MFS Global Equity Segregated Fund – Special Distribution and Tax Impact for Non-Registered Members

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 fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).

Action may be required by your members if they hold the fund in a Non-Registered plan.

We’re writing to inform you of a potential tax impact for one of the funds in your Non-Registered (taxable) plan(s).

The MFS Global Equity Segregated Fund (“Segregated Fund”) received a special distribution in February 2025. The Segregated Fund invests in units of the MFS Global Equity pooled fund (the “underlying fund”). The underlying fund made the special distribution.

Investment managers may make special distributions to investors in their funds (including Sun Life’s segregated funds) for various reasons. In this case, MFS made the distribution due to a significant sale by another investor. The sale led to the underlying fund realizing investment income, including capital gains. MFS distributed part of the investment income to the Segregated Fund. Sun Life in turn allocated this investment income to all members who had money in the Segregated Fund, based on their unit holdings on the distribution date (February 21, 2025).

When Sun Life allocated the investment income, the members’ Adjusted Cost Base (“ACB”) increased by the amount of the investment income allocated to their account. As such, they won’t see a transaction for the distribution in their account. The ACB is similar to the cost or ‘book value’ of the investment.

How will this affect your members?

The special distribution may result in capital gains or other investment income (dividend or interest income) for all members who had money in the Segregated Fund within a Non-Registered plan as of the distribution date. In 2026, they will receive a tax slip for the 2025 tax year which will include this income likely resulting in additional tax owing. We recommend that they speak with a tax professional for personalized guidance.

The special distribution doesn’t affect your members if they started investing in the Segregated Fund after February 20, 2025, or had no unit holdings on that date.

If you also offer the Segregated Fund in Registered (non-taxable) plan(s), the special distribution won’t affect the taxability of your members’ Registered plan(s) investments.

What to expect next?

Sun Life will provide the applicable tax slip(s) in February or March 2026. The tax slip(s) will also reflect all income from your members’ Non-Registered investments.

For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Members can find their ACB on Plan Member Services website mysunlife.ca and selecting Check on Account > Balances.

We will send email communication on August 14, 2025 to Non-Registered members who held this fund as of end of February 2025. Here is a copy for your reference.

Questions?

Please contact your Sun Life Group Retirement Services Representative

*In Quebec, registered as a Group annuity plans advisor.