectations fast droppingdangerously below the 2% threshold, the ECB does not really have any other choice butto use all the tools at its disposal until one of them, or a combination of them, providesthe much-needed boost that will prevent the region from falling into deflation andstagnation.

Canada: A strong second quarter

• The Canadian economy accelerated to an annualized rate of 3.1% in the secondquarter, a two-year high that exceeded expectations. Almost all segments of theeconomy contributed to this performance, but the 17.8% leap in exports was no doubtthe highlight. Given the combination of a low starting point due to weak world demandin the first quarter and the positive effects of a weaker loonie, the much-anticipatedrotation of the economy toward exports is playing out rather smoothly. However, thehousehold savings rate plummeted to 3.9%, its lowest since 2010.

United States: Good things expected for year’s second half

• U.S. GDP growth in the second quarter was revised upward by two tenths to 4.2%,boosted by more business investment than initially anticipated as well as a narrower

trade deficit. It look like this positive trend will continue into the second half of theyear, with household confidence at its highest level in seven years and a strongperformance in durable goods orders.

• The job market delivered its best performance since 1997. For a sixth consecutivemonth, more than 200,000 jobs were added, with the creation of 209,000 new jobs inJuly. In addition, positive revisions to the last few months show that employmentgrowth is even more robust than previously estimated. The positive tone on the jobmarket is also attracting more participants, swelling the ranks of the unemployed to6.2%, as many people who had given up job-hunting are now resuming their search.

• The poor performance of retail sales, which did not progress in July, casts a shadowover the picture. After six consecutive months of growth, this pause indicates that U.S.consumers are perhaps not yet ready to resume their old habits and that caution isnow the norm. While some observers say feeble wage increases are to blame, a glanceat savings rates shows that households are mostly being careful.

• The real estate sector continues its recovery. Construction starts, building permits andsales of existing homes are all gradually returning to last fall’s levels. Moreover, theslowing in price increases bodes well for property access. Construction of multi-family units remains vigorous, reflecting the new reality of young families who have adistinct preference for renting rather than buying a residence.

Europe: Time for quantitative easing?

• Disappointments are piling up in Europe. There was no GDP growth in the secondquarter, Germany’s economy contracted, and Italy entered its third recession since2008. Add to this 0.3% total inflation that is moving toward zero, and it seems thatEurope is heading straight into deflation (see graph).

Sour

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AIM

As at As at2014-08-311 2013-12-31

Canada - Unemployment rate 7.0% 6.9%Canada - CPI (year/year variation) 2.1% 0.9%Canada - GDP (year/year variation) 3.1% 2.7%U.S. - Unemployment rate 6.2% 7.0%U.S. - CPI (year/year variation) 2.0% 1.2%U.S. - GDP (year/year variation) 2.5% 2.0%2-year Canada Bonds 1.11% 1.14%10-year Canada Bonds 2.00% 2.78%Oil (West Texas) ($US) 95.8 99.2Gold ($US) 1,287.9 1,207.9CRB Commodities Index ($US) 292.8 280.2Exchange rate $CA/$US 1.0879 1.0623

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ce: I

AIM

Economic and Financial Statistics

1 Most recent data available at such date

Spotlight on the European Central Bank

Continued on last page

Focus Prudent

Focus Moderate

Focus Balanced

Focus Growth

Focus Aggressive

Selection Prudent

Selection Moderate

Selection Balanced

Selection Growth

Selection Aggressive

Money Market

Short Term Bonds

Bonds

Strategic Corporate Bond

Tactical Bonds (Aston Hill)

Real Return Bond

Diversified Security

Diversified

Diversified Opportunity

Fidelity Canadian Asset Allocation

Canadian Balanced (QV)

SRI Balanced (Inhance)

Diversified Income

Global Diversified (Aston Hill)

Tactical Income (Aston Hill)

Strategic Equity Income

Dividend Growth

Canadian Equity (Leon Frazer)

Canadian Equity Index

Select Canadian4

Canadian Equity Value

Canadian Equity (Taylor AM)

Canadian Equity (Jarislowsky)

Canadian Leaders

Fidelity True North®

Canadian Equity Growth

Fidelity Canadian Opportunities

Canadian Equity Small Cap (QV)

EcoStrategist in Brief | Ecoflextra Individual Investment Funds August 31, 2014

Table of net returns as at August 31, 2014 - Classic 75/75 Series

Unit Net assets1 Simple returns2 Compound annual returns Investmentvalue in millions 1 month 3 months YTD1 1 year 3 years 5 years 10 years MER3 Advisor$ $ % % % % % % % %

Industrial Alliance

Industrial Alliance

Industrial Alliance

IA Clarington

Aston Hill

Industrial Alliance

Industrial Alliance

Industrial Alliance

Industrial Alliance

Fidelity

QV Investors Inc.

Vancity

Industrial Alliance

Aston Hill

Aston Hill

Various Managers

Various Managers

Various Managers

Various Managers

Various Managers

IA Clarington

Industrial Alliance

Leon Frazer

Industrial Alliance

Industrial Alliance

Industrial Alliance

Taylor AM

Jarislowsky

Industrial Alliance

Fidelity

Industrial Alliance

Fidelity

QV Investors Inc.

2.51

2.52

2.60

2.68

2.71

1.36

2.13

2.11

2.12

2.16

2.20

2.45

2.50

2.56

2.75

2.52

2.75

2.60

2.62

2.49

2.53

2.54

2.48

2.58

2.68

2.67

3.00

3.28

2.42

2.79

2.64

2.80

3.04

ECOFLEXTRAEcoStrategist in brief

Various Managers

Various Managers

Various Managers

Various Managers

Various Managers

2.30

2.55

2.63

2.72

2.80

FOCUS FUNDS ECOFLEXTRA

16.13 198.0 1.1 1.7 5.8 9.0 4.5 4.3 3.9*

17.06 293.5 1.3 2.0 6.5 11.2 5.9 5.2 4.3*

17.92 499.5 1.6 2.2 7.1 13.4 7.3 6.0 4.7*

18.77 167.5 1.8 2.4 7.7 15.6 8.7 6.8 5.1*

19.64 71.5 2.0 2.7 8.4 18.0 10.2 7.7 5.5*

SELECTION FUNDS ECOFLEXTRA

10.68 21.3 1.2 2.3 6.5 - - - -

10.77 53.4 1.5 2.8 7.0 - - - -

10.90 70.5 1.7 3.2 7.6 - - - -

10.98 27.5 2.0 3.7 8.2 - - - -

11.06 8.5 2.3 4.1 8.8 - - - -

INCOME FUNDS ECOFLEXTRA

16.99 323.5 0.0 0.0 0.1 0.1 0.1 0.1 1.0*

15.45 370.6 0.1 0.1 0.9 1.4 0.5 1.3 1.8*

27.73 2,571.5 0.8 1.5 5.1 5.7 2.3 3.1 3.4*

11.98 480.2 0.6 1.0 5.2 8.4 - - -

11.05 100.4 0.2 0.3 2.4 2.9 2.6* - -

9.34 32.9 0.6 3.1 11.6 8.7 0.9* 4.6* -

DIVERSIFIED FUNDS ECOFLEXTRA

20.20 344.3 1.0 2.6 7.6 12.2 5.2 4.7 4.3*

38.60 1,853.4 1.0 3.0 8.3 16.4 7.6 6.2 5.2*

24.63 272.9 1.1 3.3 10.2 19.5 8.5 6.9 5.7*

19.06 377.4 2.0 5.5 12.0 18.7 6.5 6.0 6.1*

14.07 216.1 0.9 3.5 7.1 13.6 8.8 7.9* 5.1*

13.23 11.6 2.0 3.7 7.6 15.6 8.2 - -

24.52 200.8 1.5 4.2 9.9 20.0 8.9 9.7 8.1*

12.12 104.7 1.7 1.5 2.1 7.5 7.4 7.7 -

17.53 200.2 1.5 3.4 8.0 13.8 6.8 7.8 -

CANADIAN EQUITY FUNDS ECOFLEXTRA

15.18 223.4 2.2 4.8 12.4 20.8 13.3 10.0 5.9*

17.88 784.8 1.9 6.5 13.0 24.0 10.7 9.5 8.5*

20.59 236.2 2.1 6.2 15.7 24.0 9.8 10.8 -

21.64 233.3 1.4 7.2 14.5 23.5 7.5 6.6 6.4*

30.72 34.0 1.3 5.9 14.7 25.4 7.4 7.1 6.7*

45.75 373.0 1.4 5.3 12.5 22.6 7.8 6.5 5.3*

20.12 513.1 3.6 5.0 11.2 17.1 5.0 6.0 8.6*

18.06 145.6 1.7 7.0 12.0 23.7 11.5 8.3 7.2*

16.34 8.4 1.3 6.2 14.1 25.3 8.1 5.4 -

32.05 255.2 1.2 6.0 11.1 20.6 11.5 9.6 8.2*

28.01 411.7 1.1 5.9 14.1 26.1 9.6 8.9 8.9*

33.52 164.7 0.0 2.6 4.1 12.2 7.0 10.9 8.8*

27.75 173.9 1.9 5.0 13.3 29.8 22.8 18.5 11.4*

U.S. & INTERNATIONAL EQUITY FUNDS ECOFLEXTRA

12.98 67.7 1.9 0.5 1.5 15.9 10.6 9.1 -

18.46 11.2 2.1 2.0 4.7 14.5 13.0 9.7 4.2*

16.23 110.6 1.7 0.7 5.7 19.6 14.8 8.5* -

14.87 289.3 1.4 (0.7) 6.2 22.5 18.6 9.5 3.8*

16.73 19.4 2.1 1.2 2.1 12.4 12.3 8.0 3.9*

16.01 96.6 1.5 3.9 11.3 26.4 18.9 12.7 6.1*

13.19 140.3 2.5 0.2 1.0 17.4 14.9 11.2 -

8.69 20.4 (0.7) (1.9) 3.0 16.8 12.5 5.3 2.3*

15.81 231.1 0.3 (2.7) 1.5 15.2 10.4 6.3* -

16.20 67.8 (0.1) (2.0) 2.6 17.0 13.6 5.7 2.5*

11.88 14.3 0.3 (3.2) 0.4 13.3 11.5 5.0 2.3*

11.80 68.0 (0.7) (5.2) (3.1) 12.9 14.8 7.3 6.5*

12.33 70.2 3.4 3.8 10.0 24.8 21.0 13.1 3.1*

13.42 413.6 3.2 4.0 10.4 24.8 20.4 11.8* -

13.50 86.8 2.9 3.0 10.4 20.6 17.7 9.6 2.4*

19.09 137.1 3.0 2.2 3.2 12.6 14.9 14.9* -

Global Dividend (Dynamic)

Global Equity (QV)

Global Equity

Global Equity (Templeton)

Global Equity (Mackenzie Cundill)

Fidelity NorthStar®

Global Equity Small Cap (Deutsche AWM)

International Equity Index

International Equity

International Equity (Templeton)

International Equity (MFS)

Fidelity European Equity

U.S. Equity Index

U.S. Equity

U.S. Dividend Growth

U.S. Equity (Sarbit)


Table of net returns as at August 31, 2014 Classic 75/75 Series (continued)

Returns after deduction of MER (Management expense ratio). Past performance is not a guarantee of future returns.

The EcoStrategist in Brief | Ecoflextra economic and financial bulletin, produced monthly, and its more exhaustive annually version, are available on the Company's website under InvestmentVehicles and Publications.

1 Total net assets of the fund including individual and group contracts.2 The rates for the period are non-annualized.3 Management expense ratio (GST and HST included). These fees may vary at any time.4 Not offered in registered contracts and TFSAs.* Simulation of past returns as if the fund had been in effect for these periods.

Index funds: Simulation of past returns from the return of the index that the fund aims to reproduce.

Unit Net assets1 Simple returns2 Compound annual returns Investmentvalue in millions 1 month 3 months YTD 1 year 3 years 5 years 10 years MER3 Advisor$ $ % % % % % % % %

Dynamic

QV Investors

Industrial Alliance

Templeton

Makenzie Cundill

Fidelity

Deutsche AWM

BlackRock

Industrial Alliance

Templeton

MFS

Fidelity

SSgA (State Street)

Industrial Alliance

Industrial Alliance

Sarbit

2.92

3.19

2.76

2.77

3.03

2.97

3.41

2.66

2.81

2.88

3.27

2.87

2.66

2.80

2.63

2.81


FOCUS FUNDS ECOFLEXTRA

16.08 198.0 1.1 1.7 5.6 8.7 4.4 4.2 3.9*

16.99 293.5 1.3 1.9 6.2 10.8 5.8 5.1 4.3*

17.84 499.5 1.5 2.1 6.8 12.9 7.2 5.9 4.7*

18.69 167.5 1.7 2.3 7.5 15.2 8.5 6.8 5.0*

19.55 71.5 1.9 2.6 8.1 17.5 10.0 7.6 5.4*

SELECTION FUNDS ECOFLEXTRA

10.66 21.3 1.2 2.2 6.2 - - - -

10.74 53.4 1.4 2.7 6.8 - - - -

10.87 70.5 1.7 3.1 7.4 - - - -

10.95 27.5 1.9 3.6 8.0 - - - -

11.03 8.5 2.2 4.0 8.5 - - - -

INCOME FUNDS ECOFLEXTRA

16.98 323.5 0.0 0.0 0.1 0.1 0.1 0.1 1.0*

15.43 370.6 0.1 0.0 0.8 1.3 0.4 1.3 1.8*

27.67 2,571.5 0.8 1.4 5.0 5.5 2.3 3.1 3.4*

11.94 480.2 0.6 0.9 5.0 8.1 - - -

11.01 100.4 0.1 0.2 2.2 2.5 2.4* - -

DIVERSIFIED FUNDS ECOFLEXTRA

20.12 344.3 1.0 2.5 7.3 11.8 5.0 4.6 4.2*

38.44 1,853.4 1.0 2.9 8.0 16.0 7.4 6.1 5.1*

24.55 272.9 1.1 3.2 10.0 19.1 8.4 6.8 5.6*

18.96 377.4 2.0 5.4 11.7 18.2 6.3 5.9 6.0*

13.98 216.1 0.8 3.4 6.7 12.9 8.6 7.8* 5.1*

13.17 11.6 2.0 3.6 7.3 15.2 8.0 - -

24.47 200.8 1.4 4.2 9.8 19.8 8.8 9.7 8.0*

12.05 104.7 1.6 1.3 1.7 7.0 7.2 7.6 -

17.40 200.2 1.4 3.3 7.6 13.1 6.6 7.6 -

15.79 9.3 1.5 2.6 5.0 10.1 7.3 6.7 -

CANADIAN EQUITY FUNDS ECOFLEXTRA

15.18 223.4 2.2 4.8 12.4 20.8 13.3 10.0 5.9*

17.83 784.8 1.9 6.4 12.8 23.7 10.6 9.4 8.4*

20.45 236.2 2.1 6.0 15.2 23.3 9.6 10.6 -

21.61 233.3 1.4 7.1 14.4 23.4 7.4 6.6 6.4*

30.64 34.0 1.3 5.9 14.5 25.1 7.3 7.0 6.6*

45.56 373.0 1.3 5.2 12.2 22.2 7.6 6.4 5.3*

20.06 513.1 3.5 4.9 11.0 16.8 4.9 5.9 8.6*

18.06 145.6 1.7 7.0 11.9 23.7 11.5 8.3 7.2*

16.26 8.4 1.3 6.0 13.8 24.7 7.9 5.3 -

31.84 255.2 1.1 5.8 10.7 19.9 11.2 9.4 8.1*

27.93 411.7 1.1 5.8 13.9 25.8 9.5 8.9 8.9*

33.31 164.7 0.0 2.4 3.7 11.6 6.7 10.7 8.7*

27.68 173.9 1.9 4.9 13.2 29.5 22.7 18.4 11.4*

Focus Prudent

Focus Moderate

Focus Balanced

Focus Growth

Focus Aggressive

Selection Prudent

Selection Moderate

Selection Balanced

Selection Growth

Selection Aggressive

Money Market

Short Term Bonds

Bonds

Strategic Corporate Bond

Tactical Bonds (Aston Hill)

Diversified Security

Diversified

Diversified Opportunity

Fidelity Canadian Asset Allocation

Canadian Balanced (QV)

SRI Balanced (Inhance)

Diversified Income

Global Diversified (Aston Hill)

Tactical Income (Aston Hill)

Strategic U.S. Growth & Income

Strategic Equity Income

Dividend Growth

Canadian Equity (Leon Frazer)

Canadian Equity Index

Select Canadian5

Canadian Equity Value

Canadian Equity (Taylor AM)

Canadian Equity (Jarislowsky)

Canadian Leaders

Fidelity True North®

Canadian Equity Growth

Fidelity Canadian Opportunities

Canadian Equity Small Cap (QV)


Table of net returns as at August 31, 2014 - Guaranteed Surrender Series

Unit Net assets1 Simple returns2 Compound annual returns GSB Fund Investmentvalue in millions 1 month 3 months YTD1 1 year 3 years 5 years 10 years MER3 Fee Rate4 Advisor$ $ % % % % % % % % %

Industrial Alliance

Industrial Alliance

Industrial Alliance

IA Clarington

Aston Hill

Industrial Alliance

Industrial Alliance

Industrial Alliance

Fidelity

QV Investors Inc.

Vancity

Industrial Alliance

Aston Hill

Aston Hill

IA Clarington

Various Managers

Various Managers

Various Managers

Various Managers

Various Managers

IA Clarington

Industrial Alliance

Leon Frazer

Industrial Alliance

Industrial Alliance

Industrial Alliance

Taylor AM

Jarislowsky

Industrial Alliance

Fidelity

Industrial Alliance

Fidelity

QV Investors Inc.

2.80

2.91

2.99

3.07

3.11

1.60

2.29

2.30

2.43

2.53

2.82

2.87

2.87

3.19

3.11

3.15

2.76

3.16

3.13

2.81

2.52

2.79

3.07

2.91

2.91

3.02

3.25

3.32

2.89

3.36

2.89

3.36

3.27

0.60

0.80

0.80

1.00

1.20

0.60

0.60

0.60

0.60

0.60

0.60

0.80

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1,00

1.20

1.20

1.20

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30


2.69

2.83

2.94

3.06

3.16

0.60

0.80

0.80

1.00

1.20

Various Managers

Various Managers

Various Managers

Various Managers

Various Managers

U.S. & INTERNATIONAL EQUITY FUNDS ECOFLEXTRA

12.96 67.7 1.9 0.5 1.4 15.8 10.5 9.0 -

18.45 11.2 2.1 2.0 4.6 14.4 13.0 9.7 4.2*

16.17 110.6 1.7 0.6 5.4 19.2 14.7 8.4* -

14.77 289.3 1.3 (0.8) 5.7 21.7 18.4 9.3 3.8*

16.65 19.4 2.0 1.1 1.8 11.9 12.1 7.9 3.8*

15.94 96.6 1.5 3.8 11.0 25.9 18.7 12.6 6.1*

13.19 140.3 2.5 0.2 1.1 17.4 14.9 11.2 -

8.66 20.4 (0.7) (1.9) 2.8 16.5 12.3 5.2 2.2*

15.77 231.1 0.3 (2.8) 1.4 14.9 10.3 6.2* -

16.10 67.8 (0.2) (2.1) 2.2 16.4 13.4 5.6 2.5*

11.88 14.3 0.3 (3.2) 0.4 13.3 11.5 5.0 2.3*

11.73 68.0 (0.7) (5.3) (3.4) 12.3 14.6 7.2 6.5*

12.29 70.2 3.4 3.7 9.9 24.5 20.9 13.0 3.1*

13.37 413.6 3.2 3.9 10.1 24.4 20.2 11.7* -

13.40 86.8 2.8 2.8 9.9 19.8 17.4 9.4 2.3*

18.99 137.1 3.0 2.0 2.9 12.1 14.7 14.8* -

DISTINCTION FUNDS** ECOFLEXTRA

14.56 5.3 1.3 2.5 7.1 12.0 6.7 5.7 4.2*

15.40 8.3 1.4 2.8 7.6 13.8 7.3 6.1 4.7*

16.59 36.3 1.5 2.9 7.7 15.5 8.8 7.4 4.9*

17.42 16.9 1.7 3.3 8.5 17.8 10.2 8.0 4.5*

18.18 3.3 1.8 3.5 8.6 18.9 11.2 8.5 5.1*

Global Dividend (Dynamic)

Global Equity (QV)

Global Equity

Global Equity (Templeton)

Global Equity (Mackenzie Cundill)

Fidelity NorthStar®

Global Equity Small Cap. (Deutsche AWM)

International Equity Index

International Equity

International Equity (Templeton)

International Equity (MFS)

Fidelity European Equity

U.S. Equity Index

U.S. Equity

U.S. Dividend Growth

U.S. Equity (Sarbit)


Table of net returns as at August 31, 2014 Guaranteed Surrender Series (continued)

Returns after deduction of MER (Management expense ratio). Past performance is not a guarantee of future returns.

The EcoStrategist in Brief | Ecoflextra economic and financial bulletin, produced monthly, and its more exhaustive annually version, are available on the Company's website under InvestmentVehicles and Publications.

1 Total net assets of the fund including individual and group contracts.2 The rates for the period are non-annualized.3 Management expense ratio (GST and HST included). These fees may vary at any time.4 The GSB fund fee rate (guaranteed surrender balance) is used to determine the GSB Fee based on the year-end GSB. The GSB fund fee rate applies to the Guaranteed Surrender series only.5 Not offered in registered contracts and TFSAs.* Simulation of past returns as if the fund had been in effect for these periods.

Index funds: Simulation of past returns from the return of the index that the fund aims to reproduce.** Distinction Funds are only offered in the Guaranteed Surrender Series.

Unit Net assets1 Simple returns2 Compound annual returns GSB Fund Investmentvalue in millions 1 month 3 months YTD 1 year 3 years 5 years 10 years MER3 Fee Rate4 Advisor$ $ % % % % % % % % %

Dynamic

QV Investors

Industrial Alliance

Templeton

Makenzie Cundill

Fidelity

Deutsche AWM

BlackRock

Industrial Alliance

Templeton

MFS

Fidelity

SSgA (State Street)

Industrial Alliance

Industrial Alliance

Sarbit

3.20

3.20

3.10

3.39

3.45

3.38

3.38

2.94

2.94

3.45

3.24

3.40

2.90

3.12

3.28

3.25

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30

1.30


Distinction Prudent

Distinction Conservative

Distinction Balanced

Distinction Growth

Distinction Bold

2.90

3.00

3.04

3.21

3.26

0.80

0.80

1.00

1.00

1.20

Industrial Alliance

Industrial Alliance

Industrial Alliance

Industrial Alliance

Industrial Alliance

F95

-21A

(5)

(14

-09)



Total Return Reference indexes - Returns as at August 31, 2014

INDEXES RELATED TOINCOME FUNDSFTSE TMX Canada 91 Day T-Bill IndexFTSE TMX Canada Short Term Bond IndexFTSE TMX Canada Universe Bond IndexS&P/TSX Capped Income Trusts (Total Return)SB - World Government Bonds (Can. $)

INDEXES RELATED TOCANADIAN EQUITY FUNDSS&P/TSX 60S&P/TSX Completion IndexS&P/TSX Composite IndexS&P/TSX Capped Composite IndexS&P/TSX Small Cap Index

INDEXES RELATED TOU.S. & INTERNATIONAL EQUITY FUNDSS&P 500 (Can. $)S&P 500 (Can. $) (Reuters)MSCI - World (Can. $)MSCI - World Small Cap. (Can. $)MSCI - EAFE (Can. $)MSCI - EAFE (Can. $) (Reuters)MSCI - Europe (Can. $)

EXCHANGE RATE (Can. $ / US $)As at August 31, 2014: 1.0858

EXCHANGE RATE (US $ / Can. $)As at August 31, 2014: 0.9210

www.inalco.com

Continued from first page

Simple returns2 Compound annual returns1 month 3 months YTD 1 year 3 years 5 years 10 years

% % % % % % %

0.1 0.2 0.6 0.9 1.0 0.9 2.00.2 0.5 2.2 3.3 2.4 3.0 4.01.1 2.0 6.6 7.6 4.3 5.2 5.52.6 3.8 12.3 20.0 11.4 18.9 12.90.2 0.2 6.7 8.4 3.5 2.5 2.6

1.7 8.1 16.8 27.2 10.5 9.7 9.63.1 6.7 17.1 27.0 9.3 14.1 9.42.1 7.7 16.9 27.1 10.2 10.7 9.32.1 7.7 16.9 27.1 10.2 10.7 9.32.5 6.9 17.9 28.2 3.8 11.8 5.7

3.7 4.6 12.2 28.9 24.9 16.6 6.33.6 4.6 12.2 28.8 24.9 16.6 6.31.9 2.3 9.0 24.6 19.6 12.1 5.62.8 2.8 7.6 24.7 20.9 15.6 8.2(0.4) (1.3) 4.7 19.8 15.3 8.0 5.0(0.5) (1.3) 4.7 19.7 15.3 7.9 4.90.1 (3.5) 4.5 21.9 17.2 9.1 6.0

Variation Compound annual variation1 month 3 months YTD 1 year 3 years 5 years 10 years

% % % % % % %

(0.3) (0.1) 2.1 2.9 3.5 (0.2) (1.9)

0.3 0.1 (2.0) (2.8) (3.4) 0.2 2.0

• Confidence is melting like snow in the sun in Europe, mainly in Germany, where it iscurrently at its lowest since 2012, in reaction to the situation in Ukraine and thedarkening economic outlook. The ZEW index dropped for the eighth consecutivemonth, falling to its lowest in two years.

World: China showing no clear direction

• The Chinese credit cycle is clearly slowing down, and there are concerns that the realestate sector is entering a correction phase. Sales of new homes are plummeting, asare prices, which means the government will very likely have to beef up its economicstimulus program.

• We now know the impact of the sales tax hike in Japan: GDP was down 6.8% in thesecond quarter (annualized rate), a performance that by and large exceededexpectations of -7.1%. All eyes are now on the third-quarter data: everyone hopes tosee a rebound in activity, if they are to continue believing in the chances of the Abeplan’s success. At the time of writing these lines, early signs did not quite meetexpectations, causing serious doubt as to the ultimate success of the plan.

Financial markets

• The S&P/TSX Composite Index continued to climb in August, with a monthly gain of2.1%. The return for the year to date is now 16.9%.

• It was a very positive month for the S&P 500 as well, up 4.0% (3.7% in Canadiandollars) in August. Since the start of the year, the U.S. index has increased 9.9% inlocal currency (12.2% in Canadian dollars).

• World indices MSCI - EAFE and MSCI - World posted returns of 1.0% and 2.6%respectively (-0.4% and +1.9% respectively in Canadian dollars). The emergingmarkets, measured by the MSCI - Emerging Markets Index, gained 2.0% (2.0% inCanadian dollars).

• The Canadian bond market, measured by the FTSE TMX Canada Universe Bond Index,was up 1.1%.

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