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GUIDE TO INVESTMENT FUNDS

Canada Life Investment Funds

Lower Risk

Canada Life / Setanta Cash Fund

This Fund will invest in bank deposits and short-term financial instruments. The Fund seeks to provide modest returns in exchange for relative capital security. The maximum average duration of the Fund is 4.5 months, and the maximum duration of any one asset is 1 year. The Fund has a diversified exposure, with no more than 30% credit exposure to any one entity. The Fund is actively managed and consideration is given to the underlying credit worthiness of the financial institution, the return and the tenure of the deposit.

Canada Life / Setanta Fixed Interest Fund

This fund invests in government gilts predominantly from Eurozone countries. Returns, while typically modest, are significantly less volatile than equity returns. This type of fund will suit generally risk averse investors. Gilts (or bonds as they are often referred to usually in the case of non-Government related debt) are essentially a form of debt, like a loan. Governments and large corporations use bonds to raise money for capital expenditure. The investors or those who purchase the bonds are the lenders. Where bonds are held directly the investors receive payment for the loan usually in the form of an income (or coupon) and at maturity receive their original capital back. Where investment takes place within a fund, the value of the portfolio will rise and fall (as they are tradable securities), depending on a number of factors including interest rates and inflation.

Canada Life / SEI MoM Global Fixed Income Fund

This Fund aims to generate current income and exhibit principal volatility similar to that of the global developed fixed income market as a whole. The Fund's assets are diversified across specialist sub-advisers. Under normal market conditions, the Fund will invest at least 90% of its net assets in investment-grade fixed income securities and money market instruments listed or traded on Recognised Markets.

Canada Life / SEI MoM Opportunistic Fixed Income Fund

This Fund aims to generate current income consistent with the preservation of capital by investing primarily in global fixed income markets. Following a Manager-of-Managers approach, the Fund's assets are diversified across specialist sub-advisers. Under normal market conditions, the Fund will invest at least 90% of its net assets in investment-grade fixed income securities and money market instruments that are listed or traded on Recognised Markets.

Canada Life / Unitised With Profits Fund

The Unitised With Profits Fund smoothes investment returns so that the value of your investment does not fluctuate as much as the value of the underlying assets. You benefit from the security of capital guarantees that apply on specified dates and, as explained in more detail below, you also participate in investment, mortality and exit profits and losses arising in the fund. If you choose this option then the value of your policy is not directly related to the value of the assets that your money is invested in.

 

How does the Canada Life Unitised With Profits Fund work?

The Canada Life Unitised With Profits Fund is accessed through the following Investing Funds depending on which product you have chosen:

Product

Investing Fund
Advantage, Advantage Plus and the Self Directed Portfolio Canada Life Pension Unitised With Profits Funds
Approved Retirement Funds and Approved Minimum Retirement Funds Canada Life Retirement With Profits Fund
The Canada Life Access Savings Plan Canada Life Gross Life Unitised With Profits Fund

The Investing Funds above are all currently fully invested in the Canada Life Unitised With Profits Fund. The value of your investment does not move up and down in line with movements in the value of the fund. Instead, each year Canada Life declares bonus rates for each of these Investing Funds. Bonuses are declared net of management charges and will never be less than zero. The value of units in each fund is adjusted on a weekly basis to reflect the most recent bonus rate declared. The initial allocated value of your investment and the value of any bonuses declared are guaranteed at particular dates as explained in detail below. An additional bonus called a terminal bonus may be added to the value of your investment when you redeem your policy or when you switch funds out of any Canada Life Unitised With Profits Fund at the discretion of the company.

 

What assets are the fund invested in?

The Canada Life Unitised With Profits Fund is invested in equities, bonds, property, cash and any other assets that Canada Life considers appropriate from time to time. The proportion of the fund invested in each of the asset classes and the choice of individual investments within each asset class may vary over time at the discretion of the Board of Directors. The asset mix will normally be within the following ranges:

Equities and Property 20% - 60%
Bonds and Cash 40% - 80%

 

How are bonuses determined?

Each of the Investing Funds are currently 100% invested in the Canada Life Unitised With Profits Fund in which single and regular premium life and pensions contracts currently invest. Bonuses are declared taking account of investment, mortality and exit profits and losses and the financial condition of the fund. Mortality and exit profits and losses arise when benefits paid to exiting investors differ from the value of the underlying assets. These profits and losses are currently spread across all the Investing Funds. All bonuses may vary significantly over time and can be zero.

 

When do guarantees apply?

The dates at which you are guaranteed to get the full value of your units depend on the Investing Fund you are invested in as follows:

Canada Life Pension Unitised With Profits Funds

The guaranteed values are available at your specified normal retirement date.

If you choose to retire early then the guarantees apply provided that your chosen date of retirement is not earlier than five years before your originally specified retirement date subject to conditions below. If you retire after your specified retirement date, guarantees apply on every fifth anniversary of the specified retirement date subject again to the conditions below.

Any funds resulting from single premiums or fund switches into the Canada Life Pension Unitised With Profits Fund in the ten years before the date of retirement or funds resulting from increases to the regular premium (except in line with the indexation option) in the five years before the date of retirement will not benefit from the guarantees on retirement. Guarantees also apply on death.

Canada Life Retirement With Profits Fund

The guarantees apply on death. Guarantees also apply to regular income amounts in cases where the regular income taken in any year does not exceed 6.25% of the surrender value of the fund.

Canada Life Gross Life Unitised With Profits Fund

The guaranteed values are available on the 10th policy anniversary and every 5th policy anniversary thereafter and on death.

What happens if I disinvest from the fund at a time when the guarantees do not apply?

If you disinvest from an Investing Fund when the guarantees as specified above do not apply, then the value you get may be reduced by a factor, known as a Market Value Adjustment Factor or MVA, at the discretion of Canada Life. This will be applied in situations where bonus rates declared on your policy exceed the actual performance of the assets in the fund. In certain situations, this factor may significantly reduce the value of your policy and you may get back significantly less than you originally invested. This adjustment is needed to protect the value of the investments of policyholders remaining in the fund.

 

What restrictions apply to investing in the Unitised With Profits Fund?

 

Canada Life Pension Unitised With Profit Fund

Any single premium investment or fund switch made within ten years of your specified retirement date cannot be invested in the Pension Unitised With Profit Fund. Premium increases (except in line with the indexation option) in the five years before your specified retirement date cannot be invested in the Pension Unitised With Profit Fund.

Canada Life Retirement Unitised With Profits Fund

Premiums can only be invested in the Retirement With Profits Fund if this fund is selected at the commencement of the policy.

Canada Life Gross Life Unitised With Profits Fund

Single premiums can only be invested in this fund within five years of the commencement date of a policy. Fund switches into UWP are not allowed. Premium increases (except in line with the indexation option) can only be invested in this fund within five years of the commencement date of a policy. Please refer to the policy conditions for full and complete details of this fund.