CSA and CCIR Joint Notice of Consultation on Enhanced Cost and Performance Reporting for Investment Funds and Segregated Funds

CSA and CCIR Joint Notice of Consultation
Draft Regulation to amend Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations Draft Amendments to Policy Statement to Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations Draft CCIR Individual Variable Insurance Contract Ongoing Disclosure Guidance Total Cost Reporting for Investment Funds and Segregated Funds April 28, 2022 Introduction The Canadian Securities Administrators (the CSA) and the Canadian Council of Insurance Regulators (the CCIR, together, the Joint Regulators or we), are publishing, for a 90-day comment period, proposed enhanced cost disclosure reporting requirements for investment funds and new cost and performance reporting requirements for individual variable insurance contracts or IVICs (referred to here as Segregated Fund Contracts), as described below (collectively, the Proposals). The Proposals have been developed by a joint project committee composed of members from the CSA, CCIR, Canadian Insurance Services Regulatory Organizations (CISRO), Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) (together referred to as the SROs) (the Project Committee). The Proposals follow on work securities regulators began after the completion of the Client Relationship Model, Phase 2 (CRM2) project in 2016 and recommendations published by the CCIR in a December 2017 position paper on segregated funds, as revised in June 2018 (CCIR Segregated Funds Position Paper). The Proposals for the securities sector (the Draft Securities Amendments) are for amendments to Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations (Regulation 31-103) and Policy Statement to Regulation 31-103 respecting

Registration Requirements, Exemptions and Ongoing Registrant Obligations (Policy Statement 31-103). The Proposals for the insurance sector are for an Individual Variable Insurance Contract Ongoing Disclosure Guidance (the Draft Insurance Guidance) – an enhanced disclosure framework for Segregated Fund Contracts. The CCIR expects each of its member jurisdictions will adopt the framework by local guidance or, in certain jurisdictions, regulation. In addition to including cost and performance reporting guidance, the Draft Insurance Guidance also includes additional ongoing performance disclosure guidance designed to bring the insurance sector into closer harmony with the securities sector, as well as guidance with respect to ongoing disclosure with respect to Segregated Fund Contract guarantees. The Draft Securities Amendments would apply to all registered dealers, advisers and investment fund managers. The Draft Insurance Guidance would apply to all insurers offering Segregated Fund Contracts to their policy holders. This notice contains the following annexes:

• Annex A – Specific questions regarding the Draft Securities Amendments
• Annex B – Specific questions regarding the Draft Insurance Guidance
• Annex C – Sample prototype statement and report for the securities sector
• Annex D – Sample prototype report for the insurance sector
• Annex E – Draft Insurance Guidance
• Annex F – Segregated funds and investment funds: differences between products,
  distribution channels and regulation
  This notice and the materials will be available on the following websites of CSA jurisdictions:
  www.lautorite.qc.ca www.asc.ca www.bcsc.bc.ca www.fcnb.ca nssc.novascotia.ca www.osc.ca www.fcaa.gov.sk.ca www.msc.gov.mb.ca They will also be available on the CCIR website: https://www.ccir-ccrra.org. Substance and Purpose The Proposals are part of the Joint Regulators’ harmonized response to concerns we have identified relating to current cost disclosure and product performance reporting requirements for investment funds and segregated funds. The Draft Insurance Guidance also addresses concerns about ongoing disclosure regarding Segregated Fund Contract guarantees. We seek to enhance investor protection by improving investors’ and policy holders’ awareness of the ongoing embedded fees such as

management fund expense ratios (MER) and trading expense ratios (TER) that form part of the cost of owning investment funds and segregated funds. The Draft Insurance Guidance also seeks to enhance policy holder protection by improving policy holders’ awareness of their rights to guarantees under their Segregated Fund Contracts and how their actions might affect their guarantees. One important concern is that there are currently no requirements for securities industry registrants or insurers to provide ongoing reporting to investors and policy holders on the amount of such costs after the initial sale of the investment product, in a form which is specific to the individual’s holdings and easily understandable. While fund facts and ETF facts documents required to be delivered at the point of sale for some investment funds contain certain disclosure concerning the ongoing costs of ownership of those funds, those documents are not tailored to the individual’s holdings or required to be delivered on an ongoing basis and this requirement only applies to a subset of investment funds1 . Research carried out by the Ontario Securities Commission’s (OSC) Investor Office and the Behavioural Insights Team) 2 in connection with the adoption of CRM2 shows that Canadian investors presented with a sample annual charges and compensation report, assumed that it included embedded fees associated with investment funds, when it does not include such fees.3 We believe it is important that investors and policyholders be aware of all of the costs associated with the investment funds and segregated funds they hold, as these fees can impact their returns and have a compounding effect over time. Furthermore, transparency about costs may encourage more competition, which would benefit investors and policyholders. The Proposals would require disclosure of the ongoing costs of owning Segregated Fund Contracts and investment funds, both as a percentage, for each fund or segregated fund, and as an aggregate amount, in dollars, for all investment funds or investments in a Segregated Fund Contract held during the year. The Proposals are as consistent as possible between the securities and insurance sectors with respect to disclosure of the ongoing costs of owning Segregated Fund Contracts and investment funds, taking into account the material differences among those products and in the ways the two sectors and their regulatory regimes operate. Differences include who provides cost disclosure to clients, how often account statements are typically sent, distribution channels and product features, as indicated in the table in Annex F. 1 Other continuous disclosure documents prepared by investment funds, such as annual statements or management reports of fund performance, are not prepared by all investment funds, present information in a form which may be complex for retail investors to understand and do not allow investors to understand their total costs of investing, as they present
information which is specific to a single issuer or group of issuers. 2 Behavioural Insights Team is a social purpose company part-owned by the U.K. Government. 3 See OSC Staff Notice 11-787 Improving Fee Disclosure Through Behavioural Insights, August 19, 2019, p. 11.

Summary of Proposals
Securities sector
The Draft Securities Amendments would add the following new elements to client reporting under Regulation 31-103:

• in the account statement (s.14.14) or additional statement (s.14.14.1) as appropriate, the
  fund expense ratio, stated as a percentage for each investment fund held by the client; and
• in the annual report on charges and other compensation (s.14.17) for the account as a
  whole:
  o the aggregate amount of fund expenses, in dollars, for all investment funds held during the year; and o the aggregate amount of any direct investment fund charges (e.g., short-term trading fees or redemption fees), in dollars. Fund expenses would be calculated by reference to the fund expense ratio, which would be defined as the sum of the MER and the TER. This definition is consistent with how that term is used in the context of a mutual fund’s fund facts document and with how the term “ETF expenses” is used in the ETF Facts document. 4 The methodology for determining the information included in the reports would be prescribed in order to ensure comparability for investors and a level playing field for registrants. Explanatory notes, substantially in a prescribed form tested with investors, would be included as appropriate. The Draft Securities Amendments would apply to all registrants to which the requirements to deliver an account statement, additional statement or annual cost and compensation report currently apply, 5 in respect of all investment funds owned by their clients, including scholarship plans, labour sponsored funds, foreign funds, mutual funds, non-redeemable investment funds, prospectus-exempt investment funds and exchange-traded funds. Existing exemptions for statements and reports provided to non-individual permitted clients (including, for example, many different institutional investors), pursuant to subsections 14.14.1(6) and 14.17(5) of Regulation 31-103, would continue to apply. SRO rules would be amended to be uniform in substance with final amendments to Regulation 31-103. Registered investment fund managers would be required to provide the registered dealers and registered advisers with certain information that the dealers and advisers would require in order to prepare the enhanced statements and reports for their clients. The Draft Securities Amendments would allow investment fund managers to rely on publicly available information disclosed in an investment fund’s most recently published fund facts document, ETF facts document, prospectus or management report of fund performance, unless this 4 See item 1.3 of Part II of Form 81-101F3 in Regulation 81-101 respecting Mutual Fund Prospectus Disclosure. 5 See sections 14.14, 14.14.1 and 14.17 of Regulation 31-103.

information is outdated, or the investment fund manager reasonably believes that doing so would cause the information reported in the statement or report to be misleading. If advisers or dealers are unable to rely on information provided by investment fund managers or believe that doing so would cause the information reported in the statement or report to be misleading, they would be required to rely on the most recent publicly available information in the relevant fund facts document, ETF facts document, prospectus or management report of fund performance, and if they cannot do so, would be required to make reasonable efforts to obtain that information by other means. We believe this approach would adequately balance the need for investors to receive information about the ongoing costs of owning investments funds, while avoiding imposing an undue regulatory burden on registrants. Insurance sector The Draft Insurance Guidance would express the CCIR’s expectation that insurers would provide certain information to clients who own Segregated Fund Contracts at least once each year. The full list of these elements of disclosure is found in Annex E. With respect to costs of holding Segregated Fund Contracts, these elements include:

• the fund expense ratio, stated as a percentage for each segregated fund held by the client
  within their Segregated Fund Contract during the statement period; and
• for the Segregated Fund Contract as a whole:
  o the aggregate amount of fund expenses, in dollars, for all segregated funds held during the statement period; o the aggregate cost of insurance guarantees under the Segregated Fund Contract, in dollars, for the statement period; and o the aggregate amount of all other expenses under the Segregated Fund Contract, in dollars, for the statement period. The statement period would be no more than one year. The fund expense ratio would be defined as the sum of the MER and the TER. The methodology for determining the information included in the statements would be prescribed in order to ensure comparability for investors and a level playing field for insurers and agents. Explanatory notes, substantially in a prescribed form tested with investors, would be included as appropriate. The remaining elements of the ongoing disclosure would reflect the expectations set out in the CCIR Segregated Funds Position Paper, except as follows:
• insurers would be expected to report the total deposits, withdrawals and the change in value
  of segregated funds since the Segregated Fund Contract began and since the start of the previous statement period.

o In contrast, the CCIR Segregated Funds Position Paper recommended reporting the aggregated dollar value change in net asset value of the Segregated Fund Contract.

• with respect to the amount the client would receive upon redeeming the entire Segregated
  Fund Contract, insurers would be expected to:
  o include a notice, substantially in a prescribed form, that explains the total net asset value for the contract is not necessarily the amount the client would receive if they ended their contract, and explains how the client could obtain more details about the amount of money they would receive, and o if the costs incurred at the redemption would be significant, include a notice, substantially in a prescribed form, that explains these costs.
• insurers would be expected to indicate whether a deferred sales charge may apply to each
  segregated fund; and
• when a Segregated Fund Contract provides a guaranteed income payment, insurers would
  be expected to state how long the guaranteed payment would be payable.
  Insurance regulators in each jurisdiction will implement this initiative in line with their respective regulatory requirements. Prior Consultations In developing the Proposals, the Joint Regulators conducted extensive consultations with investor advocates and market participants, notably at a meeting of the Joint Forum of Financial Market Regulators6 held on June 10, 2021, as well as through informal technical consultations with industry associations and service providers. Prior to beginning the joint project, CCIR consulted with stakeholders with respect to disclosure of fees and performance through an Issues Paper released for public consultation in May 2016 and discussion directly with stakeholders. These consultations led to the 2017/2018 CCIR Segregated Funds Position Paper, which set out CCIR’s expectations regarding cost disclosure. CCIR continued related research, including through investor focus groups, between the release of the Position Paper and the start of the joint project. The Project Committee also worked with OSC Investor Office Research and Behavioural Insights Team (IORBIT), drawing in part on earlier research commissioned by the MFDA, to design seven prototype disclosure documents for the securities sector, which differed both in terms of substantive content and presentation. Four prototypes were developed for the insurance sector. IORBIT then tested the prototypesto determine which ones would be most effective in maximizing investor or policyholder’s comprehension of cost information. The Draft Amendments reflect the findings from IORBIT’s research. The final prototypes are included in Annex C and D as 6 https://www.securities-administrators.ca/news/joint-forum-of-financial-market-regulators-engages-with-industry￾and-investor-groups-on-investment-fee-transparency/

illustrative examples, showing what statements and reports could look like if the Draft Amendments were adopted, with the new information highlighted. Transition We recognize that developing and implementing system enhancements to implement the Proposals will require a significant investment of time and resources by industry stakeholders. However, we firmly believe that providing both investors and policyholders with essential information about the ongoing embedded costs of investment funds and segregated funds at the earliest possible date is a priority. We therefore intend to adopt a short transition period for both the securities sector and the insurance sector. We are proposing that both sectors move forward in lockstep, with final amendments coming into effect at the same time in September 2024, as further detailed below, assuming that final publication would occur and ministerial approvals be obtained during the second quarter of 2023. This would represent a transition period of approximately 18 months. Registrants and insurers would be required to deliver statements and reports compliant with the Proposals as of the first reporting periods that fall entirely after this date. In practical terms, this means that

• for the securities sector, investors would receive the first quarterly account statements
  containing the newly required information for the reporting period ending in December 2024, and the first annual reports containing the newly required information for the reporting period ending in December 2025; and
• for the insurance sector, policyholders would receive an annual report containing the newly
  required information for the reporting period ending in December 2025, and a half-yearly statement containing the newly required information for the reporting period ending in June 2025, in the case where such statements are delivered. We are proposing this approach considering the importance of this initiative for investors and policyholders and the fact that pre-consultations with industry stakeholders and investor advocacy groups have taken place and will continue. We strongly encourage registrants and insurers to begin reviewing their systems and conduct advanced planning as soon as possible in order to have all of the resources necessary for implementation in place on time, following the final publication and ministerial approvals. If you have comments on this transition period proposal, please provide detailed discussion of the comments in your submission. Request for Comments We welcome your comments on the Proposals and questions in Annexes A and B. 7 The final prototype cost and compensation report developed for the securities sector will also be included as an
  appendix to Policy Statement 31-103.

We cannot keep submissions confidential because securities legislation in certain provinces requires publication of a summary of the written comments received during the comment period. All comments with respect to the Draft Securities Amendments will be posted on the websites of each of the OSC at www.osc.ca, the Alberta Securities Commission at www.albertasecurities.com and the Autorité des marchés financiers at www.lautorite.qc.ca. Therefore, you should not include personal information directly in comments to be published. It is important you state on whose behalf you are making the submissions. Similarly, all comments with respect to the CCIR Guidance may be posted on the CCIR website. Deadline for Comments Please submit your comments in writing on or before July 27, 2022. If you are not sending your comments by email, please send a CD containing the submissions in Microsoft Word format. Comments on Draft Securities Amendments:
Address your submission to the CSA jurisdictions as follows:
Alberta Securities Commission
Autorité des marchés financiers
British Columbia Securities Commission
Financial and Consumer Services Commission (New Brunswick) Financial and Consumer Affairs Authority of Saskatchewan Manitoba Securities Commission Nova Scotia Securities Commission Nunavut Securities Office Office of the Superintendent of Securities, Newfoundland and Labrador Ontario Securities Commission Office of the Superintendent of Securities, Northwest Territories Office of the Yukon Superintendent of Securities Superintendent of Securities, Department of Justice and Public Safety, Prince Edward Island Deliver your comments only to the addresses listed below. Your comments will be distributed to the remaining CSA jurisdictions. Me Philippe Lebel Corporate Secretary and Executive Director, Legal Affairs Autorité des marchés financiers Place de la Cité, tour Cominar 2640, boulevard Laurier, bureau 400 Québec (Québec) G1V 5C1 Fax: 514 864-6381 consultation-en-cours@lautorite.qc.ca

The Secretary
Ontario Securities Commission
20 Queen Street West
22nd Floor, Box 55
Toronto, Ontario
M5H 3S8
Fax: 416 593-2318 comment@osc.gov.on.ca
Comments on Draft Insurance Guidance:
Address and deliver your comments to:
Mr. Tony Toy, Policy Manager
Canadian Council of Insurance Regulators
National Regulatory Coordination Branch
25 Sheppard Avenue West, Suite 100
Toronto, Ontario
M2N 6S6 ccir-ccrra@fsrao.ca
Your comments will be delivered to member jurisdictions of the CCIR.
Questions
If you have any questions, please contact the staff members listed below. With respect to securities questions:
Gabriel Chénard
Senior Policy Analyst
Supervision of Intermediaries
Autorité des marchés financiers
514 395-0337, ext. 4482
Toll-free: 1 800 525-0337, ext. 4482 gabriel.chenard@lautorite.qc.ca Jan Bagh Senior Legal Counsel Alberta Securities Commission Corporate Finance 403 355-2804 jan.bagh@asc.ca Chad Conrad Senior Legal Counsel Alberta Securities Commission Corporate Finance 403 297-4295 chad.conrad@asc.ca Kathryn Anthistle Senior Legal Counsel, Legal Services Capital Markets Regulation Division British Columbia Securities Commission 604 899-6536 kanthistle@bcsc.bc.ca

Curtis Brezinski
Compliance Auditor
Financial and Consumer Affairs Authority of
Saskatchewan
306 787-5876 curtis.brezinski@gov.sk.ca
Clayton Mitchell
Registration and Compliance Manager
Financial and Consumer Services
Commission (New Brunswick)
506 658-5476
Clayton.mitchell@fcnb.ca
Nick Doyle
Compliance Officer
Financial and Consumer Services
Commission (New Brunswick)
506 635-2450
Nick.doyle@fcnb.ca
Chris Jepson
Senior Legal Counsel
Ontario Securities Commission
416 593-2379 cjepson@osc.gov.on.ca
With respect to insurance questions:
Brian Murphy
Manager, Registration
Nova Scotia Securities Commission
902 424-4592 brian.murphy@novascotia.ca
Chantale Bégin CPA auditor, CA
Senior Accountant, Standardization of
Financial Institutions
Capital Oversight of Financial Institutions
Autorité des marchés financiers
418 525-0337, ext 4595
Toll-free: 1 877 525-0337, ext 4595 chantale.begin@lautorite.qc.ca Mr. Tony Toy, Policy Manager Canadian Council of Insurance Regulators National Regulatory Coordination Branch 416 590-7257 ccir-ccrra@fsrao.ca

ANNEX A
SPECIFIC QUESTIONS REGARDING THE DRAFT SECURITIES AMENDMENTS

1. Do you anticipate implementation issues related to the inclusion of any of the following in
   the Draft Securities Amendments,
   (a) exchange-traded funds,
   (b) prospectus-exempt investment funds,
   (c) scholarship plans,
   (d) labour-sponsored funds,
   (e) foreign investment funds?
2. Would you consider it acceptable if, instead of information about each investment fund’s
   fund expense ratio (MER + TER), the MER alone was disclosed in account statements and additional statements and used in the calculation of the fund expenses for the purposes of the annual report on charges and other compensation?
3. For the purpose of subsection 14.14.1(2), is the use of net asset value appropriate, or would
   it be more appropriate to use market value or another input? Would it be better to use different inputs for different types of funds?
4. Do you anticipate any other implementation issues related to the Draft Securities
   Amendments?
5. Do you anticipate any issues specifically related to the proposed transition period?

ANNEX B
SPECIFIC QUESTIONS REGARDING THE DRAFT INSURANCE GUIDANCE

1. Do you anticipate implementation issues related to the inclusion of any of the following in
   the Draft Insurance Guidance, a. Segregated Fund Contracts which are no longer available for sale, but to which customers can still make deposits; b. Segregated Fund Contracts which are no longer available for sale and to which customers can no longer make deposits;
   c. Segregated Fund Contracts that have the potential to have funds in more than one
   phase at one time (i.e. Accumulation Phase, Withdrawal Phase, Benefits Phase); d. Segregated Fund Contracts that may include insurance fees that are paid both directly (i.e. from money outside a segregated fund, such as where units are cashed out to pay the insurance fee) and indirectly (i.e. from assets held within a fund in which the client holds units)?
2. The Draft Insurance Guidance does not yet include a method insurers must follow when
   calculating the fund expenses for each Segregated Fund Contract. Please comment on the advantages and disadvantages of calculating the fund expenses for each segregated fund the client holds each day as follows:
   Option 1:
   A
   365 x B x C
   Option 2:
   A
   365 x
   B
   (1 − A

365. x C
     In each option
     A = the fund expense ratio of the applicable class or series of the segregated fund; B = the net asset value of a unit of the applicable class or series of the segregated fund for the day; and C = the number of units owned by the client for the day.

The difference between these two options is that Option 1 bases the allocation of fund expenses on the net value of assets in the fund after they are reduced to reflect the fund expenses for the day. Option 2 bases the allocation of fund expenses on the gross value of assets before they are reduced to reflect these expenses. For example, suppose that A = 2%, B = $1,000 and C = 10,000. Under Option 1, the fund expenses for the client for that segregated fund for the year would be $547.95:
0.02
365 x 1000 x 10000
Under Option 2, the fund expenses would be $547.98:
0.02
365 x
(1 − 0.02
365) x 10000
3. Should all insurers be required to use the same formula to calculate the dollar amount of
fund expenses? Please comment on the advantages and disadvantages of:
a. Requiring all insurers to use the same calculation method; or b. Allowing an insurer to use a different calculation method if the insurer can create a more precise approximation.
4. For the purpose of the calculation described in question 2, what are the costs, benefits and
risks of using the following to calculate fund expense ratio (i.e. MER + TER):
a. The MER from the most recent Fund Facts document published before the year in question begins and a TER calculated at the same time on a similar basis; b. The MER and the TER calculated for the year in question after the year ends; or
c. Another estimated MER and TER for the year (please explain how this MER and
TER would be calculated if you discuss this option)?
5. For the purpose of the calculation described in question 2, what are the costs, benefits and
risks of using:
a. 365 days; b. The actual number of days in the calendar year in question; or
c. Another number that reflects the number of days on which the net asset value is
calculated for the fund rather than the number of days in the year?

Note that the proposed calculation for securities assumes 365 days.
6. Would you consider it acceptable if, instead of information about each segregated fund’s
fund expense ratio (MER + TER), the MER alone was:
a. disclosed in annual statements for each fund; and b. used in the calculation of the total fund expenses for the Segregated Fund Contract for the year? What are the costs, benefits and risks of using the fund expense ratio versus only using the MER?
7. Might Segregated Fund Contract customers incur significant costs, other than for deferred
sales charges, if they withdraw all funds from their Segregated Fund Contracts? If so, what are those costs?
8. The Draft Insurance Guidance describes annual statements. Do you anticipate any issues
in connection with the guidance as drafted in cases where an insurer provides semi-annual statements to customers?
9. Do you anticipate any other implementation issues related to the Draft Insurance
Guidance?
10. Do you anticipate any issues specifically related to the proposed transition period?

ANNEX C
SAMPLE PROTOTYPE STATEMENT AND REPORT FOR THE SECURITIES SECTOR Highlighting shows new information Dealer ABC Inc. Your Account Number: 123-4567 Holdings in your account On December 31, 2020 Portfolio Assets Description Shares Owned Book Cost Market Value Current gain or loss Fund Expenses1 % of your holdings Investment Funds ABC Management Monthly Income Fund, Series A FE
250.00 $17,000.00 $19,500.00 $2,500.00 1.00% 41.49%
ABC Management
Canadian Equity,
Series A FE
450.00 $19,500.00 $22,500.00 $3,000.00 2.00% 47.87%
Equities
Company A
N/A
100.00 $2,000.00 $3,000.00 $1,000.00 6.88%
Company B
N/A
50.00 $1,500.00 $2,000.00 $500.00 4.26%
Totals $40,000.00 $47,000.00 100.00%

1. Fund expenses are made up of the management fee, operating expenses and trading costs. You don't pay these
   expenses directly. They are periodically deducted from the value of your investments by the companies that manage and operate those funds. Different funds have different fund expenses. They affect you because they reduce the fund's returns. These expenses add up over time. Fund expenses are expressed as an annual percentage of the total value of the fund. They correspond to the sum of the fund’s management expense ratio (MER) and trading expense ratio (TER). These costs are already reflected in the current values reported for your fund investments.

Dealer ABC Inc.
______________________________________________________________________ Your Account Number: 123-4567 Your Cost of Investing and Our Compensation This report shows for 2021

• your cost of investing, including what you paid to us and to investment fund companies
• our compensation
  Your Cost of Investing
  Costs reduce your profits and increase your losses Your total cost of investing was $815 last year What you paid Our Compensation What we received Our charges: Amounts that you paid to us by withdrawals from your account or by other means such as cheques or transfers from your bank. Account administration and operating fees – you pay these fees to us each year $100.00 Trading fees – you pay these fees to us when you buy or sell some investments $20.00 Total you paid to us $120.00 Investment fund company fees: Amounts you paid to investment fund companies that operate the investment funds (e.g., mutual funds) in your account. Fund Expenses - See the fund expenses % shown in the holdings section of your account statement1 $645.00 Redemption fees on deferred sales charge (DSC) investments2 $50.00 Amount you paid to investment fund companies $695.00 Your total cost of investing $815.00 Total you paid us, as indicated above $120.00 Trailing commissions3 paid to us by investment fund companies $342.00 Total we received for advice and services we provided to you $462.00

1. Fund expenses. Fund expenses are made up of the management fee, operating expenses and
   trading costs. You don't pay these expenses directly. They are periodically deducted from the value of your investments by the companies that manage and operate those funds. Different funds have different fund expenses. They affect you because they reduce the fund's returns. These expenses add up over time. Fund expenses are expressed as an annual percentage of the total value of the fund. They correspond to the sum of the fund’s management expense ratio (MER) and trading expense ratio (TER). These costs are already reflected in the current values reported for your fund investments. The number shown here is the total dollar amount you paid in management fees, trading fees and operating expenses for all the investment funds you owned last year. This amount depends on each of your funds’ fund expenses and the amount you invested in each fund. Your account statements show the fund expenses as a percentage for each fund you hold.
2. Redemption fees on DSC investments: You paid this cost because you redeemed your units or
   shares of a fund purchased under a deferred sales charge option (DSC) before the end of the redemption fee schedule and a redemption fee was payable to the investment fund company. Information about these and other fees can be found in the prospectus or fund facts document for each investment fund. The redemption fee was deducted from the redemption amount you received.
3. Trailing commissions. Investment funds pay investment fund companies a fee for managing their
   funds. Investment fund companies pay us ongoing trailing commissions for the services and advice we provide you. The amount of the trailing commission for each fund depends on the sales charge option you chose when you purchased the fund. You are not directly charged for trailing commissions. They are paid to us by investment fund companies. Information about fund expenses, MERs, trading expenses and other investment fund company charges, as well as trailing commissions, is also included in the prospectus or fund facts document for each fund you own.

1234 West Street,
Toronto, Ontario ABC Insurer Inc. 1 800 567 8901 abcinsurerinc.ca Your annual statement As at December 31, 2020 This statement provides you with information on how your contract has performed this year, including the rate of return and value of guarantees. It provides you with all charges and fees associated with your contract. It will help you track your financial goals. We recommend that you read it carefully. The Fund Fact documents and annual audited financial statements for segregated funds are available upon request. Please contact your representative or us if you require additional information. Information on your contract Your total annual personal rate of return (net of charges) The following graph shows your total annual personal rate of return net of charges for different periods. Note that this rate of return may be different than the rate of return realized by the segregated funds because it takes into account the timing of your deposits and withdrawals. 1 This is not necessarily the amount you would receive if you made a withdrawal. As an example, deferred sales charges or withdrawal fees may change the withdrawal value. You can contact us to learn the actual amount you can receive. As at December 31, 2020 Segregated funds Number of units Market value per unit ($) Market value ($) ABC Management Monthly Income Fund, Standard Series, DSC Guarantee 75/100
250.00 $78.00 $19,500.00
ABC Management Canadian Equity Fund,
Standard Series, FEL
Guarantee
75/100
450.00 $50.00 $22,500.00
Total1 $42,000.00
Contract name: ABC RetirementPlus
Contract tax status: Registered
Contract no.: 78902314
Issue date: March 20, 2014
Owner: John Smith
Annuitant: John Smith
Designated beneficiary: Jane Smith
Your representative: George Advisor
Your representative’s telephone no.:
1 416 444 5353
Your representative’s e-mail address: gadvisor@advisor.ca 5.50% 4.10% 3.50% 2019 - 2020 2.50% 2015 - 2020 2017 - 2020 2014 - 2020
ANNEX D
SAMPLE PROTOTYPE REPORT FOR THE INSURANCE SECTOR – ACCUMULATION

ABC Insurer Inc.
Your Contract Number: 78902314
Holdings in your Contract
On December 31, 2020
Contract values since issue on March 30, 2014
Segregated funds Deposits Withdrawals Net Growth or Loss3 Market value at end of 2020 ABC Management Monthly Income Fund, Standard Series 75/100, DSC2 $18,666.67 $1,666.67 $2,500.00 $19,500.00 ABC Management Canadian Equity, Standard Series 75/100, FEL $19,500.00 $0.00 $3,000.00 $22,500.00 Totals $38,166.67 $1,666.67 $5,500.00 $42,000.00 Contract values since December 31, 2019 Segregated funds Market value at end of 2019 Deposits Withdrawals Net Growth or Loss3 Market value at end of 2020 Fund expenses4 ABC Management Monthly Income Fund, Standard Series 75/100, DSC2 $20,650.21 $0.00 $1,666.67 $516.46 $19,500.00 1.18% ABC Management Canadian Equity, Standard Series 75/100, FEL $21,951.22 $0.00 $0.00 $548.78 $22,500.00 2.04% Totals $42,601.43 $0.00 $1,666.67 $1,065.24 $42,000.00 Total annual rate of return 2.5% 2 Your fund has a deferred sales charge. You can withdraw all the money in this fund, but you may be charged a fee to do so if you are withdrawing those funds before the end of the 7-year deferred sales charge period. 3 Total charges deducted from your return are detailed in the following section. 4 The fund’s expenses are made up of the management fee, operating expenses, and trading costs.. You don't pay these expenses directly. We periodically deduct them from the value of your investments to manage and operate the funds. They affect you because they reduce the fund's returns. These expenses add up over time. Fund expenses are expressed as an annual percentage of the total fund's value. They correspond to the sum of the fund’s management expense ratio (MER) and trading expense ratio (TER). These costs are already reflected in the current values reported for your fund investments. The dollar amount of the expense calculated from the fund expense ratio is included in the costs described below in the following section.

ABC Insurer Inc.
Your Contract Number: 78902314
Details of charges for the year 2020
Important: Review Your Costs
This part of the report shows the total cost of owning your contracts last year. These costs impact your returns. This does not include fees billed directly by your representative, if applicable. Your cost of investing is impacted by your choices. Your total cost of investing was $760 last year 5 You paid this cost to us because you withdrew money from a fund before the end of the deferred sales charge period, and it was more than your contract said you could withdraw without paying a deferred sales charge. You paid this cost directly from money withdrawn from your contract and it reduced the amount you received when you withdrew money. 6 This is what you paid us to manage and operate the funds in which you have invested. Different funds charge different levels of fees. These fees are deducted from the value of your investments – you do not pay these fees directly. They reduce the value of each unit in the funds you hold, and therefore reduced your return on investment. These costs are already reflected in the market values reported for your fund investments. 7 This is what you paid us this year for the insurance guarantees under your contract: the Maturity Guarantee, the Death Guarantee and the guaranteed withdrawal amount. You paid this cost by withdrawing investments in your contract. Withdrawal fees on deferred sales charge investments5 $50.00 Transfer fee $20.00 Investment fund expenses (Fund expenses) 6 $645.00 Insurance cost for your guarantees7 $45.00 Total $760.00

ABC Insurer Inc.
Your Contract Number: 78902314
Your contract’s guarantees
Your contract contains an insurance portion that offers you protection against negative market movements. You have a death guarantee and a maturity guarantee that protect a portion of your investment. When you decide to withdraw money from your contract, you also have a guarantee that you will be able to withdraw a certain amount for a certain period of time or for the remainder of your life. The guaranteed withdrawal amount will be payable to you even if the net asset value of the guaranteed segregated funds in the contract is less than this amount. The chart below shows the actual value of those guarantees. Guarantee 75/1008 Market value of your segregated funds: $42,000.00 Maturity date of the guarantee: January 12, 2084 Value of 75% guarantee at maturity: $27,428.42 Value of 100% guarantee on death: $36,571.22 Date of the next automatic reset of your guarantees9 March 30, 2024 Accumulation phase Guaranteed lifetime annual withdrawal amount, if taken:10 At age 55 $575.50 At age 65 $893.65 At age 70 $1,353.20 8 On withdrawal, the value of your guarantees is adjusted proportionally to the market value of your contract at the time of withdrawal. For example, if someone withdraws $1,200 when the market value of the segregated fund contract is $6,000, the withdrawal will reduce the market value of the segregated funds by 20 per cent ($1,200/$6,000). The maturity and death benefit guarantee amounts will be reduced proportionally by the same 20 per cent. 9 You may make discretionary resets up to 3 times per year subject to certain conditions, as stipulated in your contract. Kindly contact your representative for additional information on the subject. 10 Guaranteed withdrawal amounts have been calculated assuming no bonus, no deposit or withdrawal, no future return and no reset of guarantees between now and the start of annual periodic withdrawals.

DEFINITIONS

• Accumulation Phase: This phase starts
  when you begin making deposits into the contract and continues until you notify us you would like to trigger the Withdrawal Phase to start taking scheduled withdrawals.
• Deposit: Amount you paid to us for the
  purchase of segregated fund units.
• Market value: This is the value of your
  investments, calculated by taking the number of fund units and multiplying it by the market value per unit.
• Net Growth / Loss: This is the amount your
  investments have increased or decreased other than due to deposits, withdrawals or transfers in or out.
• Reset: Option enabling the contract holder
  to revaluate the guaranteed values applicable to his or her contract.
• Segregated Fund: A separate and distinct group of
  assets maintained by an insurer in respect of which the benefits of a variable insurance contract are provided.
• Total annual personal rate of return: This is how
  your investments have performed over time. This is calculated using an industry-standard method known as the “money weighted method” which factors in the time of your deposits and withdrawals (net of all charged fees) and does not take income tax into account. Your actual returns will depend on your personal tax situation. Since most benchmarks do not consider funds’ management fees and operating fees, your personal rate of return cannot be directly compared with an index.
• Transfer: Sometimes called a switch, this is the
  withdrawal of units in a fund for the purpose of purchasing units in another fund.
• Withdrawal: Withdrawals out of the contract from
  specific segregated fund units.

1234 West Street,
Toronto, Ontario ABC Insurer Inc. 1 800 567 8901 abcinsurerinc.ca Your annual statement As at December 31, 2020 This statement provides you with information on your contract, including the value of guarantees. It will help you track your financial goals. We recommend that you read it carefully. Please contact your representative or us if you require additional information. Information on your contract Your contract’s guarantees Your contract no longer has any active investments. However, it contains an insurance portion which provides guaranteed income payments for a certain period of time. The chart below shows the value of those payments. Benefit Payments Phase Guaranteed annual withdrawal amount: $7,000 Income payable until: Until the Annuitant’s death Contract name: ABC RetirementPlus Contract tax status: Non-Registered Contract no.: 78902314 Issue date: March 20, 2014 Owner: John Smith Annuitant: John Smith Your representative: George Advisor Your representative’s telephone no: 1 416 444 5353 Your representative’s e-mail address: gadvisor@advisor.ca
ANNEX D
SAMPLE PROTOTYPE REPORT FOR THE INSURANCE SECTOR – BENEFITS

1234 West Street,
Toronto, Ontario ABC Insurer Inc. 1 800 567 8901 abcinsurerinc.ca Your annual statement As at December 31, 2020 This statement provides you with information on how your contract has performed this year, including the rate of return and value of guarantees. It provides you with all charges and fees associated with your contract. It will help you track your financial goals. We recommend that you read it carefully. The Fund Fact documents and annual audited financial statements for segregated funds are available upon request. Please contact your representative or us if you require additional information. Information on your contract Your total annual personal rate of return (net of charges) The following graph shows your total annual personal rate of return net of charges for different periods. Note that this rate of return may be different than the rate of return realized by the segregated funds because it takes into account the timing of your deposits and withdrawals. 1 This is not necessarily the amount you would receive if you made a withdrawal. As an example, deferred sales charges or withdrawal fees may change the withdrawal value. You can contact us to learn the actual amount you can receive. As at December 31, 2020 Segregated funds Number of units Market value per unit ($) Market value ($) ABC Management Monthly Income Fund, Standard Series, DSC Guarantee 75/100
250.00 $78.00 $19,500.00
ABC Management Canadian Equity Fund,
Standard Series, FEL
Guarantee
75/100
450.00 $50.00 $22,500.00
Total1 $42,000.00
Contract name: ABC RetirementPlus
Contract tax status: Registered
Contract no.: 78902314
Issue date: March 20, 2014
Owner: John Smith
Annuitant: John Smith
Designated beneficiary: Jane Smith
Your representative: George Advisor
Your representative’s telephone no.:
1 416 444 5353
Your representative’s e-mail address: gadvisor@advisor.ca 5.50% 4.10% 3.50% 2019 - 2020 2.50% 2015 - 2020 2017 - 2020 2014 - 2020
ANNEX D
SAMPLE PROTOTYPE REPORT FOR THE INSURANCE SECTOR – REDEMPTION

ABC Insurer Inc.
Your Contract Number: 78902314
Holdings in your Contract
On December 31, 2020
Contract values since issue on March 30, 2014
Segregated funds Deposits Withdrawals Net Growth or Loss3 Market value at end of 2020 ABC Management Monthly Income Fund, Standard Series 75/100, DSC2 $18,666.67 $1,666.67 $2,500.00 $19,500.00 ABC Management Canadian Equity, Standard Series 75/100, FEL $19,500.00 $0.00 $3,000.00 $22,500.00 Totals $38,166.67 $1,666.67 $5,500.00 $42,000.00 Contract values since December 31, 2019 Segregated funds Market value at end of 2019 Deposits Withdrawals Net Growth or Loss3 Market value at end of 2020 Fund expenses4 ABC Management Monthly Income Fund, Standard Series 75/100, DSC2 $20,650.21 $0.00 $1,666.67 $516.46 $19,500.00 1.18% ABC Management Canadian Equity, Standard Series 75/100, FEL $21,951.22 $0.00 $0.00 $548.78 $22,500.00 2.04% Totals $42,601.43 $0.00 $1,666.67 $1,065.24 $42,000.00 Total annual rate of return 2.5% 2 Your fund has a deferred sales charge. You can withdraw all the money in this fund, but you may be charged a fee to do so if you are withdrawing those funds before the end of the 7-year deferred sales charge period. 3 Total charges deducted from your return are detailed in the following section. 4 The fund’s expenses are made up of the management fee, operating expenses, and trading costs. You don't pay these expenses directly. We periodically deduct them from the value of your investments to manage and operate the funds. They affect you because they reduce the fund's returns. These expenses add up over time. Fund expenses are expressed as an annual percentage of the total fund's value. They correspond to the sum of the fund’s management expense ratio (MER) and trading expense ratio (TER). These costs are already reflected in the current values reported for your fund investments. The dollar amount of the expense calculated from the fund expense ratio is included in the costs described below in the following section.

ABC Insurer Inc.
Your Contract Number: 78902314
Details of charges for the year 2020
Important: Review Your Costs
This part of the report shows the total cost of owning your contracts last year. These costs impact your returns. This does not include fees billed directly by your representative, if applicable. Your cost of investing is impacted by your choices. Your total cost of investing was $760 last year 5 You paid this cost to us because you withdrew money from a fund before the end of the deferred sales charge period, and it was more than your contract said you could withdraw without paying a deferred sales charge. You paid this cost directly from money withdrawn from your contract and it reduced the amount you received when you withdrew money. 6 This is what you paid us to manage and operate the funds in which you have invested. Different funds charge different levels of fees. These fees are deducted from the value of your investments – you do not pay these fees directly. They reduce the value of each unit in the funds you hold, and therefore reduced your return on investment. These costs are already reflected in the market values reported for your fund investments. 7 This is what you paid us this year for the insurance guarantees under your contract: the Maturity Guarantee, the Death Guarantee and the guaranteed withdrawal amount. You paid this cost by withdrawing investments in your contract. Withdrawal fees on deferred sales charge investments5 $50.00 Transfer fee $20.00 Investment fund expenses (Fund expenses) 6 $645.00 Insurance cost for your guarantees7 $45.00 Total $760.00

ABC Insurer Inc.
Your Contract Number: 78902314
Your contract’s guarantees
Your contract contains an insurance portion that offers you protection against negative market movements. You have a death guarantee and a maturity guarantee that protect a portion of your investment. When you decide to withdraw money from your contract, you also have a guarantee that you will be able to withdraw a certain amount for a certain period of time or for the remainder of your life. The guaranteed withdrawal amount will be payable to you even if the net asset value of the guaranteed segregated funds in the contract is less than this amount. The chart below shows the actual value of those guarantees. Guarantee 75/1008 Market value of your segregated funds: $42,000.00 Maturity date of the guarantee: January 12, 2065 Value of 75% guarantee at maturity: $27,428.42 Value of 100% guarantee on death: $36,571.22 Withdrawal phase Guaranteed annual withdrawal amount: $1,470.00 Annual withdrawal amount you have chosen to receive:9 $1,500.00 Income payable until Until the Annuitant’s death RRIF/LIF/LRIF/RLIF minimum withdrawal amount $1,400.00 LIF/LRIF/RLIF maximum withdrawal amount No maximum 8 On withdrawal, the value of your guarantees is adjusted proportionally to the market value of your contract at the time of withdrawal. For example, if someone withdraws $1,200 when the market value of the segregated fund contract is $6,000, the withdrawal will reduce the market value of the segregated funds by 20 per cent ($1,200/$6,000). The maturity and death benefit guarantee amounts will be reduced proportionally by the same 20 per cent. 9 Any withdrawals that exceed the guaranteed annual withdrawal amount will decrease future guaranteed withdrawal amounts except if required in respect of a RRIF/LIF/LRIF/RLIF minimum withdrawal amount.

DEFINITIONS

• Deposit: Amount you paid to us for the
  purchase of segregated fund units.
• Market value: This is the value of your
  investments, calculated by taking the number of fund units and multiplying it by the market value per unit.
• Net Growth / Loss: This is the amount your
  investments have increased or decreased other than due to deposits, withdrawals or transfers in or out.
• Reset: Option enabling the contract holder
  to revaluate the guaranteed values applicable to his or her contract.
• Segregated Fund: A separate and distinct
  group of assets maintained by an insurer in respect of which the benefits of a variable insurance contract are provided.
• Total annual personal rate of return: This is how
  your investments have performed over time. This is calculated using an industry-standard method known as the “money weighted method” which factors in the time of your deposits and withdrawals (net of all charged fees) and does not take income tax into account. Your actual returns will depend on your personal tax situation. Since most benchmarks do not consider funds’ management fees and operating fees, your personal rate of return cannot be directly compared with an index.
• Transfer: Sometimes called a switch, this is the
  withdrawal of units in a fund for the purpose of purchasing units in another fund.
• Withdrawal: Withdrawals out of the contract from
  specific segregated fund units.
• Withdrawal Phase: This phase starts when you
  trigger your guaranteed withdrawal benefit and start taking the scheduled withdrawals. It continues while the contract has enough invested money to pay each scheduled withdrawal. When there is no longer any money invested in the contract, the contract transitions to the benefit payment phase where you will continue to receive your guaranteed withdrawal amounts

ANNEX E
DRAFT INSURANCE GUIDANCE
Definitions
[1.1] In this Guidance
“accumulation phase” means the time between the date the owner begins making deposits to an IVIC that provides a guaranteed withdrawal benefit and the date the owner notifies the insurer they want to begin receiving such guaranteed payments under the IVIC. “Annuitant” means the person or people whose life or lives trigger any guarantee on death or any payment for life. “benefits phase” means the time between the date when the withdrawal phase ends for all or part of an IVIC that provides a guaranteed withdrawal benefit and the last date a guaranteed withdrawal benefit is payable. “fees and charges” means any sales charges, distribution fees, management fees, administrative fees, account set-up or closing charges, surrender charges, transfer fees, insurance fees or any other fees, charges or expenses whether or not contingent or deferred which are or may be payable in connection with the acquisition, holding, transferring or withdrawal of units of a segregated fund credited to the contract. “Fund Facts” means a disclosure document in respect of a segregated fund under an IVIC; this document forms part of the information folder and includes information required by law or regulatory guidance in the relevant jurisdiction including information under the following headings:
a. Quick Facts b. What does the fund invest in?
c. How has the fund performed?
d. How risky is it? e. Are there any guarantees? f. Who is the fund for? g. How much does it cost? h. What if I change my mind? and
i. For More Information.

“individual variable insurance contract” or “IVIC” means an individual contract of life insurance under which the Insurer’s liabilities vary in amount depending upon the market value of a specified group of assets in a segregated fund. IVIC includes a provision in an individual contract of life insurance under which policy dividends are deposited in a segregated fund. “Insurer” means an insurer as defined under the laws of the applicable Canadian jurisdiction. “Insurer’s name” means an insurer’s full legal name; “Intermediary” means a Licensed Individual authorized to sell and service IVICs under the laws of the relevant Canadian jurisdiction, or a Licensed Business. “Licensed Business” means any person licensed under the laws of the relevant Canadian jurisdiction to sell IVICs, other than an Insurer or a Licensed Individual. “Licensed Individual” means any of the following individuals:
a. an insurance agent, b. an insurance broker, or
c. an insurance representative authorized under the laws of the applicable
Canadian jurisdiction.
“life insurance” means life insurance as defined under the laws of the applicable Canadian jurisdiction and includes an annuity or an undertaking to provide an annuity. “owner” means a person who owns an IVIC. “Segregated fund” means a specified and distinct group of assets the Insurer holds with respect to an IVIC, in which a Customer who owns an IVIC can invest by purchasing units of a segregated fund under the IVIC. “withdrawal phase” means the time between when the owner triggers their guaranteed withdrawal benefit under an IVIC that provides such a benefit, and ends when there is no longer enough money held within the IVIC to pay a scheduled withdrawal. [1.2] With respect to the annual statement described in section [#.#.1] of this guidance:
“advisory service fee” means any fee payable by an owner to an Intermediary with respect to the IVIC, that is paid by the insurer to the Intermediary on direction of the owner from assets within the IVIC. “market value” of the units of a segregated fund in an IVIC is the value of the investments in that segregated fund, calculated by taking the number of fund units within the IVIC and

multiplying it by the market value per unit at the end the date for which the market value is calculated. “Statement date” means the date of the last day of the period covered by the statement. Annual Statement to Contract Owner [2.1] The Insurer shall provide to the owner of each IVIC, within four months of each fiscal year-end of the fund, a statement showing the information described in Schedule [X].

Schedule [X] – Minimum Content of Annual Statement

1. General
   a) Statement date, b) The following information about the Insurer:
   i) Insurer’s name, ii) Insurer’s phone number, and iii) Insurer’s website, c) The following information about the IVIC:
   i) Contract name, ii) Contract tax status, iii) Contract number, and iv) Contract issue date, d) Owner(s), e) Annuitant(s), f) Designated beneficiary(ies), g) The following information about the Licensed individual responsible for servicing the IVIC:
   i) Licensed individual’s name, ii) Licensed individual’s phone number, and iii) Licensed individual’s email address, h) A notice in plain language to i) Remind owner(s) that the information contained in the statement will help them track their financial goals, ii) Remind owner(s) they can obtain copies of the most recent Fund Facts associated with their contract and how to obtain them, and iii) Invite owner(s) to contact the Licensed individual or the Insurer if they need additional information, and iv) Remind owner(s) they can obtain annual audited financial statements [and semi￾annual unaudited financial statements] for each fund upon request and how to obtain them.
2. Performance – Contract
   a) For the overall IVIC, market value at the start of the year, b) For the overall IVIC, as of the statement date, total deposits i) Since the IVIC began, and ii) Since the start of the year, c) For the overall IVIC, as of the statement date, total withdrawals

i) Since the IVIC began, and ii) Since the start of the year, d) For the overall IVIC, as of the statement date, the change in value of investments in the IVIC for reasons other than deposits to or withdrawals from the IVIC i) Since the IVIC began, and ii) Since the start of the year, e) For the overall IVIC, market value at the statement date, f) Personal rate of return, as a percentage, calculated on the dollar-weighted method:
i) Since the IVIC began, and ii) Where the contract has been in effect for the relevant time:
(1) For the 10 years ending on the statement date, (2) For the 5 years ending on the statement date, (3) For the 3 years ending on the statement date, and (4) For the year ending on the statement date, and g) A plain language explanation that the personal rate of return may be different than the rate realized by the segregated funds within the IVIC because calculation of personal rate of return depends on factors such as timing of deposits and withdrawals.
3) Costs – Contract
a) Where applicable, a notice in plain language:
i) Explaining that the total market value of the contract is not necessarily the amount the owner will receive if they end their contract, ii) Explaining how the owner can get more details about the amount of money they would receive if they ended their contract, and iii) If the costs the owner would incur if they withdrew the full market value of the IVIC are significant, explaining these costs in enough detail to allow the owner to understand the effect. For further clarity, deferred sales charges are considered to be significant costs, but the disclosure explicitly required under this guidance with respect to deferred sales charges is sufficient to address item 3 a) iii) regarding deferred sales charges. b) For the overall IVIC, the dollar amount the owner incurred during the year for each of the following i) Front end load, ii) Deferred sales charges, iii) advisory service fee, iv) Transfer fees, v) Reset fees, vi) Early withdrawal and/or short term trading fee,

vii) Fees with respect to cheques returned due to insufficient funds, viii)Small policy fee, ix) Insurance fees, x) Fund expenses, and xi) Any other fees and charges. For further clarity, the Insurer is not required to include one of these items if the dollar amount the owner incurred for that item in the year is zero. c) For the overall IVIC, the dollar amount of the total of the items listed in 3 b), d) Any changes to the insurance fee, where legally permitted, e) A plain language explanation that any fees the owner pays directly to the Licensed individual and/or Licensed business, if applicable, are not included in the amount in 3 c), and f) A plain language explanation of how costs affect returns
4) Fund details – Value, Fund Expense Ratio, Deferred Sales Charges
a) For each fund held within the IVIC during the year described by the statement:
i) The fund name, ii) As of the statement date:
(1) Number of units held,
(2) Market value per unit, and
(3) Total market value of units held, iii) The fund expense ratio for the fund, iv) A plain language explanation of (1) What the fund expense ratio is, and (2) The fact that the dollar amount of the fund expenses allocated to the IVIC are included in the details of the charges for the IVIC for the year, and v) The fact that a deferred sales charge applies, if applicable.
5) Guarantees
a) For the overall IVIC:
i) The market value of the funds subject to the guarantee under the contract ii) The maturity date of the guarantee at the contract level iii) The dollar value guaranteed on the contract maturity date iv) The dollar value guaranteed on death of the Annuitant b) For further clarity:
i) If the amount under 5 a) i) is the same as the total value of the contract, the insurer is not required to repeat this information, and

ii) If the contract has more than one maturity date, the insurer is only required to provide the information in items 5 a) i), ii) and iii) for the contract-level maturity guarantee, not for each separate deposit. c) If the contract has an automatic reset provision, the date of the next automatic reset and an explanation of what will happen.
6) Guarantees – Contracts with guaranteed withdrawals
Accumulation Phase a) If the IVIC provides a guaranteed withdrawal benefit and all or part of the contract is in the accumulation phase, the following information with respect to the assets in the accumulation phase i) The guaranteed withdrawal amount for every withdrawal option available to the owner under that contract at:
(1) The earliest age at which the owner can begin receiving guaranteed withdrawals, (2) Age 65, if applicable, and (3) Age 70, if applicable, ii) A notice in plain language that the guaranteed amounts have been calculated assuming (1) the owner will make no further deposits to the IVIC, (2) the owner will make no withdrawal from the IVIC, aside from the guaranteed withdrawals, (3) the value of the units in the IVIC will not change between the date of calculation and the dates for which guaranteed withdrawal amounts are shown, (4) that no bonuses will be credited to the IVIC, if applicable, between the date of calculation and the dates for which guaranteed withdrawal amounts are shown, and (5) that the owner will not reset any guarantees under the IVIC, if applicable, between the date of calculation and the dates for which guaranteed withdrawal amounts are shown, iii) A notice in plain language explaining how guarantees are affected by withdrawals, and iv) If applicable, a notice in plain language to remind the owner of their ability to make discretionary resets of the guarantees under the contract. Withdrawal Phase b) If the IVIC provides a guaranteed withdrawal benefit and all or part of the contract is in the withdrawal phase, the following information with respect to the assets in the withdrawal phase i) The guaranteed annual withdrawal amount,

ii) How long the guaranteed annual withdrawal amount will be payable, assuming the owner does not make any withdrawals other than the scheduled withdrawals, iii) The amount the owner has chosen to receive annually, if different from the guaranteed annual withdrawal amount, iv) If the IVIC is a RRIF, LIF, LRIF or RLIF, the minimum RRIF, LIF, LRIF or RLIF withdrawal for the year following the statement date, v) If the IVIC is a LIF, LRIF or RLIF, the maximum LIF, LRIF or RLIF withdrawal for the year following the statement date, vi) A notice that any withdrawals that exceed the guaranteed annual withdrawal amount will decrease future guaranteed withdrawal amounts, except if required with respect to RRIF, LIF, LRIF or RLI minimum withdrawals, and vii) A notice in plain language explaining the guaranteed withdrawal amount will be payable to the client even if the net asset value of the relevant assets in the contract are less than this amount. Benefits Phase c) If the IVIC provides a guaranteed withdrawal benefit and all or part of the contract is in the benefits phase, the following information with respect to the assets in the benefits phase i) Guaranteed annual withdrawal amount, and ii) How long the withdrawal amount is guaranteed to be payable.

ANNEX F
SEGREGATED FUNDS AND INVESTMENT FUNDS: DIFFERENCES BETWEEN PRODUCTS, DISTRIBUTION CHANNELS AND REGULATION The role of registrants/insurers in cost disclosure Investment funds Segregated funds A registered dealer or adviser (i.e., an intermediary) provides disclosures to clients. Cost and performance disclosure is provided by the insurer (i.e., the manufacturer) directly to the policy holder, typically on an annual basis. Account statement frequency Investment funds Segregated funds Clients receive monthly/quarterly account statements, an annual report on charges and other compensation and an annual investment performance report. There is a single statement provided annually, although some insurers choose to provide statements more frequently. Distribution channel Investment funds Segregated funds The registered dealer or adviser has an ongoing relationship with the client. There is no intermediary equivalent to the registered dealer in the insurance sector in most jurisdictions. Insurance advisers are not required to carry on an ongoing relationship with clients in the same way as advisor on securities side. Product features Investment funds Segregated funds No guarantees are provided. Segregated funds are insurance contracts that provide guarantees.