Calculating the return
Calculating the return on Guaranteed Investment Canadian Diversified 3 years
An example of how the return is calculated – Canadian Diversified (3-year term)
On October 2, 2015, John Doe purchases Canadian Diversified Guaranteed Investments for $20,000 for a term of 5
years. The return, which will be calculated at maturity, is based on fluctuations in the prices of the 20 securities. Each
security carries the same weight in the portfolio.
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:
Rate of participation:
Return on investment (from issue
date to maturity date):
October 2, 2015
0.50%
December 10, 2015
December 10, 2018
4.5% (16.5% for 5 years)
100%
The return on maturity depends on the starting price
and the average of the 3 final prices.
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 calculated daily between October 2, 2015 to December 10, 2015 at a rate
$18.82
of 0.50%.
Total
$20,018.82
The return of the Guaranteed Investment Canadian Diversified is calculated as follows:
Interest = Principal X Cumulative return X 100%
Cumulative return = CL² - CL¹
CL1
Maximum cumulative return: 4.500% equivalent to a maximum annual compound rate of return: 1.479%
Principal
=
CL²
=
CL¹
=
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 price of each security on October 4, 2018, November 5, 2018 and December
4, 2018 (or the following business day if no reading takes place on this security on any of these dates).
The price of each security at closing on December 4, 2015 (or the following business day if no reading takes
place on this security on this date).
The rate of participation in the three reference indexes growth.
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EXAMPLE OF RETURN CALCULATION AT MATURITY (3-year term) – Bull market
Security and corresponding Bloomberg rating
CP
1
CP
2
2
CP / CP
1
131.68
135.63
1.03
S2 : National Bank of Canada (NA CT EQUITY)
42.47
43.74
1.03
S3 : BCE Inc. (BCE CT EQUITY)
53.63
56.31
1.05
S1 : Agrium Inc. (AGU CT EQUITY)
S4 : Brookfield Asset Management Inc. (BAM/A CT EQUITY)
40.65
41.87
1.03
S5 : Canadian Tire Corporation, Limited (CTC/A CT EQUITY)
121.49
128.78
1.06
S6 : Canadian National Railway Company (CNR CT EQUITY)
70.80
74.34
1.05
S7 : Gildan Activewear Inc. (GIL CT EQUITY)
40.07
40.87
1.02
S8 : Crescent Point Energy Corp. (CPG CT EQUITY)
16.62
17.62
1.06
S9 : Enbridge Inc. (ENB CT EQUITY)
22.08
23.18
1.05
S10 : Fortis Inc. (FTS CT EQUITY)
34.94
36.34
1.04
S11 : Intact Financial Corporation (IFC CT EQUITY)
92.50
97.13
1.05
S12 : Inter Pipeline Ltd (IPL CT EQUITY)
26.13
27.44
1.05
S13 : Scotiabank (BNS CT EQUITY)
58.48
61.40
1.05
S14 : The Toronto-Dominion Bank (TD CT EQUITY)
51.11
54.18
1.06
S15 : Loblaw Companies Limited (L CT EQUITY)
69.57
70.96
1.02
S16 : Power Corporation of Canada (POW CT EQUITY)
27.15
28.24
1.04
S17 : Rogers Communications Inc. (RCI/B CT EQUITY)
44.54
45.43
1.02
S18 : Shaw Communications Inc. (SJR/B CT EQUITY)
26.03
27.33
1.05
S19 : Thomson Reuters Corporation (TRI CT EQUITY)
51.60
55.21
1.07
S20 : Transcanada Corporation (TRP CT EQUITY)
43.70
46.32
2
1.06
Average CP /CP¹
1.0445
Cumulative return*
4.45%
Annual compound rate of return*
1.46%
* The return is presented for informational purposes only and is not indicative of future performance. The maximum cumulative return of this
investment is 4.500%. If the return at maturity is higher than 4.500%, the return paid will be 4.500%.
In this example of a bull market :
Calculation of interest on the principal
$20,018.82 x 4.45% = $890.84
In this example of a bull market, the cumulative stock market index growth of 4.45% corresponds to an annual rate of
return of 1.46%.
Since the index growth rate is lower than 4.5%, the interest paid to the investor's account on December 10, 2018 will be
equal to the total index growth.
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EXAMPLE OF RETURN CALCULATION AT MATURITY (3-year term) – Bear market
Security and corresponding Bloomberg rating
CP
1
CP
2
2
CP / CP
1
131.68
121.15
0.92
S2 : National Bank of Canada (NA CT EQUITY)
42.47
40.35
0.95
S3 : BCE Inc. (BCE CT EQUITY)
53.63
48.27
0.90
S4 : Brookfield Asset Management Inc. (BAM/A CT EQUITY)
40.65
32.52
0.80
S5 : Canadian Tire Corporation, Limited (CTC/A CT EQUITY)
121.49
117.85
0.97
S6 : Canadian National Railway Company (CNR CT EQUITY)
70.80
63.72
0.90
S7 : Gildan Activewear Inc. (GIL CT EQUITY)
40.07
37.67
0.94
S8 : Crescent Point Energy Corp. (CPG CT EQUITY)
16.62
15.29
0.92
S9 : Enbridge Inc. (ENB CT EQUITY)
22.08
20.09
0.91
S10 : Fortis Inc. (FTS CT EQUITY)
34.94
28.30
0.81
S11 : Intact Financial Corporation (IFC CT EQUITY)
92.50
89.73
0.97
S12 : Inter Pipeline Ltd (IPL CT EQUITY)
26.13
25.35
0.97
S13 : Scotiabank (BNS CT EQUITY)
58.48
55.56
0.95
S14 : The Toronto-Dominion Bank (TD CT EQUITY)
51.11
49.58
0.97
S15 : Loblaw Companies Limited (L CT EQUITY)
69.57
66.79
0.96
S16 : Power Corporation of Canada (POW CT EQUITY)
27.15
24.44
0.90
S17 : Rogers Communications Inc. (RCI/B CT EQUITY)
44.54
41.87
0.94
S18 : Shaw Communications Inc. (SJR/B CT EQUITY)
26.03
24.73
0.95
S19 : Thomson Reuters Corporation (TRI CT EQUITY)
51.60
49.54
0.96
S20 : Transcanada Corporation (TRP CT EQUITY)
43.70
39.33
0.90
S1 : Agrium Inc. (AGU CT EQUITY)
2
Average CP /CP¹
0.9245
Cumulative return*
0.00%
0.00%
Annual compound rate of return*
In this example of a bear market :
Calculation of interest on the principal
$20,018.82 x 0.0% = $0.00
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 December 10, 2018. Only the capital guarantee will apply.
3