Skylon Big Five Barrier Return Of Capital Note

Skylon Big Five Barrier Return Of Capital Note Securities Available August 20 th – September 30 th, 2008 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes INVESTMENT RATIONALE • Bank share prices volatility has risen dramatically from the levels seen over the last five years and Bank share prices have declined significantly from 52 week highs. • The Skylon Big Five Barrier ROC Notes allow Holder to take advantage of these conditions and receive a substantial premium, paid out in the form of regular tax advantaged distributions. 1 INTERNAL USE ONLY / DO NOT COPY

STBANKX Volatility 2

SKYLON Big Five Barrier ROC Notes HIGHLIGHTS • 5 Year Term • ROC (Return of Capital) Payments of 7. 5% P. A. • 50% Barrier provides cushion for further price decline of Canadian Bank shares if none of the Canadian Bank shares decreases by 50% or more during the term of the Note Securities. 3 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes THE NOTES HAVE BEEN DESIGNED TO PROVIDE: • Annual distributions at a rate of 7. 5% per annum. § Distributions are in the form of return of capital (tax deferral). • An amount of $100. 00 to holders at the end of the five year term unless any of the Bank shares breached its Barrier. • If any of the Bank shares reached or fell below its Barrier during the term of the Notes and the worst performing share return is negative holders will receive at maturity $100. 00 per Note Security reduced by the percentage decline of the worst performing Bank share. 4 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes PERFORMANCE EXAMPLE • Holder receives their ROC Payments regardless of Bank share performance. • If a Bank share ever reached or breached its Barrier at any time during the term of the Note Securities the payment at maturity will depend on the level of the worst performing Bank share. • If a Barrier has been breached and the worst performing Bank share is down by 20% at maturity, the Holder will receive $80 at maturity. Holder will still have received $37. 50 of ROC payments. 5 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes Data: In the last 25 years, • • The periods of worst historical price declines for the Bank Shares have not breached a 40% barrier 3 Bank Shares would have had periods (4 in total 1) during which their closing prices would have breached the 50% barrier: Ø BMO: from April 1998 to January 2000 (worst performance of -50. 06%) Ø BNS: from February 1987 to November 1990 (worst performance of – 50. 29%) Ø CM: from March 1998 to October 1998 (worst performance of -57. 23%) Ø CM: from May 2007 to July 2008 (worst performance of -53. 57%) • Current Bank Share Prices have already declined significantly from 52 week highs 6 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes SUMMARY OF THE OFFERING • Issuer: National Bank of Canada • Selling Period: August 20 – September 30, 2008 • Minimum Investment: $5, 000 • Selling Concession Fee: 3. 5% • Eligibility: RRSPs, RRIFs, RESPs, DPSPs and RDSPs • Secondary Market will be maintained daily by National Bank Financial (subject to certain conditions) • Declining 2 year Early Trading Charge • Fund. SERV Code NBC 1552 7 INTERNAL USE ONLY / DO NOT COPY

SKYLON Big Five Barrier ROC Notes DISCLAIMER This document is confidential and for the use of investment dealers only. The contents are not to be reproduced or distributed to the public or press. This document should be read in conjunction with the shelf prospectus dated April 23, 2008 and the pricing supplement dated August 18, 2008. The information contained herein, while obtained from sources which we believe to be reliable, is not guaranteed as to its accuracy or completeness. This document is for informational purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein. Skylon Big Five Barrier Return of Capital Note Securities, Series 1 are not principal protected note securities and Holders may receive an amount that is less than the Remaining Principal Amount at maturity. An investment in the Note Securities is subject to a number of risk factors. Potential purchasers should consult the Pricing Supplement before investing in the Note Securities. Capitalized terms used herein and not otherwise defined have the meaning ascribed thereto in the Pricing Supplement. This document relates only to the Note Securities offered under the Pricing Supplement and does not relate to the Reference Shares, the Reference Issuers or other securities. The Bank has derived all disclosures contained in the Pricing Supplement and used by CI Investments in this document regarding the Reference Shares and the Reference Issuers from publicly available information. Further, the Bank and the Agents have not had an opportunity to verify the accuracy or completeness of any such information or to determine if there has been any omission by any of the Reference Issuers to disclose any facts, information or events which may have occurred prior to or subsequent to the date as of which any such information has been furnished by the Reference Issuers or which may affect the significance or accuracy of the Reference Issuers of any such information. 8 INTERNAL USE ONLY / DO NOT COPY