Monitored Target Date Fund Program 2 Overview The Monitored Target Date Fund Program 2 ( MTDFP 2 ) is an investment solution consisting of a series of Standard Life Target Date Funds ( TDFs ) and a pre-set à la carte menu of funds. The TDFs in MTDFP 2 are index funds, each with a specific maturity date. MTDFP 2 includes monitoring of the investment solution as described below. Program details 01 Pre-set TDFs 1 The pre-set Standard Life TDFs asset allocations used in MTDFP 2 were established using modern portfolio theory. These funds were designed to suit the specific needs of investors with different time horizons resulting in a variety of suitable asset mixes, where equity exposure will be gradually reduced as the maturity date of the fund approaches. The funds reflect a range of equity exposure from 30% to 80%. Using a prudent and disciplined approach, a sound combination of index funds was selected from our existing Quality & Choice Investment Program ( Q&C ) to populate the TDFs asset composition. 02 À la carte menu 1 The pre set à la carte fund menu under MTDFP 2 offers an alternative option to members who prefer to build and maintain an investment portfolio of their own. The pre-set à la carte roster offers an optional asset rebalancing service which, if selected by the member, automatically adjusts their asset mix on a scheduled basis (once every quarter), in order to keep the member s assets in line with their selected investment instructions. 1 The Standard Life Assurance Company of Canada does not suggest nor recommend which investment option a member should select, whether it is a pre-set TDF fund or a personal investment under the à la carte selection. Monitored Target Date Fund Program 2 Overview 01/06
03 Monitoring Our fund monitoring process is an integral component of the program; the investment solution is thoroughly monitored, at minimum, on an annual basis to ensure that there is no deviation in the program s investment objective. Standard Life may, at its own discretion, replace, remove or add investment funds and/or change asset mixes. For à la carte, this would result in a change to the investment offering, the investment instructions for future contributions and would trigger an adjustment to the member holdings. MTDFP 2 is monitored as follows: All pre-set TDFs and à la carte funds are selected from Q&C and as such are subject to the Q&C governance process. Should a fund be removed from Q&C, this would also result in its eventual removal from MTDFP 2. The timing of said fund removal from the MTDFP 2 offering will be at the sole discretion of Standard Life. We will also review the funds of the solution, on an annual basis, or more frequently as decided by Standard Life in response to exceptional investment circumstances. This is done with respect to each fund s role in the overall investment strategy whether under the à la carte fund selection or the pre-set TDFs. This means Standard Life will monitor the fund roster and preset TDFs to ensure they remain in line with the overall objectives of MTDFP 2 as stated in this overview, and will remove, replace, or add funds as it deems necessary. If there is a change to the investment offering, the assets accumulated in the investment fund or funds affected will be adjusted 2. This includes any associated fees. The Standard Life Investment Program Team, in compliance with the approved Investment Governance Committee guidelines and procedures, will handle all monitoring mentioned above. As far as it is within Standard Life s control, we will give the sponsor, advisor and member advance notice of any replacement, removal or addition of a fund, or of a change to asset mixes. Standard Life will provide a Report on Compliance Standards which outlines the standards applied in the course of monitoring activities undertaken during the year to ensure that MTDFP 2 is administered in compliance with the investment objectives of the program. The Report on Compliance Standards can also help you assess your level of compliance with respect to the guidelines for a Capital Accumulation Plan (CAP). 2 Adjustments may include, but are not limited to: (1) the liquidation of units or assets in an investment fund and the application of the liquidation proceeds towards the purchase of units or the acquisition of assets in another fund or funds, which may have higher or lower fees; and (2) the rebalancing of a member s holdings in line with the new mix determined by The Standard Life Assurance Company of Canada. If there is any change to the investment offering, the investment instructions for future contributions would also be adjusted accordingly. Monitored Target Date Fund Program 2 Overview 02/06
Investment objective The investment objective of the TDF option in MTDFP 2 is to aim to provide long-term capital growth and return. Each TDF is designed for members with an investment time horizon which is set to a specific target date. It provides a simple, but generally complete solution for less experienced investors with a more conservative than average tolerance to risk 3. The objective of the selection of funds chosen by Standard Life under the à la carte option is to make available a selection of actively-managed investment funds with which the member can build a custom portfolio, and that aim to deliver returns that would mirror (or reflect) the underlying market or asset class they represent 3. Provide broad asset class representation Funds chosen for each asset class under MTDFP 2 represent the market in which they are invested. Asset allocations for the pre-set TDFs were developed using market indices. Subsequently, the selected funds should mirror (or reflect) the returns of the underlying index. 3 TDFs (including MTDFP 2) include segregated funds which value fluctuates with the market, and there is no guarantee that the objectives will be met. The selection of à la carte funds, a TDF or MTDFP 2 does not provide any guarantee that the program will provide sufficient income at retirement. Monitored Target Date Fund Program 2 Overview 03/06
Investment strategy The investment strategy of the pre-set TDFs under MTDFP 2 will be based on the following: TDFs invest in a mix of underlying passively-managed index funds. In order to reflect the evolving risk profile of members as they approach their target retirement date, the TDFs are rebalanced on a quarterly basis to their target asset allocations and these target asset allocations are then gradually realigned (on an annual basis) towards a more conservative investor profile. Standard Life may at any time, decide to add or replace any of the underlying funds of a TDF in order to modify the asset allocation of each TDF, or to ensure that the underlying fund still meets all of the governance requirements of Q&C. With their effective design and rigorous monitoring, TDFs may go a long way in providing peace of mind 3 to plan sponsors and their members with respect to the investment strategy, given that the portfolio risk decreases as retirement gets closer. Investable universe MTDFP 2 funds (including TDFs, their underlying funds, and the funds in the à la carte menu) are selected from Q&C. These TDFs, their underlying funds and the à la carte funds are subject to the review of the Investment Program Team. Fixed Income allocation The pre-set TDFs fixed income allocation consists of a passively-managed bond index fund. Canadian Equity allocation The pre-set TDFs Canadian equity allocation consists of a passively-managed capped equity index fund. Foreign Equity allocation The foreign component of the pre-set TDFs is comprised of a U.S. equity index fund and an International equity index fund, both passively-managed. Change history Date Reason for change May 23, 2013 International Equity Index Fund (SLI) was renamed the International Equity Index Fund (BlackRock) May 30, 2013 Addition of Target Date 2055 Index Fund (Standard Life) Monitored Target Date Fund Program 2 Overview 04/06
Monitored Target Date Fund Program 2 Target Date Funds: Target Date 2055 Index Fund (Standard Life) Target Date 2050 Index Fund (Standard Life) Target Date 2045 Index Fund (Standard Life) Target Date 2040 Index Fund (Standard Life) Target Date 2035 Index Fund (Standard Life) Target Date 2030 Index Fund (Standard Life) Target Date 2025 Index Fund (Standard Life) Target Date 2020 Index Fund (Standard Life) Target Date 2015 Index Fund (Standard Life) Retirement Index Fund (Standard Life) Overview of TDFs % of investments 100 80 60 40 20 0 45 40 35 30 25 20 15 10 5 0 Years to retirement Canadian Bond Index Fund (SLI) Canadian Equity Capped Index Fund (SLI) US Equity Index Fund (SLI) International Equity Index Fund (BlackRock) Between each 5-year period, the target asset allocation moves in a straight line (linear interpolation). Monitored Target Date Fund Program 2 Overview 05/06
The à la carte funds The à la carte group of funds is intended to offer the investor a complementary set of products. For more detailed fund information, please consult the Standard Life Morningstar fund sheets. Guaranteed Investment vehicles: Daily Interest Accumulator (DIA) 1 year Compound Interest Accumulator (CIA) 2 year Compound Interest Accumulator (CIA) 3 year Compound Interest Accumulator (CIA) 4 year Compound Interest Accumulator (CIA) 5 year Compound Interest Accumulator (CIA) Canadian Equity: Canadian Equity Capped Fund (SLI) Core US Equity: US Equity Fund (SLI) Core International Equity: International Equity Fund (SLI) Core Fixed Income: Canadian Bond Fund (SLI) Core Important information: Please note that any reference to a change to a monitored investment program does not include changes to the Quality & Choice Investment Program which are subject to the communication protocol found in the most recent Management Report. www.standardlife.ca The Standard Life Assurance Company of Canada Standard Life Assurance Limited GE13161B GS 09-2013 PDF only 2013 Standard Life 06/06