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 per Note is calculated as follows:

‘‘NAVFINAL’’ means, at any time (expressed pro rata per Note): (i) the notional proceeds from the liquidation of the Equity 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 expressed as a percentage rounded to two decimal places. No Variable Return will be paid unless the NAVFINAL exceeds $100. For any Variable return to be paid to investors, the performance of the Portfolio must exceed all fees and expenses.

Equity Account Exposure

Equity exposure was 105% on the issue date (January 25, 2008) and has changed as noted below:

Performance Commentary

As at July 31, 2008 the performance of the BNS diversiCAPITAL Focused Income and Growth Notes (TR), Series 1 on a NAV basis is -9.60% since inception. Canadian equities have underperformed over the past several months, and Global equity markets continue to be extremely volatile, 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 were 1 leveraging event and 1 de-leveraging event. As at July 31, 2008 the Notes have an equity exposure of 51%.

Portfolio Performance

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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