Total account All values as at December 31, 2014

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Marilyn Riley
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1 Total account Total participating account invested assets: $8.5 billion Investment objectives The primary objective of the Participating Account is to provide superior performance with low volatility. Investment summary Financial s in-house investment teams manage the Participating Account. This provides enhanced quality control and cost-effectiveness along with the opportunity to better customize the portfolio to meet the longterm needs of our participating policyholders. We use a total rate of return investment approach to manage a variety of asset classes through the progression of business cycles. In general, we seek excess yield in the private markets such as private fixed income, commercial mortgages and real estate, while looking to the public markets for liquidity and steady income. We invest in high quality investments both in the private markets and public markets while capturing market opportunities to the extent risk-return opportunities arise. The operating guidelines for investments contain maximum weightings by asset type, sector and geographic exposure. We follow these guidelines and target allocations to help maintain a well-diversified portfolio with superior risk adjusted returns in the long term. Participating Account asset mix December 31, 2014 () Short-term assets Cash and short-term 99 1% Total short-term 99 1% Fixed income Public bonds 3,128 37% Private fixed income 1,412 17% Commercial mortgages % Total fixed income 5,525 66% Non-fixed income Equities 1,391 16% Real estate 1,478 17% Total non-fixed income 2,869 33% Total invested assets 8, % Policy loans 806 Other assets1 36 Total participating assets 9,335 1 Other assets include premiums receivable, reinsurance assets and other miscellaneous assets. Assurance Company of Canada is a member of the Financial group of companies

Total account Account composition at December 31, 2014 Cash and Short Term, 1% Public Bonds, 37% Private Fixed Income,

within the Participating Account to help ensure the long-term objectives, liabilities, liquidity requirements and

The portfolio management team, part of the investment team, monitors the overall asset mix of the participating account

enhancement relative to the benchmark asset mix while adhering to risk and liquidity constraints.

overall yield of the Participating Account.

Private fixed income Commercial mortgages Non-fixed income Equities Real estate Total invested assets Policy loans Other

2 Total account Account composition at December 31, 2014 Cash and Short Term, 1% Public Bonds, 37% Private Fixed Income, 17% Commercial Mortgages, 12% Equities, 16% Real Estate, 17% % We set the investmentt guidelines for each asset category within the Participating Account to help ensure the long-term objectives, liabilities, liquidity requirements and interest ratee risks are being met. The guidelines are reviewed every year by s Asset Liability Committee. The portfolio management team, part of the investment team, monitors the overall asset mix of the participating account to ensure the assets are managed in the most efficient manner, thereby maximizing both investable assets and investment flexibility. Value-added strategies may be implemented through tactical asset allocation, duration positioning and credit yield enhancement relative to the benchmark asset mix while adhering to risk and liquidity constraints. Value-added management assists with favourable experience for participating policyholders and helps to enhance the overall yield of the Participating Account. Participating Account asset mix December 31, 2014 () Short-term assets Cash and short-term Fixed income Public bonds Private fixed income Commercial mortgages Non-fixed income Equities Real estate Total invested assets Policy loans Other assets Total participating assets 3,128 1, ,391 1,478 8, ,335 All values are current market values as at December 31, 2014, and do not include accrued interest. 99 1% 37% 17% 12% 16% 17% 100% 0% to 5% 32% to 49% 5% to 20% 4% to 20% 11% to 21% 12% to 22% Assurance Company of Canada is a member of the Financial group of companies

Private fixed income Total private fixed income assets: $1,412 million Proportion of total invested assets of the Participating Account: 17% Private fixed income holdings Investment term at

This team is recognized as a leader and one of the most active players in the Canadian private fixed income market.

The highly negotiated and customized nature of these investments allows to achieve yields well in excess of comparably rated public securities.

This gives the Participating Account a meaningful competitive advantage. Private Investments by quality 285 1,127 1,412 AAA, 2% AA, 13% A, 49% BBB, 34% BB or less, 2% 20.2% 79.

3 Private fixed income Total private fixed income assets: $1,412 million Proportion of total invested assets of the Participating Account: 17% Private fixed income holdings Investment term at December 31, to 5 years Over 5 years Total private fixed income Financial s in-house private fixed income team managess the private fixed income holdings. This team is recognized as a leader and one of the most active players in the Canadian private fixed income market. Private fixed income includes lease financing, project financing and private debt consisting of highh quality investments that are well-diversified by sector. The highly negotiated and customized nature of these investments allows to achieve yields well in excess of comparably rated public securities. Relative to publicly issued i bonds, private fixed income providess favourable spreads, better terms and diversification opportunities. This gives the Participating Account a meaningful competitive advantage. Private Investments by quality 285 1,127 1,412 AAA, 2% AA, 13% A, 49% BBB, 34% BB or less, 2% 20.2% 79.8% Private Investments by sector Consumer Discretionary, 6% Consumer Staples, 4% Energy, 6% Financials, 13% Government, 18% Health Care, 2% Industrials, 9% Materials, 3% Information Technology, 1% Municipalities, universities, schools and hospitals, 23% Telecommunication Services, 2% Utilities, 11% Other, 1% All values are current market values as at December 31, 2014 and do not include accrued interest. Assurance Company of Canada is a member of the Financial group of companies

Public bond holdings Total public bond assets: $3,128 million Proportion of total invested assets of the Participating Account: 37% Investment mix at December 31, 2014 Government bonds Corporate

generate consistent returns, provide liquidity and stable income.

The portfolio is a mix of government and corporate issues diversified across geography, sector, investment quality and term to maturity.

4 Public bond holdings Total public bond assets: $3,128 million Proportion of total invested assets of the Participating Account: 37% Investment mix at December 31, 2014 Government bonds Corporate bonds Total public bonds Investment term at December 31, to 5 years 499 Over 5 years 2,629 Total public bonds 3,128 Financial s in-house public bond team manages the public bond portfolio to generate consistent returns, provide liquidity and stable income. We achieve this by maintaining a high quality portfolio while adding value through security selection based on detailed analysis and sector rotation that focuses on market trends. The portfolio is a mix of government and corporate issues diversified across geography, sector, investment quality and term to maturity. The quality of the portfolioo is high, with 100% of new purchases classified as investment grade. Investments by quality 1,671 1,457 3, % 46.6% 16.0% 84.0% AAA, 14% AA, 34% A, 40% BBB, 12% BB or less, 0% Major holdings att December 31, 2014 Province of Ontario Province of Quebec Gov. off Canada Province of NS Province of BC Province of Man. Province of Nfld. Province of NB Province of Sask. Toronto Air. Auth. Tot. major holdings of public bond holdings 16.4% 8.8% 8.7% 3.8% 2.8% 2.8% 2.8% 2.3% 2.2% 2.2% 52.8% of total participating assets 6.1% 3.2% 3.2% 1.4% 1.0% 1.0% 1.0% 0.9% 0.8% 0.8% 19.4% The public bond portfolio is also diversified across a broad range of economic sectors. Corporate bonds by sector Consumer Discretionary, 5% Consumer Staples, 1% Energy, 12% Financials, 34% Government related, 5% Industrials, 10% Informationn Technology, 1% Securitization, 7% Telecommunication Services,, 10% Utilities, 15% Assurance Company of Canada is a member of the Financial group of companies

Mortgage holdings Total mortgage assets: $985 million Proportion of total assets of the Participating Account: 12% Investment mix at December 31, 2014 Insured Uninsured Total mortgage assets 325 660

1% Financial s in-house mortgage team manages the mortgage holdings in partnership with branch offices located in most provinces across the country.

The quality of the portfolio is high, with only minimum losses in the last decade.

5 Mortgage holdings Total mortgage assets: $985 million Proportion of total assets of the Participating Account: 12% Investment mix at December 31, 2014 Insured Uninsured Total mortgage assets % 67.0% Investment term at December 31, to 5 years Over 5 years Total mortgage assets % 72.1% Financial s in-house mortgage team manages the mortgage holdings in partnership with branch offices located in most provinces across the country. The mortgage team is recognized as a reliable lender with the ability to fund large transactionss and the flexibility to create a customized loan structure. The quality of the portfolio is high, with only minimum losses in the last decade. The mortgage portfolio iss highly diversified across property type including retail, multi-family and office/industrial. Mortgage holdings are further diversified across Canada s major urban centres. Mortgages by location Alberta, 12% British Columbia, 13% Manitoba, 2% Newfoundland and Labrador, 0% Northwest Territories, 0% New Brunswick, 0% Nova Scotia, 2% Ontario, 56% Quebec, 12% Saskachewan, 1% Other, 1% All values are current market values as at December 31, 2014 and do not include accrued interest. Mortgages by property type Industrial, 7% Office, 24% Retail, 32% Multi-Family, 30% Other, 7% Assurance Company of Canada is a member of the Financial group of companies

6 Real estate holdings Total real estate assets: $1,478 million Proportion of total assets of the Participating Account: : 17% Financial s in-house real estate team manages the real estate holdings, together with our property management and leasing partners. The Canadian real estate portfolio is a well-diversified collection of office,, industrial, retail and multi-unit residential properties with holdings in all the major markets across Canada. The majority of the portfolio is comprised of high quality, income-producing properties with virtually no leverage. The overall real estate portfolio continuess to outperform other asset classes, helping to enhance the overall yield of the Participating Account. Real Estate by Property Type Industrial, 18% Office, 43% Retail, 31% Residential, 6% Other, 2% Real Estate by Location Alberta, 41% British Columbia, 28% Nova Scotia, 2% Ontario, 25% Quebec, 4% All values are current market values as at December 31, 2014, and do not include accrued income. Assurance Company of Canada is a member of the Financial group of companies

Total account All values as at September 30, 2017

Total account All values as at September 30, 2017 Total participating account invested assets: $9.5 billion Investment objectives The primary objective of the Sun Life Participating Account is to provide