Calculating the return
Calculating the return on Stock Market-Indexed Guaranteed Investment (similar method used to calculate the
return for Canadian, American and Overseas stock market indices; 5 years)
An example of how the return is calculated - Overseas Index (5-year term)
On February 7, 2011, John Doe purchases a Stock Market-Indexed Guaranteed Investment for $20,000, linked to the
overseas index, for a term of 5 years. The return is based on the increase in value of 3 indices as follows: 33 1/3%
European, 33 1/3% UK and 33 1/3% Japanese.
Below are the details of his investment as indicated on the investment agreement.
Acquisition date:
Pre-issue interest rate
(sales period):
Issue date:
Maturity date:
Maximum index growth:
Rate of participation in
index growth:
February 7, 2011
1.10%
April 20, 2011
April 20, 2016
31%, or a compound annual rate of 5.55%
100%
The return on maturity depends on fluctuations in the reference
Return on investment (from
indices and their weighting in the Stock Market-Indexed
issue date to maturity date):
Guaranteed Investment - Overseas Index.
How the investment works
– From the acquisition date to the issue date, interest is earned at the pre-issue rate.
Amount invested
$20,000.00
Interest earned between February 7, 2011 to April 20, 2011 at a rate of 1.10%
$53.47
Total
$20,053.47
The return of the Stock Market-Indexed Guaranteed Investment - Overseas Index is calculated as follows:
[
2
1
2
1
2
1
]
Interest = Principal x (CL – CL ) x 33 1/3% for I1 + (CL – CL ) x 33 1/3% for I2 + (CL – CL ) x 33 1/3% for I3 x 100.000%
1
1
1
CL
CL
CL
Maximum: 31.000
Principal
=
CL²
=
CL¹
=
100.000%
=
% of the principal
The amount of the Initial Deposit plus the cumulative pre-issue interest accrued between the date of Initial Deposit
and the Date of Issue.
The average closing level of each of the reference indexes on FEBRUARY 16, 2016, MARCH 14, 2016
AND APRIL 13, 2016 (or the following business day).
The closing level of each of the reference indexes on APRIL 13, 2011.
The rate of participation in the three reference indexes growth.
* List of reference indexes and weighting
I1 : EURO STOXX 50 (Eurozone) 33 1/3%
I2: FTSE 100® (United Kingdom)
33 1/3%
I3: NIKKEI 225 (Japan)
33 1/3%
1
Example of how the return is calculated at maturity (5-year term) – Bull market
Reference
Index
Start-of-period
index level
1
(CL )
End-of-period
index level
2
(CL )
Index
appreciation
Weignting
Contribution
to the
SMIGI
cumulative
yield
I1 : EURO STOXX 50® (Eurozone)
2 825.08
4 055.57
43.56%
33 1/3 %
14.52%
I2 : FTSE 100® (United Kingdom)
6 050.72
8 198.51
35.50%
33 1/3 %
11.83%
10 512.80
11 320.13
7.68%
33 1/3 %
2.56%
I3 : NIKKEI 225® (Japan)
Equivalent
annual
compound
yield*
28.91%
5.21%
* The yield is presented for information purpose only and is not indicative of future performance
Calculation of interest on the principal
$20,053.47 x 1.2891= $25,850.93
In this example of a bull market, the cumulative stock market index growth of 28.91% corresponds to an annual rate of
return of 5.21%.
Since the index growth rate is lower than 31%, the interest paid to the investor's account on April 20, 2016 will be equal
to the total index growth.
Example of how the return is calculated at maturity (5-year term) – Bear market
Reference
Index
I1 : EURO STOXX 50® (Eurozone)
I2 : FTSE 100® (United Kingdom)
I3 : NIKKEI 225® (Japan)
Start-of-period End-of-period
index level
index level
1
2
(CL )
(CL )
Contribution
to the
SMIGI
cumulative
yield
Index
appreciation
Weignting
1 997.55
-29.29%
33 1/3 %
0.00%
6 050.72
5 057.10
-16.42%
33 1/3 %
0.00%
10 512.80
9 523.23
- 9.41%
33 1/3 %
0.00%
2 825.08
0.00%
Equivalent
annual
compound
yield*
0.00%
* The yield is presented for information purpose only and is not indicative of future performance
Calculation of interest on the principal
$20,053.47 x 1.0= $20,053.47
In this example of a bear market, the growth of the index is zero, therefore no interest will be paid to the account holder
on April 20, 2016. Only the capital guarantee will apply.
2
The Stock-Market Indexed Guaranteed Investment returns for Canadian and American indices are calculated in the same
way, but are based on a single reference index.
Interest = Principal x
[((CL² - CL¹)) x 100.000%]
CL
1
Maximum: 31.000% of the principal
3