Index Return Monitor June 12, 2014

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1 Index Return Monitor June 12, 2014 Another Month, Another Record For U.S. Markets The S&P 500 Index and the Dow Jones Industrial Average both closed at record highs in May as global growth tailwinds improved. Meanwhile, the S&P/TSX Composite Index slipped 0.3% last month. The Canadian index, however, is higher by 7.2% year-to-date (in large part due to the energy sector s 13.5% advance so far this year), outpacing its U.S. counterpart s 4.1% advance. May TSX Sector and Sub-Sector Returns YOGESH OZA, M.ECON., CFA; RICHARD WOO & MICHAEL O CALLAGHAN, MBA, CFA INVESTMENT STRATEGY GROUP Telecom Banks Industrials Cons. Discretionary REITs Health Care TSX Composite Pipelines Base Metals Oil & Gas - Integrateds Energy Oil & Gas - E&Ps Utilities Fertilizer Cons. Staples Info Tech Insurers Materials Gold Sector -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% A bevy of positive news and data helped to bolster U.S. equity markets last month. For instance, grappling with disinflation, the European Central Bank (ECB) suggested that more monetary policy accommodation is necessary. In what some market participants might have considered watching a zebra change its stripes, ECB governing council member Jens Weidmann explained that in order to combat the risks of too long a sustained period of low inflation, the central bank is willing to take additional unconventional measures if necessary. It was only a few years ago that the policy maker indicated that the notion of unconventional policy caused him to experience stomach pains. (In early June, the ECB did provide additional stimulus, reducing its key benchmark rate to 0.15%, actually adopting a negative discount rate, and announced a new fouryear, long-term refinancing operation.) The news out of Asia also helped to bolster investor sentiment. In late May, China s central bank cut corporate yield spreads by the most since the Great Recession in an attempt to bolster growth. Meanwhile, pro-business candidate Narendra Modi became India s 15th prime minister, increasing optimism about India s growth prospects. See Legal Disclaimer and Important Disclosure Footnotes at the end of this report for disclosures, including potential conflicts of interest. Bellwether Indices Price Price Performance (% Change) 31-May-14 1 mo 3 mo 6 mo 12 mo YTD S&P/TSX COMPOSITE INDEX 14, S&P 500 INDEX 1, DOW JONES INDUS. AVG 16, NASDAQ COMPOSITE INDEX 4,

2 Fixed-Income Markets Move Higher In May, a contraction in U.S. gross domestic product along with an unexpected decline in U.S. consumer spending helped to remind investors that the road to continued economic growth will not be without its challenges. This helped to underscore the benefits of maintaining a position in fixed-income securities in case of uncertainty. Investors on both sides of the border bought back into the relative safety of Canadian and U.S. bonds (bond prices and yields are inversely related). Offsetting the weak U.S. GDP and consumer spending data was an unexpected increase in durable goods orders, housing starts which were better than expected, the largest increase in exports in nine months, and higher-than-expected non-farm payrolls data. This was tempered slightly by data from China which showed the country s highest level of non-performing loans since 2005, and factory activity which declined for the fourth consecutive month as the slowdown in that country s manufacturing sector continued. Signs of inflation continued to remain visible in the U.S. as the Producer Price Index increased by more than expected and the Consumer Price Index rose by 0.3%, its biggest monthly gain in almost twelve months. Yields fell in both Canada and the United States across all maturities during May. The U.S. 10-Year Treasury and its Canadian counterpart saw their yields fall 17 basis points (bps) and 15 bps, respectively. Canada & U.S. Yields Yield as of 31-May-14-1 mo -3 mo -6 mo -12 mo 3-month Canada T-Bills Canada 5yr Notes Canada 10yr Notes Canada 30yr Bonds US 3-month T-Bills US 5yr Treasuries US 10yr Treasuries US 30yr Treasuries Canadian Dollar s Recovery Continues Throughout May, rising energy prices pushed the Canadian dollar higher versus the U.S. dollar, despite Canada s unemployment rate stubbornly staying at 6.9%. In Europe, higher-than expected German unemployment and lower business confidence prompted the European Central Bank to maintain rates at current levels. This, combined with concerns over low European inflation, sent the euro down versus the loonie and the greenback. Despite lower investor risk aversion, the trade-weighted U.S. Dollar rose 1.1% as investors accumulated fixed-income securities including U.S. sovereign bonds. Currency Moves Level Change 31-May-14 1 mo 3 mo 6 mo 12 mo YTD Canadian vs. U.S. Dollar % 2.0% -2.1% -4.3% -2.1% Euro vs. Canadian Dollar % -3.1% 2.5% 9.7% 1.3% Euro vs. U.S. Dollar % -1.2% 0.3% 4.9% -0.8% U.S. Dollar vs. Japanese Yen % 0.0% -0.7% 1.3% -3.4% Trade Weighted U.S. Dollar % 0.9% -0.4% -3.6% 0.4% 2 June 12, 2014

3 Base Metals And Crude Oil Rise In May The RJ CRB Commodity Index declined 1.3% in May despite strength in the base metals and crude oil complexes. Nickel, which was the big winner in April, rose May 2014 Commodity Returns another 5.0% in May on Nickel continued concerns that supplies from Russia, the world s secondlargest nickel supplier, could be disrupted due to the ongoing crisis in Ukraine, which escalated West Texas Intermediate Oil Copper Aluminum Brent Crude Oil Zinc during the month. Also, RJ CRB Commodity Index Indonesia s export ban on nickel Silver Spot US$/oz ore exports reached a fifth Gold Spot US$/oz month. Copper futures finished 3.1% higher on speculation that Nymex Natural gas Lumber China could take steps to -8% -6% -4% -2% 0% 2% 4% 6% stimulate its economy by relaxing foreign-investment limits and increased quotas for capital flows. The other two industrial metals, aluminum and zinc, finished the month 2.1% and 0.7% higher, respectively. West Texas Intermediate (WTI) oil closed the month 3.6%higher after the U.S. Energy Information Administration reported that crude stockpiles fell at Cushing, Oklahoma, the biggest U.S. oil-storage hub. Brent Crude Oil advanced 1.3% for the month, due to continuing concerns over the Ukrainian crisis. Gold futures contracts traded in a range within the US$1,300 level before falling to US$1,250 on a heavy selling of futures contracts on May 27, 2014, ending the month 3.2% lower. Silver, which normally tracks gold closely, declined 2.0%. Both commodities are trading near or below the average industry cost of production, while physical demand remained strong in Asia-Pacific during the first quarter of Nymex natural gas, which declined for two consecutive months in February and March, rebounded 10.2% in April after it found key technical support levels. However, the fossil fuel dipped 5.7% in May as inventories rose more then expected. Lumber finished 7.0% lower after U.S. April pending home sales declined 9.4%, compared to the consensus estimate for a decline of 8.7%. The housing recovery has shown signs of slowing after mortgage rates rose and house prices increased, making properties less affordable. Commodities Prices (US$) 31-May-14-1 mo -3 mo -6 mo -12 mo YTD % RJ CRB Commodity Index Gold Spot US$/oz Silver Spot US$/oz Brent Crude Oil West Texas Intermediate Oil NYMEX Natural gas Lumber Copper 3 month Nickel 3 month Aluminum 3 month Zinc 3 month June 12, 2014

4 Foreign Returns Hurt By Stronger Loonie In May The loonie gained 1.1% against the U.S. dollar and 2.7% against the euro in May. The Canadiandollar return on the S&P 500 Index was 1.0%. In U.S. dollars, the return on the S&P 500 Index was 2.1%. The Bloomberg European 500 return was 1.9% for the month. In Canadian dollars the return on the index slipped 0.9% as the loonie appreciated against the euro. Index Returns In Canadian Dollars 1 mo 3 mo 6 mo 12 mo YTD S&P/TSX COMPOSITE INDEX S&P 500 INDEX DOW JONES INDUS. AVG NASDAQ COMPOSITE INDEX BLOOMBERG EUROPEAN MSCI EAFE MSCI WORLD MSCI EMERGING MARKETS , as of May 31, 2014 Equity-Heavy Portfolios Underperform The DEX Universe Bond Index return for the month was 1.2% compared to the TSX s 0.3% decline. The MSCI World Index gain in Canadian dollars was 0.6%. Allocations with a higher weight to Canadian bonds outperformed. Allocations with a higher weighting to the TSX and global equities underperformed. Long-Term Strategic Asset Allocation Investor Profiles (All In C$) Performance % Change (Global Equity/Cdn. Equity/Bonds/Cash) 1 mo 3 mo 6 mo 12 mo YTD CAPITAL PRESERVATION (10 / 5 / 65 / 20) INCOME (20 / 15 / 55 / 10) INCOME & GROWTH (30 / 20 / 45 / 5) GROWTH (45 / 25 / 30 / 0) AGGRESSIVE GROWTH (60 / 30 / 10 / 0) , pcbond.com as of May 31, 2014 Bonds Outpace The TSX In May A bond market rally occurred in May as the U.S. government 10-year treasury yield declined from 2.7% to an intraday low of 2.4% at the end of May. The Canadian bond market followed the U.S. rally. With weakness in several sectors in the TSX including materials, consumer staples, information technology and utilities, Canadian bonds outperformed Canadian stocks. Asset Class Returns Total Return % Change Index Yield % 1 mo 3 mo 6 mo 12 mo YTD 31-May-14 EQUITIES S&P/TSX Composite Total Return S&P 500 Total Return BONDS DEX Universe Bond Index DEX Long Term Bond Index DEX Mid Term Bond Index DEX Short Term Bond Index and PC-Bond Group, as of May 31, June 12, 2014

5 Materials Sector Pressures TSX Lower In May The TSX s 0.3% decline last month was in part due to the material sector s 4.2% slide. The sector edged lower largely as a result of the 5.8% tumble in gold stocks in May. Investors sold both gold and silver on indications that the global recovery was strengthening. After rallying 5.4% in April, the energy sector dipped 0.9% lower in May. Although West Texas Intermediate oil and Brent crude oil rose 3.6% and 1.3%, respectively, NYMEX natural gas fell 5.8%. Natural gas prices have a tendency to be softer during the spring months when there is weak demand for both air conditioning and heating. S&P/TSX Sector Returns Index Price Weight 31-May-14 1 mo 3 mo 6 mo 12 mo YTD GICS Sectors Consumer Discretionary 5.5 1, Consumer Staples 2.7 2, Energy , Financials , Health Care 3.1 1, Industrials 7.9 2, Info Technology Materials , Telecom Services 4.9 1, Utilities 2.0 1, REIT Returns REIT Index REIT Total Return Index Most Asian Markets Finished Higher In May The best performing international sector in May was the India Sensex 30 Index which closed 8.0% higher. Investors were very optimistic that the newly elected Prime Minister Narendra Modi of the Hindu Nationalist Bharatiya Janata party was positive for the country from a political, social and economic perspective. The Hong Kong Hang Seng Index, which includes shares of companies based in mainland China, advanced 4.3% during May on optimism that China s manufacturing sector could be stabilizing after several months of declines. International Indices Price 31-May-14 1 mo 3 mo 6 mo 12 mo YTD Bloomberg Euro FTSE Eurotop 100 2, England FTSE 100 6, German DAX 9, French CAC 40 4, MSCI World 1, MSCI EAFE 1, MSCI Emerging Mkts. 1, Japan Nikkei , Hong Kong Hang Seng 23, Australia S&P/ASX 200 5, Taiwan Weighted 9, India Sensex 30 Index 24, June 12, 2014

6 Large-Cap Equities Outperform Small-Caps The S&P/TSX Smallcap Index, a good portion of which is comprised of junior natural resource companies, fell 1.9% in May while the S&P/TSX 60 Index registered a decline of just 0.1%. The outperformance of the S&P/TSX 60 Index was not surprising given its heavy weighting in Canadian financial stocks, especially banks. Canadian banks reported strong quarterly results during the month, helping to offset the effect of the index s weighting in senior gold companies which fell during the month. Small-Cap Stocks Versus Large-Cap Stocks Price 31-May-14 1 mo 3 mo 6 mo 12 mo YTD CANADA S&P/TSX 60 INDEX S&P/TSX MIDCAP INDEX S&P/TSX SMALLCAP INDEX S&P/TSX VENTURE COMP INDEX U.S. S&P 100 INDEX S&P 500 INDEX RUSSELL 1000 INDEX S&P 400 MIDCAP INDEX S&P 600 SMALLCAP INDEX RUSSELL 2000 INDEX Value Beats Growth In May Thanks partially to its exposure to financials, which performed well in May, the DJ Canada Value Index outperformed its growth counterpart by 50 bps. Style Indices Price 31-May-14 1 mo 3 mo 6 mo 12 mo YTD GROWTH DJ CANADA GROWTH INDEX S&P BARRA GROWTH INDEX RUSSELL 1000 GROWTH INDX S&P MID 400 BARRA GROWTH S&P 600 BARRA GROWTH INDX RUSSELL 2000 GROWTH INDX VALUE DJ CANADA VALUE INDEX S&P BARRA VALUE INDX RUSSELL 1000 VALUE INDX S&P MID 400 BARRA VALUE S&P 600 BARRA VALUE INDX RUSSELL 2000 VALUE INDX June 12, 2014

7 Hedge Fund Indices Hedge funds and other alternative investments remain popular across the Canadian private client investment industry and, as a result, the Index Return Monitor includes the Credit Suisse Tremont hedge fund indices. Listed below are short-term and long-term performance figures for a number of the more popular strategies. ** Note There is a one month delay on hedge fund performance data. ** Hedge Fund Indices 1 mo 3 mo 6 mo 12 mo YTD CS Tremont Hedge Fund Index CS Tremont Hedge Multi-Strategy CS Tremont Hedge Equity Market Neutral CS Tremont Hedge Dedicated Short Bias CS Tremont Hedge Distressed CS Tremont Managed Futures , as of April 30, 2014 Long-Term Hedge Fund Indices 1-Year 2-Year 3-Year 5-Year 10-Year CS Tremont Hedge Fund Index CS Tremont Hedge Multi-Strategy CS Tremont Hedge Equity Market Neutral CS Tremont Hedge Dedicated Short Bias CS Tremont Hedge Distressed CS Tremont Managed Futures , as of April 30, June 12, 2014

8 Long-Term Returns Long-Term Returns (As Of 31-May-14) Return % Change (Annualized) 1 yr 2 yr 3 yr 5 yr 10 yr 15 yr 20 yr S&P/TSX Composite (price) S&P/TSX Composite Total Return S&P/TSX Income Trust Total Return na na na Dow Jones Industrial Average Dow Jones Industrial Avg TR na S&P S&P 500 Total Return na Nasdaq Comp FTSE 100 Index na German DAX France CAC na Japan Nikkei MSCI World MSCI (EMU) Europe na MSCI Emerging Markets na MSCI Emerging Markets Total Return na na MSCI EAFE MSCI EAFE Total Return na na MSCI Far East , CIBC World Markets Long-Term Returns In Canadian Dollars (As Of 31-May-14) Return % Change (Annualized) 1 yr 2 yr 3 yr 5 yr 10 yr 15 yr 20 yr S&P/TSX Composite (price) S&P/TSX Composite Total Return Dow Jones Industrial Average (in C$) Dow Jones Industrial Avg. Tot. Ret. (in C$) na S&P 500 (in C$) S&P 500 Total Return (in C$) na Russell 2000 (in C$) Nasdaq Comp (in C$) MSCI World (in C$) MSCI EMU Europe (in C$) na MSCI Emerging Markets (in C$) na MSCI EAFE (in C$) MSCI Far East (in C$) , CIBC World Markets, Canadian-dollar-based returns 8 June 12, 2014

9 Disclosures And Disclaimers Key To Important Disclosure Footnotes: 1 CIBC World Markets Corp. makes a market in the securities of this company. 2a This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. 2b CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the past 12 months. 2c CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the past 12 months. 2d CIBC World Markets Corp. has received compensation for investment banking services from this company in the past 12 months. 2e CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months. 2f CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. 3a This company is a client for which a CIBC World Markets company has performed non-investment banking, securities-related services in the past 12 months. 3b CIBC World Markets Corp. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. 3c CIBC World Markets Inc. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. 4a This company is a client for which a CIBC World Markets company has performed non-investment banking, non-securities-related services in the past 12 months. 4b CIBC World Markets Corp. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. 4c CIBC World Markets Inc. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. 5a The CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common equity securities. 5b A member of the household of a CIBC World Markets Corp. research analyst who covers this company has a long position in the common equity securities of this company. 6a The CIBC World Markets Inc. fundamental analyst(s) who covers this company also has a long position in its common equity securities. 6b A member of the household of a CIBC World Markets Inc. fundamental research analyst who covers this company has a long position in the common equity securities of this company. 6c One or more members of Investment Strategy Group who was involved in the preparation of this report, and/or a member of their household(s), has a long position in the common equity securities of this company. 7 CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by this company. 8 A partner, director or officer of CIBC World Markets Inc. or any analyst involved in the preparation of this research report has provided services to this company for remuneration in the past 12 months. 9 A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., or a member of his/her household is an officer, director or advisory board member of this company or one of its subsidiaries. 10 Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., has a significant credit relationship with this company. 11 The equity securities of this company are restricted voting shares. 12 The equity securities of this company are subordinate voting shares. 13 The equity securities of this company are non-voting shares. 14 The equity securities of this company are limited voting shares. CIBC World Markets Research Rating System Abbreviation Rating Description Stock Ratings SO Sector Outperformer Stock is expected to outperform the sector during the next months. SP Sector Performer Stock is expected to perform in line with the sector during the next months. SU Sector Underperformer Stock is expected to underperform the sector during the next months. NR Not Rated CIBC does not maintain an investment recommendation on the stock. R Restricted CIBC World Markets is restricted*** from rating the stock. Sector Weightings** O Overweight Sector is expected to outperform the broader market averages. M Market Weight Sector is expected to equal the performance of the broader market averages. U Underweight Sector is expected to underperform the broader market averages. NA None Sector rating is not applicable. **Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest. "CC" indicates Commencement of Coverage. The analyst named started covering the security on the date specified. 9 June 12, 2014

10 This report is issued and approved for distribution to clients in Canada by registered representatives of CIBC Wood Gundy, a division of CIBC World Markets Inc., a subsidiary of CIBC, Member of the Canadian Investor Protection Fund and Member of the Investment Industry Regulatory Organization of Canada, and by its affiliates via their registered representatives. This report is not authorized for distribution in the United States. This document and any of the products and information contained herein are not intended for the use of private investors in the United Kingdom. This report is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of CIBC Wood Gundy. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. CIBC Wood Gundy suggests that, prior to making an investment decision with respect to any security recommended in this report; the recipient should contact one of our client advisers in the recipient s jurisdiction to discuss the recipient s particular circumstances. Non-client recipients of this report should consult with an independent financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. CIBC Wood Gundy will not treat non-client recipients as its clients by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but CIBC Wood Gundy does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by CIBC World Markets or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser CIBC World Markets Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution. 10 June 12, 2014