Calculating the return
Calculating the return on a Guaranteed Investment– Health Care (5-year term) (similar method used to calculate
the return for Guaranteed Investment – Consumer Staples, Financial Services and Selection Québec)
On February 3, 2016, John Doe invests $20,000 in a Guaranteed Investment – Health Care for a 5-year term. The
return is calculated based on a basket of 10 equally weighted stocks (1/10 = 10% each):

A combination of 10 stocks from the largest international companies in the health care industry.
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:
February 3, 2016
0.50%
April 19, 2016
April 19, 2021
Minimum interest = 3% and maximum = 14%
100%
Rate of participation in raw material
price:
Return on investment (from issue date The return on maturity depends on the price
fluctuations of 10 stocks.
to maturity date):
How the investment works
– From the acquisition date to the issue date, interest is earned at the pre-issue rate.
Amount invested
Interest calculated daily between February 3, 2016 to April 19, 2016 at a rate of
0.50%.
Total
$20,000.00
$21.08
$20,021,08
Interest = Principal x Cumulative return X 100%
[(CP
2
2
2
)
]
for S1 + CP for S2 + ... CP for S10 x 1/10 -1
1
1
1
CP
CP
CP
Minimum guaranteed cumulative return = 3.000% equivalent to a minimum guaranteed annual compound rate of return = 0.593%
Maximum cumulative return = 14.000% equivalent to a maximum annual compound rate of return = 2.656%
Cumulative return =
Principal
=
CP²
=
CP¹
=
S1 to S10
100%
=
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 8, 2021, March 9, 2021 and
April 8, 2021 (or the following business day if no reading takes place on this security on any of these dates).
The closing level of each of the reference indexes on April 8, 2016 (or the following business day if no
reading takes place on this security on this date).
Each one of the 10 securities listed on the following page.
The rate of participation in the growth of the basket of securities.
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EXAMPLE OF RETURN CALCULATION AT MATURITY (5-year term)
Security and corresponding Bloomberg rating
S1 : Novartis AG (NOVN VX EQUITY)
S2 : Roche Holding AG (ROG VX EQUITY)
S3 : Sanofi-Aventis SA (SAN FP EQUITY)
S4 : GlaxoSmithKline Plc (GSK LN EQUITY)
S5 : Johnson & Johnson (JNJ UN EQUITY)
CP
CP
1
Bull market
2
2
CP / CP
Bear market
Bull market
1
Bear market
81.90
95.82
77.81
1.17
0.95
263.80
284.90
242.70
1.08
0.92
75.18
85.71
67.66
1.14
0.90
1 362.00
1 457.34
1 239.42
1.07
0.91
98.16
106.99
89.33
1.09
0.91
380.00
425.60
304.00
1.12
0.80
31.00
35.03
29.45
1.13
0.95
S8 : Bristol-Myers Squibb Co. (BMY UN EQUITY)
63.63
73.81
61.72
1.16
0.97
S9 : Eli Lilly (LLY UN EQUITY)
81.25
97.50
76.38
1.20
0.94
S10 : Merck & Co. inc. (MRK UN EQUITY)
51.08
59.25
47.50
S6 : Novo Nordisk A/S (NOVOB DC EQUITY)
S7 : Pfizer Inc. (PFE UN EQUITY)
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Average CP /CP
1
Cumulative return*
Annual compound rate of return*
*
1.16
0.93
1.1320
0.9180
13.20%
3.00%
2.51%
0.59%
* The return is presented for information purposes only and is not indicative of future performance. The maximum cumulative return of this
investment is 14.000%. If the return at maturity is higher than 14.000%, the interest paid will be 14.000%.
In this example of a bull market :
Calculation of interest on the principal
$20,021.08 x 13.20% = $2,642.78
The cumulative stock market index growth of 13.20% corresponds to an annual rate of return of 2.51%.
Since the index growth rate is lower than 14%, the interest paid to the investor's account on April 19, 2021 will be equal
to the total index growth.
In this example of a bear market :
Calculation of interest on the principal
$20,021.08 x 3.00% = $600.63
The growth of the index is below the minimum guaranteed, therefore the interest payment to the account holder on April
19, 2021 will equal only the minimum guaranteed return of 3.00% which corresponds to an annual compound rate of
return of 0.59%.
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