SUN LIFE FINANCIAL GRANITE MANAGED INCOME PORTFOLIOS. Income-oriented solutions crafted with plan members in mind FOR INSTITUTIONAL USE ONLY

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1 SUN LIFE FINANCIAL GRANITE TM MANAGED INCOME PORTFOLIOS Income-oriented solutions crafted with plan members in mind FOR INSTITUTIONAL USE ONLY

2 SUN LIFE GRANITE MANAGED INCOME PORTFOLIOS NOT ALL INCOME IS CREATED EQUAL THE NEED FOR CAPITAL PRESERVATION AND A STEADY, SUSTAINABLE YIELD IS GROWING There has been a dramatic shift in investor demand for income solutions in recent years, with an increasing number of Canadians looking for income-oriented investments. This is the result of a number of factors including an aging population and the perception that income-oriented investments seem to be safer. Yet today s low interest rates have many income-oriented investors facing difficult choices. To achieve higher yield may require looking beyond traditional sources of income but this can mean being exposed to more risk. On the other hand, traditional income options, such as Government of Canada bonds, have pitfalls of their own. Given the current interest rate environment, there is no guarantee that these investments will keep pace with inflation, potentially resulting in negative real rates of return. To tackle these challenges, your plan members may want to consider a strategic mix of diversified incomeoriented investments. This mix could include traditional, income-generating asset classes, as well as those offering higher yields. Combining these asset classes can help plan members participate in an income-oriented investment while managing their overall risk. Sun Life Granite Managed Income Portfolios are designed to provide your plan members with income-oriented solutions. These portfolios offer: INCOME REQUIREMENTS Sun Life Managed Income Portfolio 40% Sun Life Managed Enhanced Income Portfolio 50% 50% A choice of two portfolios based on your plan member s long-term needs and risk tolerance. 60% Deep investment expertise. RISK PROFILE Broad diversification to generate a consistent level of income for the funds. Equities Bonds Strategic asset mixes for the funds are as of April 1, 2015 and are subject to change at any time without notice. SUN LIFE GLOBAL INVESTMENTS 2

3 CHOICE Crafted by Sun Life Global Investments with skillful attention to detail, Sun Life Granite Managed Income Portfolios are designed to provide complete income-generating solutions. SUN LIFE MANAGED INCOME PORTFOLIO SEGREGATED FUND Intended for plan members who are more conservative, this fund consists primarily of holdings in higher-quality fixed-income funds, as well as income-generating equity mutual funds and exchange-traded funds Canadian bonds 25% Corporate bonds High yield securities * Emerging markets debt Global REITs Canadian equity Infrastructure 30% Global equity 2.5% 2.5% SUN LIFE MANAGED ENHANCED INCOME PORTFOLIO SEGREGATED FUND Designed for income-oriented investors with a higher tolerance for risk, this fund is more heavily weighted in income-generating equity mutual funds and exchange-traded funds, as well as higher-yielding fixed-income categories like emerging markets debt and high-income bonds % 5% 13% 15% 20% 15% Corporate bonds High yield securities * Emerging markets debt Global REITs Canadian energy Canadian equity Infrastructure Global equity Strategic asset mixes for the funds are as of April 1, 2015 and are subject to change at any time without notice. *Investments made in debt securities that are rated non-investment grade (below BBB) or other securities considered to be high yield. 3 SUN LIFE GLOBAL INVESTMENTS

4 DEEP INVESTMENT EXPERTISE GLOBAL R E ACH At Sun Life Global Investments, we have our finger on the pulse of global trends and market conditions giving us the ability to deliver some of the best investment ideas from around the world direct to plan members. We do the research for you. Sun Life Global Investments is part of Sun Life Financial, a global leader in asset management with: 150 years of investing experience and a presence in 26 countries around the world Over 200 investment professionals and $808 billion* in assets under management Deep and established relationships with some of the world s best asset managers who oversee $100 billion* in assets for Sun Life Financial * As of June 30, 2015 in Canadian dollars. DEDICATED PORTFOLIO MANAGEMENT Sun Life Granite Managed Income Portfolios are crafted in-house by the Sun Life Global Investments Portfolio Management Team. The team is dedicated to building investment solutions with best-in-class managers for each asset class, and actively manages these portfolios to take advantage of different market environments. The team has access to a wealth of global resources including: Sun Life Financial s International Investment Centre (IIC), an independent investment consulting team, which has relationships with over 100 asset managers around the world. The IIC provides manager and fund selection recommendations to the Portfolio Management Team, and also regularly monitors the managers and funds selected. Sun Life Financial s internal investment teams, including the largest private fixed income participant in North America, provide another layer of support that includes market intelligence, trade execution for the portfolios and assistance in developing investment strategies. SUN LIFE GLOBAL INVESTMENTS 4

5 DISCIPLINED INVESTMENT PROCESS The Sun Life Global Investments Portfolio Management Team follows a disciplined, four-step investment process to build and manage each portfolio. RISK MANAGEMENT Portfolios are diversified by level of risk. To minimize individual management risk, the portfolios use multiple investment managers with expertise in each of the various asset classes. In addition the funds have varying investment and manager styles. 01 STRATEGIC ASSET ALLOCATION Each portfolio s strategic asset mix is constructed by determining the percentage to be invested in each asset class depending on the given risk tolerance and income objectives FUND/MANAGER SELECTION The team takes advantage of its global relationships to conduct a rigorous selection process. This results in access to some of the best asset managers and funds from around the world, which helps reduce manager specific risks. TACTICAL ASSET ALLOCATION Market conditions are assessed on an ongoing basis to tactically adjust the asset mix and take advantage of potentially attractive opportunities from a risk adjusted and capital preservation perspective. Tactical shifts are gradual and are made within pre-determined guidelines. 04 PORTFOLIO MONITORING AND REVIEW The underlying funds and their portfolio managers are continually assessed and monitored to ensure the portfolio s objectives are met. 5 SUN LIFE GLOBAL INVESTMENTS

6 BROAD DIVERSIFICATION Sun Life Global Investments has a rigorous manager selection process that closely examines track record, risk management, organizational structure, strength and strategy, investment philosophy and experience. Only after this thorough review process is a manager chosen to represent an asset class within Sun Life Granite Managed Income Portfolios. Keeping in mind that all managers are not experts in all asset classes, each fund invests in a mix of underlying funds and/or exchange-traded funds (ETFs) managed by some of the best investment managers from around the world. DIVERSIFICATION IN NUMBERS 8 to 9 asset classes (including non-traditional) 7 best in class fund managers 8 to 9 underlying funds (using both active and passive management) AN ASSET CLASS FOR EVERY MARKET ENVIRONMENT Whether the economy is expanding or contracting, there are investment vehicles available to help our portfolios achieve their investment objectives. ASSET CLASS ASSET CLASS DEFINITION KEY FEATURES HIGH YIELD SECURITIES EMERGING MARKETS DEBT GLOBAL REAL ESTATE INVESTMENT TRUSTS (REITs) INFRASTRUCTURE Corporate bonds rated below investment grade (below BBB) Fixed income securities of governments and corporations in developing markets Publicly listed closed or open-ended trusts that hold primarily income producing real estate assets Long-lived physical assets that provide essential services to industry and society Generally provide higher yield, and potential for capital appreciation Over 50% of the market is in the U.S. Generally higher yield than stable developed markets EM corporate bond issuance is now outpacing sovereign debt issuance Steady, predictable cash flow, as they typically pay out monthly or quarterly Strong oversight on REITs leading to higher investment security Provide predictable cash flows for long periods of time Infrastructure is key to a growing economy, and can provide inflation protection SUN LIFE GLOBAL INVESTMENTS 6

7 A MULTI-MANAGER APPROACH Each portfolio invests in a mix of underlying mutual funds and/or exchange-traded funds (ETFs) managed by some of the best investment managers from around the world. ASSET CLASS FUND SUB-ADVISOR/MANAGER CANADIAN BONDS Sun Life MFS Canadian Bond Fund MFS Investment Management CORPORATE BONDS ishares iboxx $ Investment Grade Corporate Bond Fund BlackRock Asset Management HIGH YIELD SECURITIES RBC Global High Yield Bond Fund Sun Life NWQ Flexible Income Fund RBC Global Asset Management NWQ Investment Management EMERGING MARKETS DEBT RBC Global High Yield Bond Fund RBC Global Asset Management GLOBAL REITS Sentry REIT Fund Sentry Investments CANADIAN ENERGY Dynamic Energy Income Fund 1832 Asset Management L.P. CANADIAN EQUITY Dynamic Equity Income Fund 1832 Asset Management L.P. INFRASTRUCTURE Sun Life Sentry Infrastructure Fund Sentry Investments GLOBAL EQUITY Guardian Global Dividend Growth Fund Guardian Capital Note: Other funds may be tactically added. 7 SUN LIFE GLOBAL INVESTMENTS

8 insight to build investments that work SUN LIFE GLOBAL INVESTMENTS Sun Life Global Investments brings together the strength of one of Canada s most trusted names in financial services, Sun Life Financial, with some of the best asset managers from around the world to offer a lineup of world-class investment solutions. With a focus on risk management, our rigorous selection and monitoring process provides access to leading asset managers who use insight and innovation to manage high quality investment solutions. Our unique insight into defined contribution plan member trends and investment behaviour helps us build solutions aimed at meeting their long-term financial goals. For more information contact: PAT LEO Director, Institutional Business Development Ontario and Western Canada pat.leo@sunlife.com ANNE MELOCHE Regional Vice-President, Institutional Business Quebec and Eastern Canada anne.meloche@sunlife.com Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. Sun Life Granite Managed Income Portfolios are segregated funds of Sun Life Assurance Company of Canada, managed on a sub-advisory basis by Sun Life Global Investments. Sun Life Global Investments (Canada) Inc., MFS Institutional Advisors, Inc., and MFS Investment Management Canada Limited are members of the Sun Life Financial group of companies. Sun Life Global Investments (Canada) Inc., FOR INSTITUTIONAL USE ONLY