Sun Life MFS U.S. Equity Fund Compliance Update

November 10, 2014

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

In Q2 2014, Sun Life Global Investments (Canada) Inc. communicated that the Sun Life MFS U.S. Equity Fund exceeded the maximum borrowing limit of 5% as set out by National Instrument 81-102. This was due to the timing of client withdrawals and trade settlements between May 13, 2014 and May 15, 2014 at levels of 5.71%, 6.07%, and 5.67% on each of the respective days. On May 16, 2014, the borrowing limit no longer exceeded the threshold, due to settlement of investment sales.

Background
National Instrument 81-102 states the following in regard to mutual funds borrowing cash:
"A mutual fund shall not borrow cash or provide a security interest over any of its portfolio assets unless the transaction is a temporary measure to accommodate requests for the redemption of securities of the mutual fund while the mutual fund effects an orderly liquidation of portfolio assets, or to permit the mutual fund to settle portfolio transactions and, after giving effect to all transactions undertaken under this subparagraph, the outstanding amount of all borrowings of the mutual fund does not exceed five percent of its net asset value at the time of the borrowing."

How does this affect you and your plan members?
There is no impact to you or your members as a result of this breach. We will continue to monitor the fund and provide updates as necessary.

Questions?
Please contact your Sun Life Group Retirement Services representative.