University of Northern BC Investment Presentation

1. University of Northern BC Investment Presentation

2. Agenda • Defined Benefit vs Defined Contribution Plan • Mutual funds vs Segregated funds • What is risk? • Relationship between risk & return • Investment management styles • Choosing your funds • Investment tools • Sun Life Financial services

3. DB vs. DC- What’s the difference? • Defined Contribution Pension Plan (DCPP): • One of the more popular pension plans in Canada • The contributions are “Defined” known today – we know how much you contribute to the plan • The sum of money you will have in retirement will depend on much is contributed and how you choose to invest the money • Defined Benefit Pension Plan (DBPP): • The benefit you receive at retirement is based on a formula so the benefit at retirement is “Defined” • The dollars to fund the retirement can vary based on how the money is invested • The investments are managed by the sponsor of the plan

4. DB vs. DC- What’s the difference? DB DC Unpredictable; based on DC account value and interest or investment returns after retirement Pension Benefit Predictable; based ondefined formula Company Contributions Defined % of employee pensionable earnings Variable Investment Decisions Made by company Made by employee Investment Risk Company assumes risk Employee assumes risk Lump sum value of earnedpension Termination Value of retirement account

5. Mutual funds vs. Segregated funds • Segregated Funds are typically investment options available through insurance companies • Mutual funds and segregated funds combine money from a large number of investors and these assets are invested and controlled by a professional money manager • The monies in the segregated funds offered in your plan are pooled together and invested in the underlying mutual fund • Segregated funds are held in trust for you and are kept separate from the insurance company's assets

6. What is risk?

7. Determining your risk profile • Risk tolerance is the degree to which you are comfortable with: • Volatility of annual returns • Likelihood and size of negative returns • In the long term: • Higher returns typically come from taking more risk, but • Need to be able to sleep comfortably at night? • The risk required to achieve your goals: • What is my investment time horizon? • What are my retirement income expectations? • What is the value of additional sources of potential retirement income?

8. Two different risks need to be managed • Volatility of short term performance • Assess your “risk tolerance” • Diversify your portfolio to address market risk • and • 2. Longevity Risk • Risk of failing to accumulate sufficient assets to build desired pension • Not having sufficient assets to pay your desired pension for life

9. When to re-evaluate your risk tolerance • Major life events such as: • Marriage or divorce, • Children are born, go to university, leave home, (return home?) • Debt levels change or net worth changes considerably • Inheritances • Death of a spouse • As your investment time horizon to retirement shortens • If your tolerance for risk changes for any other reason

10. 65 91 95 Retirement 50% chance one spouse will live to age 91 25% chance one spouse will live to age 95 Longevity risk Source: Canadian Institute of Actuaries – 1994 Uninsured Pensioner Mortality Table Projected to 2020.

11. Investments – Risk vs. Return • Guaranteed • Guaranteed interest during fixed term • Less long-term growth potential Canadian, US, & Foreign Equities High • Money Market • Government treasury bills (T-Bills) • Less long-term growth potential “Balanced Funds” • Bonds (Fixed Income) • Promise to repay debt • Pays a rate of interest • Government and corporate Return • Equities (Stocks) • Share in company profits • Canadian, U.S. or Foreign • Greater long-term growth potential Bonds • Balanced Funds • “One-stop” shopping • Automatic diversification Money Market Low Guaranteed Funds Low High Risk

12. Growth of $10,000 (June 1995 – June 2010) $50,000 $40,000 $ 34,583 $ 28,893 $30,000 $20,000 $ 17,120 $ 13,291 $10,000 $0 Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Consumer Price Index DEX 91 - Days T - Bill Index DEX Universe Bond Index S&P/TSX Composite Index

13. Investing in volatile markets Be patient and don’t panic • Corrections are a normal part of the market. Markets eventually recapture losses, reaching and surpassing former levels. This can present opportunities for long-term investors Work with your Financial Advisor • Working with an advisor who is focused on helping you achieve lifetime security. Consumers with well-balanced, disciplined investment plans, who have taken the risk of market volatility into account when creating their investment plans, should have minimal impact on long-term goals Diversify • A diversified portfolio with a variety of investments, can carry less risk • During market volatility, members with proper asset allocation and disciplined investment plans will be impacted less by short-term events

14. Ways you can diversify Asset Class Manager Style Foreign Markets Sector Diversify your investments • Diversification: holding different types of investments in your portfolio • Lower your overall risk by:not putting all of your eggs in one basket Allowed 100% foreign content

15. The cycle of market emotions Point of maximum financial risk Euphoria Anxiety Thrill Denial Excitement Fear Optimism Desperation Optimism Panic Relief Capitulation Hope Despondency Depression Point of maximum financial opportunity Source: Westcore Funds / Denver Investment Advisers LLC

16. Investment Styles

17. Investment Manager approaches Active Objective is tooutperform a market indexbased on research of current market conditions and company prospects (actively buys and sells securities in individual funds) Passive/Index Simply buys and sells assets tomatch characteristics of an index, fundperformance should be similar to the index, i.e. S&P TSX Fund Manager applies an investment “style” to their approach Fund Management Fees tend to be lower than an Active Fund Manager

18. Investment styles Value Focuses on stocks that a fund manager thinks are currentlyundervalued in price and will eventually have their worth recognized by the market Growth Believes that the single most important thing driving stock prices is rapidlyrising corporate earnings-- and that's what they look for If the manager is right, the company’s stock will increase in price as the company achieves business and earnings growth If the manager is right, the stock will increase in price as others in the market recognize the true value of the stock

19. Investment styles GARP Growth at a reasonable price - looks for stocks of growth companies that they canbuy for a reasonable price Core Fund manager includes both growth and value styles – objective is to not allow any one style overweight the other By not allowing one style to overweight they maintain a neutral position This is a combination of value and growth investing

20. Choosing your funds

21. my money- Investment Risk Profiler • Assess your personal risk tolerance by completing the investment risk profiler: • online • paper-based version

22. Investment Risk Profiler Example: A score of 36 to 85 points = Moderate 15% International Equity 10% Money Market 15% U.S. Equity 40% Fixed Income 20% Canadian Equity

23. Your investment fund choices * Fund Management Fees as at August 31, 2010. FMF for this plan are expressed as an annualized percentage, and exclude applicable sales tax as of July 1, 2010 Asset Class Fund Name Risk Management Style FMF* Guaranteed/ Money Market • Sun Life Financial Money Market • Sun Life Assurance 1,3,5 Year Guaranteed Low Core N/A 0.39% N/A Bonds • BlackRock Bond Index • PH&N Bond Low – Moderate Universe Universe 0.44% 0.66% Balanced • Bonavista Balanced • Beutel Goodman Balanced • McLean Budden Balanced Growth Moderate Value Value Growth 1.55% 0.73% 0.64% Canadian Equity • BlackRock S&P/TSX Composite Index • Beutel Goodman Canadian Equity • McLean Budden Canadian Equity Growth • McLean Budden Canadian Equity • Beutel Goodman Small Cap Moderate – High High Core-GARP Value Growth Core-GARP Value 0.45% 0.73% 0.64% 0.65% 0.74% U.S. Equity • BlackRock U.S. Equity Index • CI American Value • McLean Budden U.S. Equity Moderate – High Core-GARP Value Core-GARP 0.45% 1.25% 0.71% Foreign Equity • McLean Budden Global Equity Moderate – High Core-GARP 0.67%

24. 20% 20% 30% 30% 25% 25% 25% 25% Rebalance to match your risk tolerance Current Asset Mix Target Asset Mix Back to target asset mix 40% 15% 20% 25% Sell Bonds Buy Equities Rebalancing strategy

25. Investment Tools

26. Getting information about your funds (Morningstar®) • Morningstar can be accessed by selecting Investment Performance from the Accounts menu

27. Getting information about your funds (Morningstar®) • Investment Information • Capital market performance • Individual fund performance • Investment style, fund and manager updates Portfolio X-Ray • Analyze different combinations of funds as a single portfolio; including the effect of asset allocation changes to the portfolio • Fund Compare • Compare and analyze funds in your plan with the full list of available funds • Performance Reports • Generate investment performance reports for your plan’s funds

28. Investment Information

29. Morningstar Portfolio X-Ray

30. Morningstar Fund Compare

31. Performance Reports

32. Sun Life Financial Tools & Services

33. my money Retirement Planner If you’re not sure how much money you need to set aside for your desired lifestyle in retirement, the my money Retirement Planner can help The planner lets you determine how much you need to save now to provide you with your desired income level in retirement. You can adjust a number of variables as they change over time by updating your calculations in the retirement planner. **The Retirement Planner is one of many tools that you can use, in planning for your retirement, it does not take the place of a real financial planner/advisor**

34. Additional on-line tools to help • Planning Tools • Withdrawal Calculator • Capital Gains vs. RRSP Calculator • Mortgage vs. RRSP Calculator • RRSP Loan Calculator • Non Resident Tax Calculator • Retirement Tools • Annuity Premium Calculator • Old Age Security Calculator • Registered Retirement Income Fund (RRIF) Calculator

35. Keeping you involved Internet www.mysunlife.ca Customer Care Centre 1-866-733-8612 • Receive up-to-date account balances • View transaction history • Make investment changes • Link directly to investment reports • View online member statements • 24 hour automated phone account access • Representatives available every business day (8 am to 8 pm ET) • Account updates • 150 languages supported

36. Keeping you involved Read your personal statements • Quarterly • Mailed to your home • Available online • Easy to read • Personal rates of return • Summary of all plans • Transaction history

37. Your action plan • Use the Investment Risk Profiler to determine your recommended portfolio allocation • Determine your investment approach • Use the Retirement Planner to determine your required savings level to meet your retirement goals • Make your investment decisions • Monitor your savings and investments • Talk to a Financial Advisor

38. Thank-you!