The Canadian economy grew modestly in August but gains have moderated from earlier in the year. Consumer confidence stabilized in October after declines. The US economy grew at an annualized rate of 2.0% in Q3, led by inventory, consumption, and government spending. Housing sales increased slightly but remain near lows. Growth continued in the Eurozone and UK but may slow, while Japan saw improvements in business and consumer spending. Canadian and US stock markets gained in October with technology and consumer sectors outperforming, while bond yields were stable.

1. GWLInvestment Management Ltd.GWLInvestment Management Ltd. November, 2010
Volume 3, Issue 11
ECONOMIC AND CAPITAL MARKETS MONTHLY UPDATE
THE ECONOMY
Canada
♦ The Canadian economy grew 0.3%, month-over-month in
August, marking the 10th increase in the last twelve
months. The majority of sectors advanced in August with
the first pronounced gain in service sector activity in the
past five months. However, overall gains have moderated
considerably since the beginning of the year.
♦ The transition from inventory restocking and stimulus
spending to private sector services and sustainable,
although moderate, export growth will see the economy
continue to grow, but at a more moderate pace in the
near term.
♦ Consumer confidence stabilized in October after steady
declines over the previous four months. However, there
remains a concern over employment prospects.
United States
♦ In the third quarter, the U.S. economy advanced at an
annualized rate of 2.0%. While growth was modestly
stronger than in the second quarter, the outlook remains
soft as the large inventory contribution is not expected to
continue.
♦ Final domestic demand increased 2.5% annualized,
quarter-over-quarter, down 4.3% from the second quarter.
Personal consumption, private inventory investment and
federal government spending were the major contributors
to third quarter growth.
♦ Sales of new and existing homes increased in September,
but are still lower than this time last year and still near the
all-time lows reached in May 2010 for new home sales and
July for existing home sales. With a glut of unsold homes
on the market due to foreclosures, housing prices face
further downside risk.
International
♦ The euro zone economic recovery continues, although
signs are emerging that momentum is easing.
Divergences in economic performance within the euro
zone are widening, but Germany continues to record solid
and accelerating growth in its services and manufacturing
sectors.
♦ The U.K. economy remains in a solid recovery made for
the time being. Output expanded 0.8%, quarter-over-
quarter, in the third quarter. However, tax increase and
sharply reduced government spending will dampen
growth prospects in the medium term.
♦ In Japan, business and household spending is improving.
Machinery orders advanced in August for the third straight
months, while the value of retail sales picked up in the
third quarter to the highest level in ten years.
Canadian Economic Indicators
Annual % change 2009 2010 2011
Unless otherwise indicated Forecast Forecast
G.D.P. (real) -2.6% 3.1% 2.4%
Exports -14.0 7.1 4.9
Consumer spending 0.2 3.4 2.8
Business Investment -17.4 0.4 7.6
Corporate Profits (pre-tax) -33.2 20.4 10.4
Unemployment rate (%) 8.3 8.0 7.6
Inflation Rate (all items) 0.3 1.7 2.2
Interest Rate Trends
Dec. Dec. Sept.
2008 2009 2010
Canadian Bank Prime 3.50% 2.25% 3.00%
U.S. Bank Prime 3.25 3.25 3.25
30-Day Commercial Paper
Canada 2.24 0.36 1.04
U.S. 0.38 0.20 0.21
5-Year Bonds
Canada 1.69 2.77 2.03
U.S. 1.55 2.68 1.27
30-Year Bonds
Canada 3.46 4.08 3.36
U.S. 2.68 4.64 3.68
Cdn./U.S. dollar 82.05¢ 94.95¢ 97.20¢
Market Index Returns
2009 Sept. YTD
S&P/TSX Composite Index 35.05% 4.09% 7.46%
S&P 500 Composite 8.08 5.42 2.22
MS EAFE (net) 12.62 6.27 -0.55
MS Japan -9.07 1.28 1.43
MS Pacific (ex Japan) 47.89 9.35 6.34
MS Europe 16.92 7.43 -1.67
MS Emerging Markets 53.00 7.56 9.24
DEX Universe Bond 5.41 0.65 7.51
Real Estate Fund (Gross) 1.61 0.76 2.54
All returns are in Canadian dollars and include income.
Source: TD Newcrest/”PC-Bond, a business unit of TSX Inc. Copyright © TSX Inc. All rights reserved. The
information contained herein may not be redistributed, sold or modified or used to create any
derivative work without the prior written consent of TSX Inc.”

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EQUITY MARKETS
October brought further gains for Canadian equities with the
S&P/TSX Composite Index gaining 2.7% during the month to close at
12,676, another post-credit crisis high. Mid and small cap stocks
continued their outperforming trend with the S&P/TSX Smallcap
Index up 5.9% for the period. The market continued to firm as
economic data out of the US grew more encouraging as the month
progressed. As well, an imminent announcement out of the Federal
Reserve on further quantitative easing spurred global equity markets
higher. Sectors that led the market higher during the month included
the Technology, Healthcare and Consumer Staples sectors. Lagging
performance was posted by the Utilities and Telecom groups. The
S&P/TSX Composite continues to perform well reflecting Canada’s
stronger economic outlook, significant exposure to robust
commodity markets and compelling valuation relative to alternative
asset classes. All of this underscores our constructive outlook for
Canadian equities.
The US equity market was strong again in October, returning 3.7%.
This strength was driven primarily by robust earnings reports and rising
expectations of additional quantitative easing by the Federal
Reserve. The Technology, Consumer Discretionary and Materials
sectors led the market, as investors continued to rotate into cyclical
stocks. Accordingly, the defensive Utility and Telecom sectors were
the worst performers. Financials, typically viewed as a cyclical
sector, again stood out as a laggard. The relatively poor
performance of Financials stemmed primarily from ongoing
concerns over potential regulation and its implications for long-term
profitability. Economic data continues to be mixed, suggesting that
recent US growth may be at risk - job growth remains elusive and
house prices could see another down-leg as an additional wave of
foreclosures are expected to hit the market. The foreclosure
moratorium currently in place at some major lenders will likely be
short-lived, but it does create additional uncertainty in an already
difficult environment.
FIXED INCOME MARKETS
The DEX Universe Bond Index recorded a gain of 0.22% in October,
continuing a stretch of six straight months of positive returns. Year-to-
date the Index has returned 7.75%. As in September, the provincial
sector return of 0.45% easily outperformed the Government of
Canada sector return of 0.05% and the corporate sector return of
0.30%. With respect to the yield curve, gains for the month were
concentrated in the short term sector (0.25%) and the mid term
sector (0.43%) while the long term sector experienced a negative
return of 0.02%. Returns for the month were primarily driven by a
very stable level of interest rates in October as the average yield for
the Index fell from 2.80% to 2.79% in month. This stable interest rate
environment reflects investors’ uncertainty regarding the impact on
the future level of interest rates due to the expected introduction of
Quantitative Easing II by the U.S. Federal Reserve in early November.
We expect the Federal Reserve will not only maintain its
commitment to keep its Federal Funds rate at “exceptionally low
levels for an extended period” but will also commit to purchase up
to $1.0 trillion of 2 to 10 year U.S. Treasury securities over the next 6-8
months. In this environment we anticipate interest rates in both
Canada and the U.S. will remain in a trading range for the balance
of 2010 unless economic growth surprises to the upside.
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November, 2010
GWLInvestment Management Ltd. Page 2
The views expressed in this commentary are those of GWL Investment Management Ltd. (“GWLIM”) as at the date of publication and are subject to change without notice. This commentary
is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective
investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their representative for advice based on their
specific circumstances. GWLIM is a subsidiary of The Great-West Life Assurance Company. Great-West and GWLIM are members of the Power Financial Corporation group of companies.
© GWL Investment Management Ltd. 2010
S&P/TSX COMPOSITE INDEX
STANDARD & POOR’S 500 INDEX
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DEX UNIVERSE BOND INDEX*
* Formerly the SC Universe Bond Index