Variable Return

The Variable Return calculation is the formula used to determine the Variable Return on the Notes at the Maturity Date. The Variable Return, if any, on a Note is linked to the performance of the Portfolio and is calculated as follows:

‘‘NAVFINAL’’ means, at any time (expressed pro rata per Note): (i) the notional proceeds from the liquidation of the Fund Account; plus (ii) the maturity value of the Bond Account as calculated by the Calculation Agent; minus (iii) repayment of the Loan and any accrued and unpaid Loan interest and Program Fees. Portfolio Performance will be the amount, if any, determined on the Maturity Date and expressed as a percentage of the Principal Amount, by which the pro rata value of the Portfolio per Note exceeds the Principal Amount, being $100. An Investor cannot elect to receive the Variable Return, if any, prior to the Maturity Date and the Notes cannot be redeemed or retracted prior to the Maturity Date. There is a possibility that an Investor may not receive any Variable Return.

Fund Account Exposure

Fund Account Exposure was 100% on the issue date (July 15, 2005) and has changed as noted below:

Monthly Coupon Payment History

Monthly Coupons per Note will be payable in Canadian dollars in an amount, if any, equal to 75% of all Distributions (on a per Note basis) paid on the Shares notionally held in the Equity Account as of the relevant record date(s) in the relevant monthly period. Upon payment of any Monthly Coupon on the Notes, the aggregate amount of such payment will be deducted from the Distribution account. The Distribution Account will, from time to time, hold the aggregate amount of the Distributions credited thereto from and including the last occurring Monthly Coupon Payment Date (or the Issue Date where the first Monthly Coupon has not yet become payable). Program Fees and Loan interest will not be deducted from the Distribution Account. There can be no assurance that any Distribution will be paid on the Shares during the term of the Notes and, accordingly, there can be no assurance that any Monthly Coupons will be paid on the Notes.

Performance Commentary

As at July 31, 2008 the BNS Deposit Notes Linked to the Clarington Diversified Income Fund have yielded a return of -3.03% since inception, comprised of a change in NAV of -11.82% and a total of $8.79 in all monthly coupon payments. Weak global markets have caused Canadian equities to underperform over the past several months, negatively affecting the overall performance of the Notes. The Canadian yield curve rallied over the month, increasing the cost of principal protection and therefore decreasing distance in CPPI Notes. During the period from July 1, 2008 to July 31, 2008 there was 1 de-leveraging event. As at July 31, 2008 the Notes have a fund exposure of 23%.

Fund Performance

Fund Units	Weight	Initial Unit NAV	Month End Unit NAV	Change %	Lock-in Date
Clarington Fund	100.00%	$11.76	$9.23	-21.51%	09/29/2008
Overall Return				-21.51%

Note: An investment in principal protected notes may not be suitable for all investors. Important information about these investments is contained in the Information Statement of each note. Investors should obtain and carefully read a copy prior to investing, paying particular attention to the associated risks. Past performance is not indicative of future returns. Commissions, trailing commissions, management fees and expenses all may be associated with these investments. Principal is guaranteed at maturity only for products purchased at their issue price and held to maturity. The investment return on the notes, if any, is uncertain in that an investor may not receive more than return of the principal amount at maturity. A person should reach a decision to invest in the notes only after carefully considering with his or her advisor, the suitability of this investment in light of his or her investment objectives and the information set out in the respective Information Statement.

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