Verus Monthly Market Insights

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1 May 2018 May 2018 S&P/TSX Composite Index reported strong growth this month but remains negative for the year The S&P/TSX Composite Index rose 2.91% through the month of May on a price-only basis. Of the 248 stocks in the index at month end and the 2 that were removed during the month, 161 rose, 87 fell and 2 were unchanged. The small and mid-cap indices underperformed, while the large-cap index reaped larger gains than the broader index. Only two of the eleven sectors experienced losses in the month of May Index Returns (Price Only) May YTD S&P/TSX Composite 2.91% -0.91% S&P/TSX % -0.96% S&P/TSX Completion 2.16% -0.75% S&P/TSX Small Cap 1.60% -2.17% Top 10 Point Contributors Top 10 Point Detractors 1) Canadian National Railway Co. (+48.8) 1) Canadian Natural Resources Ltd. (-11.3) 2) Toronto-Dominion Bank (+47.8) 3) Nutrien Ltd. (+33.3) 4) Suncor Energy Inc. (+30.1) 5) Enbridge Inc. (+25.3) 6) Magna International Inc. (+18.8) 7) Canadian Pacific Railway Ltd. (+16.4) 8) Pembina Pipeline Corp. (+16.0) 9) Constellation Software Inc. (+14.8) 10) Bombardier Inc. (+13.8) 2) Bank of Nova Scotia (-5.9) 3) Brookfield Infrastructure Partners LP (-5.0) 4) Canadian Tire Corp. Ltd. (-4.5) 5) Air Canada (-4.5) 6) Alimentation Couche-Tard Inc. (-4.3) 7) Fortis Inc. (-3.8) 8) CI Financial Corp. (-3.4) 9) BCE Inc. (-3.1) 10) Seven Generations Energy Ltd. (-3.1) May 2018 Monthly S&P/TSX Composite Index Performance by Sector (Price only) 11.9% Healthcare 11.8% 9.9% 7.9% 5.9% 3.9% 1.9% -0.1% Info Tech 7.8% Industrials 6.7% Materials 5.5% Cons. Disc. 4.3% S&P/TSX 2.9% Real Estate 2.9% Energy 2.4% Cons. Staples 1.5% Financials 1.3% Telecom -0.6% Utilities -1.9% -2.1% Source: Bloomberg 1 VERUS MONTHLY MARKET INSIGHTS

2 Sector Monthly price-only return Monthly total return Financials 33.75% of S&P/TSX Composite 1.27% 1.44% Notable Movement 13 of the 27 constituents in the Financials sub-index ended the month higher than where they began, while the other 14 were lower. Bank of Nova Scotia (BNS, -0.9% price return) was the sector s largest point detractor in May following mixed Q2F2018 results and the acquisition of MD Financial Management. Energy 19.48% of S&P/TSX Composite 2.45% 2.81% The Energy sector saw 28 of its 50 month-end constituents rise through May while the other 22 fell. Suncor Energy Inc. (SU, +2.5%) added the most points to the subindex through May, helped by strong oil prices. Materials 11.68% of S&P/TSX Composite 5.47% 5.55% Of the Materials sector s 53 constituents, 37 rose, 15 fell and 1 was unchanged by month-end. Nutrien Ltd. (NTR, +12.3%) added the most points to the sub-index. Industrials 10.26% of S&P/TSX Composite Consumer Discretionary 5.56% of S&P/TSX Composite Telecommunication Services 4.39% of S&P/TSX Composite Information Technology 3.97% of S&P/TSX Composite Utilities 3.46% of S&P/TSX Composite Consumer Staples 3.39% of S&P/TSX Composite Real Estate 2.80% of S&P/TSX Composite 6.72% 6.81% 4.31% 4.67% -0.57% -0.57% 7.77% 7.77% -1.91% -1.24% 1.53% 1.61% 2.86% 3.33% 22 of the sector s 27 constituents rose through the month of May, while 5 ended in the red. Canadian National Railway Co. (CNR, +9.2%) was the sector s largest point gainer in May. The Consumer Discretionary sector saw 13 of its 22 constituents rise in May, while 9 fell. Magna International Inc. (MG, +10.2%) was the sector s largest point contributor. Two of the sector s three constituents finished the month of May in the red. BCE Inc. (BCE, -0.9%) deducted the most points to the sub-index through the month after reporting mixed Q1F2018 results. The Information Technology sector saw 8 of its 11 month-end constituents rise during the month while 3 fell. Constellation Software Inc. (CSU, +11.3%) was the sector s largest point contributor. The Utilities sector saw 7 of its 15 month-end constituents fall during the month while 8 rose. Brookfield Infrastructure Partners LP (BIP.un, -4.8%) was the sector s largest point detractor through the month of May. Of the 10 stocks in the Consumers Staples sector at month end and the 1 that was removed during the month, 7 rose and 4 fell. Saputo Inc. (SAP, +8.2%) was the sector s biggest point gainer during the month of May. Of the 21 stocks in the Real Estate sector at month end and the 1 that was removed during the month, 19 rose and 3 fell. Canadian Apartment Properties (CAR.un, +10.3%) added the most points to the sub-index. 2 VERUS MONTHLY MARKET INSIGHTS

3 Health Care 1.25% of S&P/TSX Composite 11.80% 11.88% 5 of the 9 constituents in the Healthcare sub-index ended the month higher than where they began, 3 were lower and 1 remained unchanged. Valeant Pharmaceuticals International (VRX, +23.1%) was the largest point contributor in May after reporting better-than-expected Q1F2018 results. 3 VERUS MONTHLY MARKET INSIGHTS

4 May 2018 S&P 500 Index showed signs of stability in the month of May after a volatile start to the year The S&P 500 Index gained 2.16% on a price-only basis through the month of May. Of the 505 stocks in the index at month end and the three removals, 289 rose and 219 declined. The S&P 500 outperformed the Dow Jones Industrial Average. While the NASDAQ Composite index and Russell 2000 indices outpaced the S&P 500 Index. After a slow start to May, the S&P 500 rallied through to the end of the month Index Returns (Price Only) S&P 500 Dow Jones Industrial Average NASDAQ Composite Russell 2000 Top 10 Point Contributors 1) Apple Inc. (+13.3) 2) Facebook Inc. (+5.6) 3) Microsoft Corp.(+5.2) 4) Amazon.com Inc. (+3.0) 5) Alphabet Inc. Class A (+2.9) 6) Alphabet Inc. Class C (+2.4) 7) Exxon Mobil Corp.(+2.1) 8) Intel Corp. (+2.1) 9) Netflix Inc. (+2.0) 10) NVIDIA Corp. (+1.9) May YTD 2.16% 1.18% 1.05% -1.23% 5.32% 7.80% 5.95% 6.39% Top 10 Point Detractors 1) Johnson & Johnson (-1.9) 2) Walmart Inc. (-0.9) 3) Cisco Systems Inc. (-0.9) 4) Bank of America Corp. (-0.9) 5) Verizon Communications Inc. (-0.8) 6) CVS Health Corp. (-0.8) 7) Celgene Corp. (-0.7) 8) Gilead Sciences Inc. (-0.7) 9) JPMorgan Chase & Co. (-0.7) 10) McDonald's Corp. (-0.7) May 2018 Monthly S&P 500 Index Performance by Sector (Price only) 4 VERUS MONTHLY MARKET INSIGHTS

5 Sector Information Technology 25.98% of S&P 500 Index Financials 14.20% of S&P 500 Index Health Care 13.92% of S&P 500 Index Consumer Discretionary 12.87% of S&P 500 Index Industrials 9.91% of S&P 500 Index Consumer Staples 6.69% of S&P 500 Index Energy 6.26% of S&P 500 Index Utilities 2.80% of S&P 500 Index Materials 2.84% of S&P 500 Index Real Estate 2.74% of S&P 500 Index Telecommunication Services 1.79% of S&P 500 Index Monthly price-only return Monthly total return 7.13% 7.37% -1.12% -0.9% 0.02% 0.22% 1.87% 1.99% 2.69% 3.01% -1.79% -1.53% 2.53% 3.04% -1.69% -1.13% 1.83% 2.07% 1.97% 2.26% -2.28% -2.28% Notable Movement The sector saw 57 of its 69 constituents capture gains through May, while the other 12 were lower. Apple Inc. (AAPL, +13.3% price return) was the sector s largest point contributor. 45 of the sector s 69 constituents ended the month of May lower than they began, while the remaining 24 ended the month higher. The largest point detractor in the sector was Bank of America Corp. (BAC, -2.5%). 34 of the sub-index s 63 constituents ended the month higher than where they began, while 29 others finished in the red including 1 addition to the sub-index. The largest point contributor to the index was Medtronic PLC (MDT, +7.7%) which announced that it sold its 22.4% stake in Lifetech Scientific Corp during the month. The sector saw 42 of its 81 month-end constituents fall through May while 40 rose including the removal of one constituent. McDonald s Corp. (MCD, -4.4%) lost the most points in the sector. 52 of the 70 companies in the Industrials sub-index finished May in the green, while the other 20 posted a monthly loss. This includes one addition and two removals of constituents to the sub-index. Boeing Co. (BA, +6.1%) was the sector s best performing component, on an index point contribution basis. Of the Consumer Staples sector s 33 constituents, 23 ended the month lower than where they started and 10 posted a monthly gain. Subtracting the most points from the sub-index was Walmart Inc. (WMT, -6.1%) due to negative investor sentiment on the FlipKart purchase for US$15bn. The Energy sector saw 20 of its 31 constituents rise through the month of May, while 11 posted declines. Exxon Mobil Corp. (XOM, +5.5%) contributed the most points to the sector s advance during the month of May on the back of higher oil prices. The Utilities sector saw 18 of its 28 constituents end the month in the red, while the remaining 10 stocks finished the month higher. Duke Energy Corp. (DUK, -2.6%) lost the most points in the sector despite reporting better-than-expected Q1F2018 EPS results. Of the Materials sector s 25 constituents, 17 rose and 8 fell. DowDuPont Inc. (DWDP, +2.0%) was the sector s best performer on an index-point contribution basis. 25 of the Real Estate sub-index s 33 constituents traded higher through May, while the remaining 8 ended in the red. Welltower Inc. (WELL, +9.6%) was the sector s largest point gainer after two analysts upgraded their target price on the stock. All of the sector s 3 constituents declined in the month of May. Verizon Communications Inc. (VZ, -3.4%) led the sub-index s decline. 5 VERUS MONTHLY MARKET INSIGHTS

6 Disclosures This report is provided to you for informational purposes only. The report is not intended to provide personal investment advice and does not take into account the specific investment objectives, financial situation or particular needs of any specific person. Investors should seek advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and management s analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized. Opinions, estimates and projections contained in this report are our own as of the date hereof and are subject to change without notice. The ScotiaMcLeod Global Portfolio Advisory Group prepared this report by aggregating information from various sources as a resource for ScotiaMcLeod Wealth Advisers and their clients. Information may be obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may also be obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third party sources: Standard & Poor s, Valueline, Morningstar, Bloomberg, and FactSet. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness. While the information provided in this report is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the ScotiaMcLeod Global Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Copyright 2018 Scotia Capital Inc. 6 VERUS MONTHLY MARKET INSIGHTS