Welcome! You ve come to the right place to learn more about a great education savings plan!

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1 Welcome! You ve come to the right place to learn more about a great education savings plan! As a parent you always want the best for your child and want to provide them the tools to help them have a successful future. Giving them an opportunity to pursue a higher education is a gift that will last a lifetime, a gift that can never be taken away from them. Heritage Education Funds is one of Canada s leading providers of top performing fixed income RESPs, and we have over 46 years of expertise behind us in helping families from coast to coast. To date Heritage has over $2 billion in assets under management, and has paid out more than $80 million in Educational Assistance Payments (EAPs) in 20 alone, resulting in over $700 million to date. We are proud to be assisting Canadian families who value higher education for their children and would like to thank you for inquiring about us today! Talk to a Heritage Representative today! Our experienced sales professionals can customize your RESP to your financial needs and have the expertise behind them to help guide you through your saving process. We know you have a hectic schedule, so we make it easy for you by coming to meet with you in the comfort of your own home, or at a convenient location for you. We provide free consultations, and no obligation is required. Visit our Contact Us page online to find your local representative. Jason Maguire President Follow us to learn more: Heritage RESPs are offered by Prospectus only. Heritage Education Funds is the trade name of the Heritage Education Funds Inc.

2 RESP GUIDE Registered Education Savings Plan Save towards your child s post-secondary education and find out how the government can help you pay for it. Heritage Education Funds RESPs are offered by Prospectus only. Heritage Education Funds is the trade name of Heritage Education Funds Inc.

3 OUR STRUCTURE Heritage Educational Foundation A Canadian company with over $2.8 billion in assets under management, as at September 30, 202. Heritage Education Funds Inc. A Canadian company with almost 50 years of RESP expertise, helping families from coast to coast. BENEFICIARIES AND SUBSCRIBERS Over 400,000 Children Parents Grandparents Other family members and friends THE HERITAGE EDUCATIONAL FOUNDATION A not-for profit Canadian corporation that provides professional administration of Subscribers contributions and government incentives The Foundation has returned over $907 million in Savings and Educational Assistance Payments (EAPs) to students and parents since inception Over $425 million in government incentives collected for Subscribers to date Investments or contributions are administered following the guidelines of National Policy 5 and invested in lower risk vehicles like federal, provincial and municipal bonds and Guaranteed Investment Certificates Governed by a Board of Directors HERITAGE EDUCATION FUNDS INC. Distributor of Registered Education Savings Plans (RESPs) and Education Savings Plans (ESPs) Home Office in Toronto, Ontario BRANCH OFFICES Locations across Canada Provide local Subscriber service and support SALES REPRESENTATIVES Registered Sales Representatives provide professional RESP expertise, enrollment information, ongoing support and services

4 KEY PARTNERS Key Business Partners Depository Scotiabank Commercial Banking Centre 625 Cochrane Drive, Suite 200 Markham, Ontario, L3R 9R9 Registrar Heritage Educational Foundation 2005 Sheppard Avenue East, Suite 700 Toronto, Ontario, M2J 5B4 Trustee and Custodian RBC Investor Services Trust RBC Centre 55 Wellington Street West, 2 nd floor Toronto, Ontario, M5V 3L3 Auditors KPMG LLP (Chartered Accountants) Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, Ontario M5H 2S5 External Legal Counsel McMillan LLP Brookfield Place 8 Bay Street, Suite 4400 Toronto, Ontario, M5J 2T3 Portfolio Advisor Scotia Asset Management L.P. P.O. Box 85 One Queen Street East, Suite 200 Toronto, Ontario, M5C 2W5 Portfolio Advisor CIBC Wood Gundy 8 Bay Street, Suite 600 Toronto, Ontario, M5J 2VB Portfolio Advisor UBS Investment Management Canada Inc. 54 University Avenue Toronto, Ontario, M5H 3Z4 Portfolio Advisor Yorkville Asset Management Inc. 55 University Avenue, Suite 704 Toronto, Ontario, M5J 2H7 Insurance Provider Sun Life Assurance Company of Canada 227 King Street S., P.O. Box 638, Stn. Waterloo Waterloo, ON N2J 4B8 Distributor Heritage Education Funds Inc Sheppard Avenue East, Suite 700 Toronto, Ontario, M2J 5B4 Acts as Depository for all Contracts, receives Contributions made by Subscribers, deducts Membership Fees and, if applicable, Insurance Premiums and remits the balance, together with any interest, to the Trustee who deducts Depository Fees and contributes the balance to the account maintained by the Trustee in trust for the Subscriber. Acts as Registrar for the Plans. Acts as Trustee of the Plans. Are the Auditors of the Plans. Is the External Legal Counsel for the Foundation. Manages investments within the Plans. Manages investments within the Plans. Manages investments within the Plans. Manages investments within the Plans. Provides optional life and disability insurance protection. Is the Distributor of the Plans. 2

5 The cost How much will it cost? It is estimated that the full cost of a 4-year undergraduate degree from a Canadian university in 203 could be over $58, Year of Birth Year of School Entrance Estimated Cost of Total Tuition for a 4-Year Program (At Home) Estimated Cost of Total Tuition and Accommodation for a 4-Year Program (Away from Home) $0,27 $58, $95,768 $50, $90,62 $43, $85,734 $36, $8,8 $29, $76,75 $22, $72,69 $6, $68,709 $, $65,00 $05, $6,50 $00, $58,99 $95, $55,066 $90, $52,0 $86, $49,296 $8, $46,642 $77, $44,3 $73,89 Today s average cost of a 4-Year program beginning in 202/203 $35,368 $60,206 According to the University of Toronto website an example of a cost of a 4-Year program that ended in 20/202 was $20,28 which covers basic tuition fees and compulsory incidental fees. Costs of accommodation can range between $5,500 and $5,000 or more depending on where you choose to live, whether you purchase a meal plan, or buy and prepare your own food. You already know what your options are Today families without an RESP have to: Borrow the money Withdraw funds from their personal savings, retirement funds or investments Mortgage their home Pay-as-they-go Let their child earn the money or depend on student loans People don t plan to fail, they simply fail to plan. 3 These amounts are calculated using the average annual increase in the total cost of tuition and the average annual increase in the cost of accommodation from 995/996 to 2006/2007 (5.69% and 4.53%, respectively). Source: Statistics Canada.

6 THE SOLUTION The Solution: A Registered Education Savings Plan (RESP) What is an RESP and Why Invest in One? EDUCATION SAVINGS VEHICLE GOVERNMENT INCENTIVES ELIGIBLE SCHOOLS LOWER RISK TAX BENEFITS ANYONE CAN START SAVING RESPs are education savings vehicles registered by the Federal Government (through the Canada Revenue Agency) Contributors are known as the Subscribers Children are known as the Beneficiaries Contributions are eligible for the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), as well as Provincial incentive programs. The student (Beneficiary) can study full-time or part-time in Canada or abroad. Eligible institutions include all universities, community colleges, CEGEP, private vocation schools, distance education and correspondence courses. Heritage Education Funds RESPs are invested in lower risk fixed-income securities investments such as bonds and GICs that earn a competitive return. If your child does not pursue post-secondary education, you may be allowed to withdraw and transfer the accumulated income of up to $50,000 of earnings per Subscriber from your RESP to your RRSP or spousal RRSP. Investment earnings on Contributions of up to $50,000 are tax-sheltered until withdrawn by the student and taxed at the student s tax bracket. Parents, grandparents, other family members and friends can all help to save towards a child s post-secondary education. Today many parents utilize government programs to help save towards their children s future education. What is the Canada Education Savings Grant (CESG)? Basic CESG: The Federal Government tops up your annual RESP contribution by 20%, up to $500 a year, per eligible child. Additional CESG: Qualifying families may receive up to 40% on the first $500 of annual RESP contributions. Both Basic and Additional CESG have a combined total lifetime maximum of $7,200 per eligible child. What is the Canada Learning Bond (CLB)? For qualifying families who open an RESP, a $500 CLB from the Federal Government is available to help save for a child s post-secondary education and will be deposited into the child s RESP. Annual CLB installments of $00 are also available in each subsequent year provided the family still qualifies. Total available CLB grant is up to $2,000 per child for a qualifying family. No contributions required to get CLB. Certain conditions apply. See Prospectus for full details. 4

7 Key RESP benefits The Key Benefits of Investing Inside an RESP vs. Outside an RESP You could gain over $3,539 more! Total Value Of Investment In 8 Years $96,354 The total value of investment may increase for those who qualify for CLB and/or provincial grants. Total Value Of Investment In 8 Years $64,85 $9,85 $7,37 $7,200 $37,07 Your total personal contributions over 8 years Compound income earnings on your investment Maximum CESG of $7,200 2 Income earnings on CESG $45,000 $45,000 Outside an RESP (NOT Tax-Sheltered) 6.60% Growth Inside an RESP (Tax-Sheltered) 6.60% Growth Start early. Invest often. Stay invested. $00,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $0,000 $0 Newborn Age at which contributions begin The earlier your child is enrolled in an RESP, the longer your savings have time to grow. Start saving today and benefit from the power of compound growth. RESP contributions CESG Income earned on RESP contributions Income earned on CESG 5 Both of these examples are based on annual contributions of $2,500 and exclude fees. The income that would be earned is assumed to be 6.60% gross per annum, compounded monthly, over 8 years. This assumption is based on the 5 year return of the DEX Universe All Government Bond Index as at December 3, 20 which is an index comparable to the investments made by the Heritage Plans. A marginal tax rate has been applied to the Non-RESP income earnings. Individual circumstances and actual results may vary. 2 This assumes the Basic CESG which is equal to 20% of the total annual contributions to a maximum of $500 per eligible child, per calendar year. Certain conditions apply. See prospectus for full details.

8 TWO TYPES OF RESPS Two Types of RESPs Individual (Self-Directed) RESP Group (Pooled) RESP Offered by: Banks, Trust Companies, Life Insurance Companies, Financial Advisors, Mutual Fund Companies, Heritage Education Funds (Impression Plan RESP). Scholarship Plan Dealers such as Heritage Education Funds Inc. Benefits: Net principal savings. Interest on net savings. Interest on government incentives. Net principal savings. Income on net savings. Income on government incentives. Key Differences: ) Attrition may not be available. 2) Enhancements may not be available. 3) A choice of lower risk returns or potentially riskier high returns may not be available. Please refer to the applicable Fund s prospectus to review other possible risks associated with such investment. 4) Insurance protection may not be available 4. 5) Some individual RESP providers may not participate in all government incentive programs. 6) Mutual funds in which RESPs are invested are subject to an annual Management Expense Ratio (MER) fee and other fees such as trustee, administration, Independent Review Committee (IRC), and account fees that are charged regardless of fund performance. The average Canadian fixed income MER is.69% 6. Mutual funds generally do not charge a Membership Fee; however, there may be a sales commission typically ranging from 0% to 6%, which is not returned. ) Attrition may increase your return. In 20, 0.6% of the total EAP came from attrition. 2 2) Enhancements 3 may increase your return. In 20, 0.3% of total EAP came from enhancements. 2 3) Lower risk investments such as municipal, provincial and federal bonds. Other investments include corporate bonds and principal protected notes. Please refer to the Heritage Plans prospectus to review other possible risks associated with your investment. 4) Optional life and disability insurance protection. 5 5) Access to all government incentives for which your child is eligible. 6) For the Heritage Plans, similar to an MER, an administration fee of 0.50% and portfolio advisory fee of 0.05% to 0.20% is charged annually. The IRC fees are compensated annually in the amount of $0,000 to each member, plus $2,000 per meeting attended. The Chair receives an additional $2,500 per year. The depository fee of $3.50 $0.00 is levied based on the contribution method chosen. A $00 Membership Fee per unit is deducted from early contributions. Up to 00% of the Membership Fees may be returned with Educational Assistance Payments, depending on the Scholarship Option selected. Membership Fees are not returned under the Self-Determined Option or if your Plan terminated prior to maturity. 3, 5 Attrition is the term that applies to the share of pooled income that remains in an RESP, after any Beneficiaries in the same age group, do not qualify for payments. For those Beneficiaries, the Principal is returned to the Subscriber, but the income that was earned on the Principal stays in the total asset pool, to be shared by Beneficiaries remaining in the pool. 2 Please refer to the Heritage Plans most recent prospectus for the Attrition and Enhancement rates of the past five (5) years. Attrition and Enhancements 3 are not available to Subscribers who select the Self-Determined Option at Maturity and continue in the Self-Determined Plan. 3 Discretionary payments (consisting of Membership Fee returns and enhancements) are not guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if it will make a payment in any year and how much the payment will be. 4 Some insurance companies who offer RESPs may provide life or disability insurance protection benefits (but most other providers do not). 5 Certain conditions apply. See Prospectus for full details. 6 Source: PalTrak ( ) 6

9 THE HERITAGE PLAN RESPs How do Heritage Plan RESPs work? SELF-DETERMINED OPTION (Self-Determined Plan, also known as Self-Directed or Individual Plan) LESS THAN 2 YR. PROGRAM Allows a minimum 3 week program of study in different educational institutions in Canada Pay-out Option Selection 80 days prior to Maturity (Maturity may be delayed or advanced by up to 2 years) 2 Years MATURITY YEARS OF RESP LIFETIME Acceptance of Enrollment Eligibility for CESG Contribution Period SCHOLARSHIP OPTION (Group Plan, also known as Pooled Plan) OPTION : Suitable for 2 YR. PROGRAM OPTION 2: Suitable for 3 YR. PROGRAM OPTION 3: Suitable for 4 YR. PROGRAM Allows up to 4 one-year programs of study in different educational institutions including full-time distance education or correspondence courses. 7 Student must enroll in a program of at least 3 consecutive weeks in Canada (studying no less than 0 hours per week for full-time or no less than 2 hours per month for part-time). Full-time programs at foreign universities will qualify for an EAP if they last at least 3 consecutive weeks. Programs at all other foreign educational institutions must last at least 3 consecutive weeks. Accumulated income may be withdrawn as taxable income by the Subscriber less an additional federal tax of 20% (2% federal and 8% provincial for residents of Quebec) or transferred to their RRSP or Spousal RRSP, up to a limit of $50,000 per Subscriber (subject to RRSP contribution room). 2 Certain conditions apply. See Prospectus for full details.

10 THE HERITAGE PLAN RESPs Pay-Out Options SELF-DETERMINED OPTION YOUR SAVINGS (NET OF FEES) RETURNED TO YOU TAX-FREE at the maturity of your plan. Can be used to fund st year of post-secondary education. You select the Option that meets your requirements. All of your earned income, government incentives and interest on government incentives (if applicable) paid to the Student, subject to tax. SCHOLARSHIP OPTION Used to fund 2 nd year of post-secondary education and beyond. Paid to the Student, subject to tax. SCHOLARSHIP OPTION 2 ONE PAYMENT OF: EAP (including gov. incentives and interest on gov. incentives) SCHOLARSHIP OPTION 2 2 TWO PAYMENTS OF: EAP (including /2 gov. incentives and /2 interest on gov. incentives) SCHOLARSHIP OPTION 3 2 THREE PAYMENTS OF: EAP (including /3 gov. incentives and /3 interest on gov. incentives) Your savings are returned tax-free, net of applicable fees. EAPs are taxed at the student s marginal rate which is typically minimal. Each EAP consists of a portion of government incentives, income earned on savings and government incentives, attrition 3 and enhancement 4. An amount equal to 25%, 50% or 00% of your Membership Fees 4 may be returned based on the Scholarship Option selected. Student must enroll in a program of at least 3 consecutive weeks in Canada (studying no less than 0 hours per week for full-time or no less than 2 hours per month for part-time), a full-time program of 3 consecutive weeks if studying at a university outside of Canada, or a program of 3 consecutive weeks if studying at an institution outside of Canada other than a university. Accumulated income may be withdrawn as taxable income by the Subscriber less an additional federal tax of 20% (2% federal and 8% provincial for residents of Quebec) or transferred to their RRSP or Spousal RRSP, up to a limit of $50,000 per Subscriber (subject to RRSP contribution room). 2 Certain conditions apply. See Prospectus for full details. 3 Attrition is the term that applies to the share of pooled income that remains in an RESP, after any Beneficiaries in the same group as your Beneficiary, do not qualify for payments. For those Beneficiaries, the Principal is returned to the Subscriber, but the income that was earned on the Principal stays in the total asset pool, to be shared by Beneficiaries remaining in the pool. Please refer to the Heritage Plans most recent prospectus for the attrition rates of the past five (5) years. 4 Discretionary payments (consisting of Membership Fees and enhancements to EAPs) are not guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if it will make a payment in any year and how much the payment will be. 8

11 heritage PORTfOLIO How Is My Money Invested? As per National Policy 5, the assets in the Heritage Plans are invested in various lower risk investments that earn a competitive and consistent return, including: Government Bonds (Federal, Provincial and Municipal) Guaranteed Investment Certificates (GICs) and similar debt obligations of a chartered bank Principal Protected Notes Corporate Bonds T-Bills Heritage Plan RESPs for the period ending September 30 th, 202 Heritage Plan RESPs - Asset Weightings 7.4% 2.9% 2.6%.9% Sector Allocations % of Market Value Provincial Bonds 38.0% Federal Bonds 37.2% Principal Protected Notes 7.4% Corporate Bonds 2.9% Bank Deposits/GICs 2.6% Short-term Investments.9% 38.0% 37.2% Heritage Plan RESPs Market Portfolio Returns (Net of Fees) 2 Portfolio Returns (Market) Year 3 Year 5 Year 0 Year 6.40% 5.73% 5.86% 5.94% 9 Source: Heritage Educational Foundation. 2 Investment returns have been calculated using market values and time-weighted cash flows during the periods. These returns are net of fees incurred by the Heritage Plans, including administration fees and advisory fees. As with all investments, we caution that past performance is not indicative of future returns.

12 PERFORMANCE MATTERS You want your child s savings to be invested wisely! Below is the hypothetical scenario of interst earned on $00/month over 8 years in non-resp savings vs. the Heritage Plan growth. $40,000 $35,000 $30,000 $25,000 $20,000 $5,000 $0,000 $6,994 Non-RESP Growth $2,472 $7,35 $3,320 $9,959 $26,409 Heritage Plan Growth $23,220 D C B A $5,000 $0 3% 4% 5% 6% ANNUAL RATE OF RETURNS 7% 8% Value of Investment after 8 years A The income that was paid out to Beneficiaries in the same age group and with the same number of units as the Beneficiaries whose Plans matured in Actual results will vary. B This represents 20% of your eligible contributions from the Canada Education Savings Grant program and may include additional incentives depending on your annual income. C The interest is calculated based on the amount of interest earned on the government incentives of Beneficiaries in the same age group for the period ending 20 which is equivalent to the rate of 4%, compounded monthly. Capital gains and losses earned on government incentives are paid out to Beneficiaries as part of their EAPs. Actual results will vary. D Attrition value is the term that applies to the share of pooled income that remains in the Heritage Plans after any Beneficiaries in the same group do not qualify for payments. For those Beneficiaries, the Principal is returned to the Subscriber, but the income that was earned on the Principal stays in the total asset pool, to be shared by Beneficiaries remaining in the pool. The attrition value illustrated here has been calculated as 0.35% of the EAPs paid out to Beneficiaries whose Plans matured in 2009 and who received all EAPs to which they were entitled. This percentage is based on the number of Beneficiaries not proceeding forward over the past 5 years and the average portion of income earned by them over the past 5 years. For a further explanation on how attrition applies to the Plan, and for the attrition rates over the past 5 years, please see the Heritage Plans most recent prospectus. This includes Income on Principal, CESG, attrition D, and interest on CESG for a Heritage Plan RESP where $00 per month was contributed over a period of 8 years. It is also based on Scholarship Option #3 where the Beneficiary completed 4 years of post-secondary education by 202. This total is provided for illustrative purposes only. The total amount that you will receive will differ, depending on the actual performance of the Heritage Plans. Additional amounts may be paid from the Enhancement Fund* as a top up to EAPs. * Discretionary payments (consisting of enhancements) are not guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if it will make a payment in any year and how much the payment will be. 0

13 Our Beneficiaries tell us how much having a Heritage RESP has meant to them : When I was about one year old, my parents decided to invest the money they received from their family allowance into an RESP. I was not aware at that early age of the efforts my parents had to make to put money aside for my future, despite their modest income. Thanks to all their efforts, I will graduate this spring and I will be able to sleep without a care because I will have no student loan debt. Thank you Mom and Dad. Valerie Michaud, Riviere-du-Loup, Quebec My parents thought well ahead in planning to pay for my post-secondary education. I am going to make my parents proud by making effective use of their money and having a great career (my goal is to become a pharmacist). I am very lucky to be a Heritage beneficiary. Shraddha Patel, Brampton, Ontario Growing up in a low-income family, I was raised to understand the value of money and work towards my own goals. Because of my Heritage RESP, I am halfway towards earning my degree to become a registered nurse. I cannot thank my parents enough for thinking about my education early in my life. Claire Horton, Fort Langley, B.C. When I graduate, I will feel so relieved to be debt-free. I truly feel for my peers who have to rely on loans to pay for their education and the worries this brings to their life. So thank you Dad and thank you Heritage for guiding me financially through my university career. Laura Campanaro, LaSalle, Ontario Thanks to Heritage and my grandparents, I am able to pursue my professional dreams and volunteer my time to help great causes. I am pursuing medicine through a Bachelor of Science Major in Biology and I couldn t have done it without my RESP! Jessica Schnerch, Winnipeg, Manitoba A Heritage RESP has given me the opportunity to pursue a post-secondary education without the constant worry of student loans. I am proud to say that I am about to accomplish one of many dreams (a B.A. in Sociology) but not without a thank you to my parents and Heritage. Cindy Yong, Calgary Alberta Having a Heritage RESP has allowed me to pursue an Honours Education degree. Since it is hard for me to get enough money through summer work, I can rely on Heritage to provide me with the support I need to pay my way through school. Courtney MacAdam, Thorold, Ontario Having a Heritage RESP has provided me with peace of mind and helped me stay focused on school and on the right path to achieve my goals. Sivanithy Granapandithan, Toronto, Ontario For more information please contact: Heritage Education Funds Inc Sheppard Avenue East, Suite 700, Toronto, Ontario M2J 5B4 Toll Free: Phone: Fax: CustomerCare@HeritageRESP.com 08E 0.2