There are a number of assumptions used in this report to illustrate how T-Class works. Among them:

Annual T-Class payments are based on the ROC payout rate you selected (to a maximum of 8%). For example, in year one, the market value is equal to the original value of the investment multiplied by the annual growth rate less the T-Class annual withdrawal rate. Once the adjusted cost base has been reduced to zero, after-tax cash flow is calculated at the rate of tax you have selected.

The comparison of taxes paid by alternative investments assumes the income level is the same as your selected T-Class rate with the appropriate inclusion rate applied. Taxation for the SWP is assumed to be capital gains generated as a result of redeeming shares. Interest income is assumed to be a yield equal to your selected T-Class withdrawal rate with no capital appreciation.

Cash Flow is based on the targeted return of capital withdrawal rate as stated. It is calculated annually: T5 class funds will pay out an annual amount that is equal to 5% of the previous year's December 31st net asset value per share (NAVPS) and T8 class funds will pay out an amount equal to 8% of the previous year's year-end NAVPS. If you have determined a T-Class Withdrawal Rate other than 5% or 8%, or a fixed dollar amount, the specified amount is paid out to you in cash and the remainder is reinvested back into the fund. For T-Class withdrawal amounts that equal more than 5% and less than 8%, it is assumed that the investment resides in T8. All other T-Class withdrawal amounts assume that the investment resides in a T5 fund class. Annual cash flow distributions are not guaranteed and may fluctuate from year-to-year unless a fixed dollar amount is selected. Cash flow withdrawals for T-Class are not an indication of the performance or yield of the investment. If T-Class withdrawals are greater than the return of the fund, the value of your investment will decrease. Your adjusted cost base will be reduced by the amount of any return of capital received. If your adjusted cost base goes below zero, you will have to pay capital gains tax on distributions.

Dividend Rate assumed in this report can be up to 5% in any given year and if defined, are applied at year end. CI Corporate Class has a low dividend policy.

Rate of Return Assumptions

The assumptions used in this report reflect estimates that are used in conventional retirement planning. Each rate of return scenario has been modeled on historical returns from December 1995 to December 2015. Income returns reflect the historical returns of the DEX Universe Bond Index. Equity returns reflect the historical returns of the S&P/TSX Composite Index for Canadian returns, S&P 500 Index for U.S. returns and MSCI EAFE Index for international returns, with an equal weight given to each.

As mentioned above, the assumptions also reflect the asset mix selected by your advisor and can be adjusted to reflect a higher or lower allocation to equities. In general, a higher portion to equities will produce a higher rate of return with more volatility, while a larger allocation to income will produce lower returns with lower volatility. The hypothetical rates of return in each illustration are compounded annual returns net of an applicable MER of 2.00% over the illustrated period.

Custom Rate Scenario allows the user to input any rate of return, net of applicable MERs, within the acceptable range.

Fixed Rate Scenario is modeled on the long-term returns of the selected asset mix and represents a constant return for each year.

Historical Model Scenario December 1995 to December 2015 is modeled on actual returns during the period, adjusted for inflation.

High Volatility Scenario is modeled on a series of hypothetical returns that reflect the actual returns from December 1995 to December 2015, with adjustments for above-average returns and volatility.

Low Volatility Scenario is modeled on a series of hypothetical returns that reflect the actual returns from December 1995 to December 2015, with adjustments for below-average returns and volatility.

Poor Early Performance Scenario is modeled on a series of hypothetical returns with weak performance in early years of this illustration and stronger performance in the later years.

Strong Early Performance Scenario is a series of hypothetical returns with strong performance in early years of this illustration and weaker performance in the later years.

Definitions

Adjusted Cost Base, or ACB for tax purposes is the value of the investment which includes the original cost per unit, plus reinvested distributions and additional investments, minus any return of capital distributions.

Capital Gains occur when an investment, such as stock, bond or mutual fund, is sold at a higher price than originally purchased. A capital loss occurs when an investment is sold below its original cost. An unrealized capital gain is the difference between the adjusted cost base, or purchase price and the market value of the investment.
An investor can realize capital gains when a fund distributes realized gains to investors or when the investment is sold.
Capital gains tax is paid at 50% of your marginal tax rate.

Dividends and distributions

Capital gains dividend is applicable to both corporate class funds and mutual fund trusts and may be paid when the fund realizes gains and distributes them to investors.

Interest income distribution is applicable only to mutual fund trusts. It represents interest income received by the fund and paid to the investor. Taxes are paid at your full marginal tax rate.

Effective Tax Rate is all income tax you pay calculated as a percentage of your total income.

Marginal Tax Rate is the rate of tax applied to the last dollar added to your taxable income. The Canadian tax system is tiered, so that as your income increases the rate of tax increases and more taxes are paid at the higher level than at lower levels of income.

Market Value represents the value of the investment and is the amount at which it can be bought or sold.

Net Asset Value, or NAV is the amount at which an investor can buy or sell a mutual fund investment.

Return of Capital distributions occur when a fund returns portion of the original capital, or distributes unrealized capital gains. Since ROC it is not considered to be interest income, dividends or capital gain there is no tax payable.

Systematic Withdrawal Plan (SWP) or Automatic Withdrawal Plan (AWP) is a method to withdraw income from your investments on a monthly basis. Withdrawals usually consist of return of capital and capital gains, so some income may be taxable.

Asset Allocation: Automatically rebalances to the chosen asset allocation and does not take into account the potential tax consequences that may be triggered when switching between funds.