Investments 101. Glossary of investment terms. Account balance. Asset allocation. Asset class. Asset mix. Beneficiary

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1 Investments 101 Glossary of investment terms As you navigate through your online Purolator site and your account at mysunlife.ca/purolator, refer to this one-stop guide for definitions of common financial terms. Account balance Your account balance is based on the previous business day s closing value of your account. You can find this under the balances selection on mysunlife.ca/purolator (my financial centre > Accounts > Balances) or through the Customer Care Centre at Asset allocation The way you divide your investment portfolio between the various asset classes. It is the most important way to diversify your investments, and diversification is the key to lowering your investment risk (by not putting all your eggs in one basket, so to speak). Target date Money market Bond/Fixed income Canadian equity U.S. equity International equity Global equity Asset mix Describes the proportion of your investment fund currently invested in each of the asset classes. For example, a fund might have an asset mix of 30 per cent Canadian equities, 30 per cent foreign equities and 40 per cent fixed income. Beneficiary The person(s), corporation, trust or charity named in writing by you to receive your plan death benefit.

2 Bond funds When you buy a bond (also known as fixed income securities), you are actually lending money to a company or the government. The borrower promises to pay back the amount of the loan, plus interest, according to a specific schedule. Bonds are usually less risky than stocks, but the market value of a bond, especially longerterm bonds, can go up and down as interest rates change. The Bond/Fixed income funds offered in your plan are: Bond/Fixed income PH&N Bond Segregated Fund TDAM Canadian Bond Index Segregated Fund Canada Revenue Agency (CRA) The federal government body with which plans must be registered for contributions to be tax-deductible. Formerly known as Revenue Canada or the Department of National Revenue. Canadian equity funds These funds invest primarily in stocks of Canadian companies. Because stocks have historically risen higher in value than other types of investments, they may offer the greatest potential for long-term growth. However, with stock prices fluctuating more than other types of investments, investing in stocks is also riskier. The Bond/Fixed income funds offered in your plan are: Canadian equity Beutel Goodman Fundamental Canadian Equity Segregated Fund CC&L Group Canadian Equity Segregated Fund Jarislowsky Fraser Canadian Equity Segregated Fund Compounding/Compound interest Interest credited to the investor at a set rate, on specified dates, and added to the original deposit to earn further interest essentially the ability of an asset to generate earnings from previous, reinvested earnings. Usually interest compounds annually or semi-annually. Daily cost averaging An investment strategy to minimize volatility and risk by investing equal amounts of a sum over regular intervals. This reduces the possibility of investing a large sum during a temporary dip in the markets. Defined contribution pension plan (DCPP) The DCPP is a plan to which both you and Purolator contribute. The pension benefit you receive on retirement depends primarily on how much you ve saved, as well as your investment returns. Your contributions are taxdeductible; tax on the investment returns you earn is deferred until you withdraw the money. At termination, retirement or death, you can transfer the account balance to one or a combination of the following (depending on your pension jurisdiction and your age): a locked-in registered retirement savings plan (RRSP), a locked-in retirement account (LIRA), an annuity, a Life Income Fund, cash (as per the plan rules) or a non locked-in vehicle (as per the plan rules). The funds must be removed from the DCPP by December 31st of the year in which you turn age 71.

3 Diversification Diversification is a strategy that helps reduce the risks associated with investing. When you diversify your assets, you spread them over a range of investments by choosing different funds or different types of investments to balance your risk exposure to any one investment. For example, investing in both bond and equity funds can spread your risk. You can spread your risk further by investing in different funds within each category. If you belong to a retirement plan that directs all of its investments to a single stock fund, you may want to vary your asset allocation in your personal portfolio to establish a broader blend of investments. Equity funds add an additional component of diversification for you since each fund contains a mixed portfolio of investments. By contributing to your group plan, your retirement contributions can be diversified in two ways. You re choosing from a mix of different funds available to you under your group plan, and each market-based fund contains a diversified portfolio of investments. Equity Investments that represent ownership in a company are called Equities. They are sometimes referred to as Stocks. Fees See Investment management fees and Short-term trading fees. Fixed income See Bond funds. Foreign equity funds These are funds that invest primarily in stocks of companies located outside of Canada, including the United States. As with Canadian equity funds, historically foreign equity funds offer greater potential for long-term growth, but can be riskier than other types of investments. Foreign equity funds allow for diversification in your portfolio. Canada s share of the world equity market is only about three per cent, so there are far more investment opportunities out-of-country than in. By diversifying your equity investments globally, you spread your portfolio over a greater percentage of the world market and may reduce your overall investment risk. The Canadian equity funds offered in your plan are: Foreign equity BlackRock EAFE Equity Index Segregated Fund BlackRock U.S. Equity Index Segregated Fund (Registered) Fiera Global Equity Segregated Fund MFS International Equity Segregated Fund

4 Guaranteed funds Guaranteed funds are investments offered by insurance companies. They are similar to Guaranteed Investment Certificates which are offered by banks and trust companies. When you invest in a guaranteed fund, you earn a set rate of interest that is guaranteed for a specific term, and you receive a promise from the insurance company to return your original contribution plus this interest at the end of the agreed upon term so it s a very low-risk investment. In many plans, there are a variety of terms available. The Guaranteed fund offered in your plan is: Guaranteed Sun Life Assurance 5-Year Guaranteed Fund Investment Management Fees (IMFs) IMFs pay for professional investment managers to select the underlying fund s investments and build the fund s portfolio. These fees also pay for keeping records of your account and member servicing costs. IMFs do not include applicable sales tax, operating expenses or any other embedded fees of the underlying fund. Locked-in As required by applicable pension legislation rules, these pension plan assets, such as in a DCPP, cannot be taken in cash. These assets must be used to provide you with an eligible lifetime retirement income. Locked-in money can only be used to purchase specific types of retirement income products as specified in the applicable pension legislation. Money market funds These are funds that invest primarily in short-term (less than one year) government treasury bills and corporate notes. Because they are short-term and issued mostly by the government or high-quality businesses, they are very low-risk and also earn a fairly low rate of return. The Money market fund offered in your plan is: Money market Sun Life Financial Money Market Segregated Fund Non-locked in Assets in a retirement and savings plan that can be withdrawn as cash, as opposed to locked-in assets. Registered retirement savings plan (RRSP) A savings vehicle for retirement. The plan must be registered with the Canada Revenue Agency. Contributions to an RRSP are tax-deductible, while income earned on those contributions is tax deferred until you withdraw the money. must be removed by December 31st of the year in which you reach age 71. Return on investment (ROI) As a means to measure performance, ROI measures the amount of return on an investment compared to its cost. The result is usually presented as a percentage. Risk and return When you invest your money, you expect it to grow and to generate a return on your investment. Risk is the complicating factor. Most investors think of risk as the possible loss of some, or all of their money. That is accurate. But, there s another type of risk. This is the risk that your investment returns will be lower than inflation and that your money will lose its purchasing power. For example, in 20 years $1,000 today will only be worth $375 if the rate of inflation is five per cent each year. You want your investment to achieve a return over and above the rate of inflation to make sure you have enough saved in the future.

5 Risk profile Your risk profile represents your personal tolerance for investment risk. RRSP See Registered retirement savings plan (RRSP). RRSP contribution limit Your RRSP contribution limit is indicated on the Notice of Assessment that you receive from the Canada Revenue Agency after filing your tax return each year. Segregated fund An investment in segregated funds is similar to an investment in mutual funds. Both types of funds combine money from a large number of investors and these assets are invested and managed by a professional fund manager. The assets in segregated funds are owned by the insurance company, but are segregated from its other assets. Neither the value of the assets nor the rates of return are guaranteed. Segregated fund assets are the assets of the insurance company but in cases where they were to declare bankruptcy, all segregated fund assets would be returned to the investors in priority over the insurance company s other creditors. Short-term trading Short-term trading (also known as frequent trading or timing the market ) is the practice where an investor makes multiple buying and selling transactions in an attempt to time market trends and boost returns to their account. However, these transactions affect all investors in the fund and can lead to an overall negative impact on the fund s performance. Sun Life Financial charges a two per cent fee when you move money into a fund followed by a move out of the same fund (other than the funds identified below) within 30 days. If applicable, the two per cent fee will be charged to your account the next business day after your transaction is processed. Note: this fee does not apply to guaranteed funds, directly held stock, money market funds or to deposits or withdrawals. In the event a member continues to engage in short-term trading, their trades may be delayed and their ability to move money online may be restricted. Stock See Equity. Target date funds A fund that is designed for investors looking to choose a single investment based on their time horizon (the date when they expect to need the money). Target date funds are created with differing maturity dates so investors can choose the fund that most closely matches their time horizon. By reducing the fund s equity exposure, the level of investment risk declines over the life of the fund so that the risk remains suitable for the funds maturity date. Your plan offers the BlackRock LifePath series of target date funds. Tax-sheltered A tax-sheltered plan, such as your DCPP and RRSP, provides a tax deferral on investment returns you earn on contributions made. This means that the recognition of income is postponed until it is withdrawn. For example, income earned in an RRSP is not taxable until it is withdrawn. Volatility A description of the range of up and down movements in the value of an investment. See Diversification as a strategy to mitigate volatility. For a more detailed glossary, you can visit mysunlife.ca/purolator. Once you have signed in, select my financial centre > Resource Centre > Glossary. Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. Sun Life Assurance Company of Canada, /16-al-cm sunlife_glossary_e_0516_cm