THE CANADA LIFE ASSURANCE COMPANY FLEX INVESTMENT FUNDS

Transcription

1 Financial Statements of THE CANADA LIFE ASSURANCE COMPANY FLEX INVESTMENT FUNDS December 31, 2015

2 Deloitte LLP 360 Main Street Suite 2300 Winnipeg MB R3C 3Z3 Canada INDEPENDENT AUDITOR S REPORT Tel: Fax: To the Contractholders of The Canada Life Assurance Company Flex Investment Funds We have audited the accompanying financial statements of The Canada Life Assurance Company Flex Investment Funds as listed in Note 1 to the financial statements, which comprise the statements of financial position as at December 31, 2015 and December 31, 2014, the statements of comprehensive income, statements of changes in net assets attributable to contractholders and the statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the requirements of Part XII of the Canadian Life and Health Insurance Association Guideline G2, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Canada Life Assurance Company Flex Investment Funds as listed in Note 1 to the financial statements, as at December 31, 2015 and December 31, 2014, and the results of operations and cash flows for the years then ended in accordance with International Financial Reporting Standards and the requirements of Part XII of the Canadian Life and Health Insurance Association Guideline G2. Chartered Accountants Winnipeg, Manitoba March 18, 2016

3 The Canada Life Assurance Company Flex Investment Funds (in Canadian $ thousands) Statement of Financial Position Assets Far East Equity Fund S038MF Managed By: Canada Life Investments Statement of Comprehensive Income December 31 December 31 For the years ended December 31 December Income Cash and shortterm deposits 1,809 2,330 Net gain (loss) on investments (96) 5,725 Investment income due and accrued 57 3 Investment properties income Due from The Canada Life Assurance Company (note 8) 5 Due from brokers 25 Miscellaneous income (loss) (204) (99) Total Income (300) 5,626 Due from outside parties Investments Bonds Stocks 38,500 Investment fund units Investment properties Mortgages and sales agreements Derivatives 41,605 Total investments 38,500 41,605 Total assets 40,371 43,963 Liabilities Overdrafts Due to The Canada Life Assurance Company (note 8) Due to brokers Due to outside parties Mortgages on investment properties Derivatives Total liabilities excluding net assets attributable to contractholders Net assets attributable to contractholders 40,371 43,963 Expenses Management fees (note 8) 1,297 Investment properties expenses Other 119 Total expenses 2,051 1,608 Statement of Changes in Net Assets Attributable to Contractholders Net assets attributable to contractholders beginning of year Contractholder deposits 5,565 2,602 Contractholder withdrawals (6,806) (12,103) Increase (decrease) from operations 1,296 Transaction costs Withholding taxes 76 1 Net increase (decrease) in net assets from operations attributable to contractholders (2,351) 4,018 For the years ended 43, December 31 December ,446 (2,351) 4,018 Change in net assets attributable to contractholders (3,592) (5,483) Net assets attributable to contractholders end of year 40,371 43,963

4 Far East Equity Fund S038MF (in Canadian $ thousands) Managed By: Canada Life Investments Statement of Cash Flows For the years ended December Net Inflow (Outflow) of Cash Related to the Following Activities Operating Activities Increase (decrease) in net assets from operations attributable to contractholders (2,351) 4,018 Adjustments Realized (gains) losses (6) (13,340) Unrealized (gains) losses ,255 Gross proceeds of disposition of investments 104,280 82,138 Gross payments for the purchase of investments (102,008) (72,131) Change in investment income due and accrued (54) (3) Change in due from/to The Canada Life Assurance Company 20 (92) Change in due from/to brokers 64 Change in due from/to outside parties Change in mortgages on investment properties ,909 Financing Activities Contractholder deposits 5,565 2,602 Contractholder withdrawals (6,806) (12,103) (1,241) (9,501) Net increase (decrease) in cash, shortterm deposits and overdrafts (521) 2,408 Cash, shortterm deposits and overdrafts, beginning of year 2,330 (78) Cash, shortterm deposits and overdrafts, end of year 1,809 2,330 Supplementary cash flow information Dividends received 981 3,478

5 The Canada Life Assurance Company Flex Investment Funds Far East Equity Fund S038MF Managed By: Canada Life Investments (in Canadian $ thousands, except per unit amounts) The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the past five years. Net Assets Attributable to Contractholders Per Unit (note 7) For the years ended December 31 Number of units outstanding Emperor Net asset value per unit Flex Generations/Mosaic Generations I Generations II Generations Core Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 75/100 guarantee policy 100/100 guarantee policy 215, , , , ,422 1,338,541 1,521,136 1,976,567 2,489,298 2,849, , , , , , , , , , , , , , , , , , , , , , ,015 68,635 37,427 28, , , , ,574 94,651 88,699 62,329 68,357 77,541 60, PS1 75/75 guarantee policy 8, PS1 75/100 guarantee policy 28,046 21,013 18,323 6, PS1 100/100 guarantee policy PS2 75/75 guarantee policy 20,981 6,273 3, PS2 75/100 guarantee policy 6,495 2,910 2, PS2 100/100 guarantee policy Net Assets Attributable to Contractholder by Category For the years ended December 31 Net asset value Emperor Flex 3,140 3,529 3,777 3,428 3,401 Generations/Mosaic 19,251 22,973 27,295 28,981 28,974 Increase (decrease) per unit (0.73) 1.31 (0.72) 1.29 Generations I 3,903 4,697 5,799 6,325 6,506 (0.81) 1.42 Generations II 2,115 2,121 2,426 2,240 2,248 (0.59) 0.88 Generations Core 1,157 1,419 1,443 1,363 1,670 (0.54) 0.99 Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 1,676 1, (0.63) /100 guarantee policy 3,967 2,803 2,912 2, (0.64) /100 guarantee policy 1, (0.70) 1.05 PS1 75/75 guarantee policy 117 (1.93) PS1 75/100 guarantee policy (0.64) 1.26 PS1 100/100 guarantee policy PS2 75/75 guarantee policy (0.25) 1.77 PS2 75/100 guarantee policy (0.24) 1.77 PS2 100/100 guarantee policy (0.24) 1.77

6 Far East Equity Fund S038MF Managed By: Canada Life Investments (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Global Common Stock Australia AGL Energy Ltd. 52, APA Group 113, CSL Ltd. 5, Link Administration Holdings Ltd. 13, Macquarie Group Ltd. 7, Pact Group Holdings Ltd. 35, QBE Insurance Group Ltd. 39, Sydney Airport Authority 194, ,241 Telstra Corporation Ltd. 35, Treasury Wine Estates Ltd. 42, Bermuda Beijing Enterprises Water Group Ltd. 193, China Gas Holdings Ltd. 258, Shenzhen International Holdings Ltd. 9, Smartone Telecommunications Holdings Ltd. 60, Cayman Islands 3SBio Inc. 8, Anta Sports Products Ltd. 15, Best Pacific International Holdings Ltd. 428, China Auto Rental Inc. 205, China Resources Land Ltd. 138, Cosmo Lady (China) Holdings Company Ltd. 294, CT Environmental Group Ltd. 1,952, Geely Automobile Holdings Ltd. 720, IMAX China Holding Inc. 121, ,178 Jumei International Holding Ltd. 7, Kingdee International Software Group Ltd. 354, Lee & Man Paper Manufacturing Ltd. 219, Peak Sport Products Co. Ltd. 290, Phoenix Healthcare Group Co. 87, Regina Miracle International Holdings Ltd. 203,

7 Far East Equity Fund S038MF Managed By: Canada Life Investments (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Global Common Stock (continued) Cayman Islands (continued) Shenzhou International Group Holdings Ltd. 69, Silicon Motion Technology Corp. 5, Tencent Holdings Ltd. 20, Xinyi Solar Holdings Ltd. 594, Xtep International Holdings Ltd. 173, Zhen Ding Technology Holdings Ltd. 49, China China Life Insurance Co. Ltd. 95, China Merchants Bank Co. 118, CRCC HighTech Equipment Corp. Ltd. 120, Huatai Securities Co. Ltd. 172, France Lyxor ETF MSCI India 140,713 2,674 2,877 Hong Kong China Taiping Insurance Holdings Co. Ltd. 111, China Travel International Investment Hong Kong Ltd. 442, China Unicom Ltd. 156, Singamas Container Holdings Ltd. 380, Techtronic Industries Company Ltd. 51, Wenzhou Kangning Hospital Co. Ltd. 21, Indonesia Bank Rakyat Indonesia Persero Tbk PT 231, Industri Jamu Dan Farmasi Sido Muncul PT 443, Kino Indonesia Co. 144, Mitra Keluarga Karyasehat 700, Pembangunan Perumahan 236, PT Ciputra Development 590, PT Pakuwon Jati 1,160,

8 Far East Equity Fund S038MF Managed By: Canada Life Investments (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Global Common Stock (continued) Luxembourg DBX Harvest CSI 300 ETF 11, Malaysia IHH Healthcare 136, My E.G. Services Bhd. 347, Philippines 8990 Holdings Inc. 228, Megaworld Corporation 2,885, Security Bank Corp. 27, Universal Robina Corp. 58, Singapore Keppel DC Real Estate Investment Trust 89, Mapletree Logistics Real Estate Investment Trust 233, Singapore Telecommunications Ltd. 181, South Korea Aerospace Technology of Korea Inc. 23, AmorePacific Corp. 1, CJ CGV Co. Ltd. 2, CJ Corp. 1, Genic Co. Ltd. 26,766 1, Hanssem Co. Ltd Hyundai Motor Co. Ltd. 4, Hyundai Motor Co. Ltd InBody Co. Ltd. 3, Kangwon Land Inc. 5, Korea Aerospace Industries Ltd. 8, LG Corp. 3, LG Display Co. Ltd. 20, LG Household & Health Care Ltd MK Trend Co. 4,

9 Far East Equity Fund S038MF Managed By: Canada Life Investments (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Global Common Stock (continued) South Korea (continued) Naturalendo Technology Co. Ltd. 35,184 1, Nongshim Co. Ltd Osstem Implant Co. Ltd. 3, Samsung Electronics Co. Ltd Samsung Electronics Co. Preferred Shares Tonymoly Co. Ltd. 12, Vieworks Co. Ltd. 2, Taiwan Bon Fame Co. Ltd. 34, Delta Electronics Inc. 42, Eclat Textile Co. Ltd. 15, Fubon Financial Holding Co. Ltd. 350, Hermes Microvision Inc. 3, Largan Precision Company Ltd. 1, Mega Financial Holding Co. Ltd. 550, Taiwan Semiconductor Manufacturing Co. Ltd. 58, Yuanta Financial Holding Co. Ltd. 16, Thailand Airports of Thailand Public Co. Ltd. 34, Erawan Group Public Co. Ltd. 459, Krungthai Card PCL 59, Minor International Public Co. Ltd. 156, Muangthai Leasing PCL 964, Ratchaburi Electricity General Holding Co. Ltd. 68, Thai Beverage PCL 606, Total Global Common Stock 37,963 38,500 Total Stocks 37,963 38,500 Total Investments 37,963 38,500

10 FAR EAST EQUITY FUND S038MF MANAGED BY: CANADA LIFE INVESTMENTS NOTES TO THE SCHEDULE OF INVESTMENT PORTFOLIO (in Canadian $ thousands) Introduction The Fund's objective in managing risk is the creation and protection of contractholder value. Risk is inherent in the Fund's activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Fund's continuing profitability. The Fund can be exposed to liquidity risk, market risk (which includes currency risk, interest rate risk and other price risk) and credit risk arising from the financial instruments it holds. A. Risk Management The Fund s investment activities expose it to a variety of financial risks. The Schedule of Investment Portfolio presents the securities held by the Fund as at December 31, 2015, and groups the securities by asset type, geographic region and/or market segment. The following sections describe the significant risks that are relevant to the Fund. To assist with managing risk, The Canada Life Assurance Company (the Company) maintains a governance structure that oversees the Fund's investment activities and monitors compliance with the Fund's stated investment strategy and other regulations. B. Liquidity Risk Liquidity risk arises when a Fund encounters difficulty in meeting its financial obligations as they come due. The Fund is exposed to liquidity risk due to potential daily cash redemptions of redeemable units. The Fund retains sufficient cash and cash equivalent positions to maintain adequate liquidity to meet the obligation to fund daily cash redemptions of their redeemable units. Some securities are illiquid due to legal restrictions on their resale, the nature of the investment, or simply a lack of interested buyers for a particular security or security type. Certain securities may become less liquid due to changes in market conditions, such as interest rate changes or market volatility, which could impair the ability of a Fund to sell such securities quickly. In accordance with the Fund's policy, the Company monitors the Fund's liquidity positions on a regular basis. C. Currency Risk Currency risk is the risk that financial instruments which are denominated or exchanged in a currency other than the Canadian dollar, which is the Fund s reporting currency, will fluctuate due to changes in exchange rates. The table below indicates the foreign currencies to which the Fund had significant exposure as at period end in Canadian dollar terms, including the underlying principal amount of forward currency contracts, if any. The table also illustrates the potential impact to the Fund s net assets attributable to contractholders, all other variables held constant, as a result of a 1% change in these currencies relative to the Canadian dollar. In practice, the actual results may differ from this sensitivity analysis and the difference could be significant Currency Investments Cash, Shortterm Deposits and Overdrafts Total* Impact on Net Assets Attributable to Contractholders Hong Kong Dollar 10, , Euro 2,877 2, Other Currencies 24,895 24, Total 38, , As Percent of Net Assets Attributable to Contractholders *includes both monetary and nonmonetary instruments

11 FAR EAST EQUITY FUND S038MF MANAGED BY: CANADA LIFE INVESTMENTS NOTES TO THE SCHEDULE OF INVESTMENT PORTFOLIO (in Canadian $ thousands) C. Currency Risk (continued) 2014 Currency Investments Cash, Shortterm Deposits and Overdrafts Total* Impact on Net Assets Attributable to Contractholders Hong Kong Dollar 19,627 19, United States Dollar 2,530 2, Euro 3,387 (1) 3, Other Currencies 16,061 16, Total 41,605 (1) 41, As Percent of Net Assets Attributable to Contractholders *includes both monetary and nonmonetary instruments D. Other Price Risk Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate, currency or credit risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. All securities present a risk of loss of capital. The Fund Manager moderates this risk through careful selection of securities and other financial instruments within the parameters of the investment strategy. The maximum risk resulting from financial instruments is equivalent to their fair value. For this Fund, the most significant exposure to other price risk arises from its investment in equity securities. As at December 31, 2015, had the prices on the respective stock exchanges for these securities raised (or lowered) by 1%, with all other variables held constant, net assets would have increased (or decreased) by approximately $385 or approximately 1.0% of total net assets attributable to contractholders. In practice, the actual results may differ and the difference could be significant. E. Fair Value Classification The following table presents information about the Fund s assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Fund to determine such fair value: 2015 Assets Measured at Fair Value Assets measured at fair value Level 1 Level 2 Level 3 Total Stocks 2,668 35,832 38,500 Total assets measured at fair value 2,668 35,832 38, Assets Measured at Fair Value Assets measured at fair value Level 1 Level 2 Level 3 Total Stocks 3,555 38,050 41,605 Total assets measured at fair value 3,555 38,050 41,605 There have not been any significant transfers in or out of Level 1 or 2 during the period.

12 The Canada Life Assurance Company Flex Investment Funds Far East Equity Fund S038MF Managed By: Canada Life Investments The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the past five years. (1) Management Expense Ratio (unaudited) For the years ended December Emperor Flex Generations/Mosaic Generations I Generations II Generations Core Group Prestige/Prestige Plus Private Collections 75/75 guarantee policy 75/100 guarantee policy 100/100 guarantee policy PS1 75/75 guarantee policy PS1 75/100 guarantee policy PS1 100/100 guarantee policy (2) Portfolio Turnover Rate (unaudited) For the years ended December Portfolio Turnover Rate (%) (1) (2) The management expense ratio has been calculated as the aggregate of all fees, taxes, charges and other expenses incurred during the year divided by the average daily net asset value of the segregated fund attributable to the particular fee option. All ratios shown are on an annual basis. In circumstances where the particular fund or fee option did not have twelve months' exposure the ratios have been annualized. Management expense ratios are calculated for Individual Retirement and Investment Services clients only. No management expense ratio is calculated for the Preferred Series 2 guarantee policy option as such fees are charged directly to the contractholder. The portfolio turnover rates presented in the financial statements reflects the Canadian Life and Health Insurance Association Inc. (CLHIA) Guideline G2, Individual Variable Insurance Contracts Relating to Segregated Funds 12.3(a)(iii). The portfolio turnover rates indicate how actively the portfolio investments have been bought or sold throughout the year. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year.

13 The Canada Life Assurance Company Flex Investment Funds Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands) Statement of Financial Position Statement of Comprehensive Income December 31 December 31 For the years ended December 31 December Assets Income Cash and shortterm deposits 1,346 2,411 Net gain (loss) on investments (2,838) 19,749 Investment income due and accrued Investment properties income Due from The Canada Life Assurance Company (note 8) Due from brokers Miscellaneous income (loss) Total Income (2,804) 19,790 Due from outside parties Investments Bonds Stocks 157,480 Investment fund units Investment properties Mortgages and sales agreements Derivatives 160,918 Total investments 157, ,918 Total assets 159, ,443 Liabilities Overdrafts Due to The Canada Life Assurance Company (note 8) Due to brokers Due to outside parties Mortgages on investment properties Derivatives Total liabilities excluding net assets attributable to contractholders Net assets attributable to contractholders 159, ,420 Expenses Management fees (note 8) 3,783 Investment properties expenses Other 349 Total expenses 4,290 4,498 Statement of Changes in Net Assets Attributable to Contractholders Net assets attributable to contractholders beginning of year Contractholder deposits 21,733 4,517 Contractholder withdrawals (19,053) (21,488) Increase (decrease) from operations 3,944 Transaction costs Withholding taxes 3 Net increase (decrease) in net assets from operations attributable to contractholders (7,094) 15,292 For the years ended 163, December 31 December ,099 (7,094) 15,292 Change in net assets attributable to contractholders (4,414) (1,679) Net assets attributable to contractholders end of year 159, ,420

14 Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands) Statement of Cash Flows For the years ended December 31 Net Inflow (Outflow) of Cash Related to the Following Activities Operating Activities Increase (decrease) in net assets from operations attributable to contractholders (7,094) 15,292 Adjustments Realized (gains) losses (11,906) (10,662) Unrealized (gains) losses 17,946 (5,879) Gross proceeds of disposition of investments 89,130 91,271 Gross payments for the purchase of investments (91,732) (71,659) Change in investment income due and accrued (90) 33 Change in due from/to The Canada Life Assurance Company 1 (14) Change in due from/to brokers Change in due from/to outside parties Change in mortgages on investment properties (3,745) 18,382 Financing Activities Contractholder deposits 21,733 4,517 Contractholder withdrawals (19,053) (21,488) 2,680 (16,971) Net increase (decrease) in cash, shortterm deposits and overdrafts (1,065) 1,411 Cash, shortterm deposits and overdrafts, beginning of year 2,411 1,000 Cash, shortterm deposits and overdrafts, end of year 1,346 2,411 Supplementary cash flow information Dividends received 3,123 3,141

15 The Canada Life Assurance Company Flex Investment Funds Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except per unit amounts) The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the past five years. Net Assets Attributable to Contractholders Per Unit (note 7) For the years ended December 31 Number of units outstanding Emperor Net asset value per unit Flex Generations/Mosaic Generations I Generations II Generations Core Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 75/100 guarantee policy 100/100 guarantee policy 210, , , , ,632 1,764,688 1,947,195 2,289,285 2,860,511 3,494, , , , , , , , , , , , , , , ,943 23,347 26,513 31,046 42,929 48,863 84,998 82,549 32,687 22,035 19, , , , ,010 73,099 44,688 44,555 35,318 29,062 23, PS1 75/75 guarantee policy PS1 75/100 guarantee policy 12,194 2,593 6,004 2, PS1 100/100 guarantee policy PS2 75/75 guarantee policy 85,701 80,768 72,086 65, PS2 75/100 guarantee policy 27,406 22,710 23, PS2 100/100 guarantee policy Net Assets Attributable to Contractholder by Category For the years ended December 31 Net asset value Emperor Flex 68,361 81,707 83,667 83,383 95,117 Generations/Mosaic 34,051 39,565 42,576 46,161 54,419 Increase (decrease) per unit (17.90) (1.02) 1.72 Generations I 5,421 6,007 6,420 6,267 7,384 (0.71) 1.20 Generations II 2,009 1,954 1,832 1,750 1,621 (0.59) 0.91 Generations Core 1,653 1,754 1,607 3,575 3,916 (0.57) 0.98 Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 1,092 1, (0.67) /100 guarantee policy 3,290 2,709 2,164 1, (0.68) /100 guarantee policy (0.70) 1.07 PS1 75/75 guarantee policy PS1 75/100 guarantee policy (0.63) 1.22 PS1 100/100 guarantee policy PS2 75/75 guarantee policy 1,227 1, (0.34) 1.62 PS2 75/100 guarantee policy (0.34) 1.62 PS2 100/100 guarantee policy

16 Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Canadian Common Stock Consumer Discretionary Amaya Inc. 87,774 2,594 1,530 Dollarama Inc. 57,525 3,254 4,599 Gildan Activewear Inc. 127,764 3,333 5,026 Magna International Inc. 31,362 1,489 1,760 Restaurant Brands International Inc. 112,948 5,283 5,845 Consumer Staples Alimentation CoucheTard Inc. Class B Sub. voting 139,315 5,249 8,485 Loblaw Companies Ltd. 119,071 6,607 7,780 Energy Canadian Natural Resources Ltd. 66,995 2,281 2,025 Crescent Point Energy Corp. 126,664 2,077 2,042 Enbridge Inc. 83,629 4,974 3,847 Keyera Corp. 59,510 2,600 2,396 Suncor Energy Inc. 93,656 3,381 3,345 Tourmaline Oil Corp. 90,002 3,138 2,012 Vermilion Energy Inc. 54,221 2,687 2,039 Financials Brookfield Asset Management Inc. Class A limited voting 124,299 4,979 5,426 Element Financial Corp. 372,518 5,616 6,221 Manulife Financial Corp. 366,239 6,032 7,596 Onex Corp. Sub. voting 53,557 2,181 4,543 Royal Bank of Canada 157,271 9,002 11,661 Sun Life Financial Inc. 71,525 2,351 3,086 The Bank of Nova Scotia 159,311 8,684 8,917 The TorontoDominion Bank 220,000 8,056 11,933 Health Care Concordia Healthcare Corp. 63,381 4,279 3,584 Valeant Pharmaceuticals International Inc. 15,400 2,425 2,165

17 Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Canadian Common Stock (continued) Industrials Air Canada Variable Voting 319,452 2,009 3,262 Canadian National Railway Co. 50,380 3,448 3,897 Canadian Pacific Railway Ltd. 36,405 6,844 6,433 Information Technology CGI Group Inc. Class A Sub. voting 81,411 2,412 4,510 Constellation Software Inc. 2,800 1,551 1,615 Materials AgnicoEagle Mines Ltd. 24, Agrium Inc. 14,000 1,605 1,731 First Quantum Minerals Ltd. 171,995 2, Goldcorp Inc. 75,732 1,328 1,211 Teck Resources Ltd. Class B 98, Total Canadian Common Stock 125, ,825 United States Common Stock Consumer Discretionary The Home Depot Inc. 24,700 3,951 4,519 Industrials Norfolk Southern Corp. 13,700 1,690 1,603 Information Technology MasterCard Inc. Class A 27,400 3,423 3,691 Total United States Common Stock 9,064 9,813 Global Common Stock Ireland Allergan PLC 11,200 4,327 4,842

18 Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Global Common Stock (continued) Total Global Common Stock 4,327 4,842 Total Stocks 138, ,480 Total Investments 138, ,480

19 CANADIAN EQUITY FUND (LAKETON) SF009 MANAGED BY: LAKETON INVESTMENT MANAGEMENT, A DIVISION OF GLC ASSET MANAGEMENT GROUP LTD. NOTES TO THE SCHEDULE OF INVESTMENT PORTFOLIO (in Canadian $ thousands) Introduction The Fund's objective in managing risk is the creation and protection of contractholder value. Risk is inherent in the Fund's activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Fund's continuing profitability. The Fund can be exposed to liquidity risk, market risk (which includes currency risk, interest rate risk and other price risk) and credit risk arising from the financial instruments it holds. A. Risk Management The Fund s investment activities expose it to a variety of financial risks. The Schedule of Investment Portfolio presents the securities held by the Fund as at December 31, 2015, and groups the securities by asset type, geographic region and/or market segment. The following sections describe the significant risks that are relevant to the Fund. To assist with managing risk, The Canada Life Assurance Company (the Company) maintains a governance structure that oversees the Fund's investment activities and monitors compliance with the Fund's stated investment strategy and other regulations. B. Liquidity Risk Liquidity risk arises when a Fund encounters difficulty in meeting its financial obligations as they come due. The Fund is exposed to liquidity risk due to potential daily cash redemptions of redeemable units. The Fund retains sufficient cash and cash equivalent positions to maintain adequate liquidity to meet the obligation to fund daily cash redemptions of their redeemable units. Some securities are illiquid due to legal restrictions on their resale, the nature of the investment, or simply a lack of interested buyers for a particular security or security type. Certain securities may become less liquid due to changes in market conditions, such as interest rate changes or market volatility, which could impair the ability of a Fund to sell such securities quickly. In accordance with the Fund's policy, the Company monitors the Fund's liquidity positions on a regular basis. C. Currency Risk Currency risk is the risk that financial instruments which are denominated or exchanged in a currency other than the Canadian dollar, which is the Fund s reporting currency, will fluctuate due to changes in exchange rates. The table below indicates the foreign currencies to which the Fund had significant exposure as at period end in Canadian dollar terms, including the underlying principal amount of forward currency contracts, if any. The table also illustrates the potential impact to the Fund s net assets attributable to contractholders, all other variables held constant, as a result of a 1% change in these currencies relative to the Canadian dollar. In practice, the actual results may differ from this sensitivity analysis and the difference could be significant. Currency Investments 2015 Cash, Shortterm Deposits and Overdrafts Total* Impact on Net Assets Attributable to Contractholders United States Dollar 14, , Total 14, , As Percent of Net Assets Attributable to Contractholders *includes both monetary and nonmonetary instruments

20 CANADIAN EQUITY FUND (LAKETON) SF009 MANAGED BY: LAKETON INVESTMENT MANAGEMENT, A DIVISION OF GLC ASSET MANAGEMENT GROUP LTD. NOTES TO THE SCHEDULE OF INVESTMENT PORTFOLIO (in Canadian $ thousands) C. Currency Risk (continued) 2014 Currency Investments Cash, Shortterm Deposits and Overdrafts Total* Impact on Net Assets Attributable to Contractholders Other Currencies Total As Percent of Net Assets Attributable to Contractholders *includes both monetary and nonmonetary instruments D. Other Price Risk Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate, currency or credit risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. All securities present a risk of loss of capital. The Fund Manager moderates this risk through careful selection of securities and other financial instruments within the parameters of the investment strategy. The maximum risk resulting from financial instruments is equivalent to their fair value. For this Fund, the most significant exposure to other price risk arises from its investment in equity securities. As at December 31, 2015, had the prices on the respective stock exchanges for these securities raised (or lowered) by 1%, with all other variables held constant, net assets would have increased (or decreased) by approximately $1,575 or approximately 1.0% of total net assets attributable to contractholders. In practice, the actual results may differ and the difference could be significant. E. Fair Value Classification The following table presents information about the Fund s assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Fund to determine such fair value: 2015 Assets Measured at Fair Value Assets measured at fair value Level 1 Level 2 Level 3 Total Stocks 157, ,480 Total assets measured at fair value 157, , Assets Measured at Fair Value Assets measured at fair value Level 1 Level 2 Level 3 Total Stocks 160, ,918 Total assets measured at fair value 160, ,918 There have not been any significant transfers in or out of Level 1 or 2 during the period.

21 The Canada Life Assurance Company Flex Investment Funds Canadian Equity Fund (Laketon) SF009 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the past five years. (1) Management Expense Ratio (unaudited) For the years ended December Emperor Flex Generations/Mosaic Generations I Generations II Generations Core Group Prestige/Prestige Plus Private Collections 75/75 guarantee policy 75/100 guarantee policy 100/100 guarantee policy PS1 75/75 guarantee policy PS1 75/100 guarantee policy PS1 100/100 guarantee policy (2) Portfolio Turnover Rate (unaudited) For the years ended December Portfolio Turnover Rate (%) (1) (2) The management expense ratio has been calculated as the aggregate of all fees, taxes, charges and other expenses incurred during the year divided by the average daily net asset value of the segregated fund attributable to the particular fee option. All ratios shown are on an annual basis. In circumstances where the particular fund or fee option did not have twelve months' exposure the ratios have been annualized. Management expense ratios are calculated for Individual Retirement and Investment Services clients only. No management expense ratio is calculated for the Preferred Series 2 guarantee policy option as such fees are charged directly to the contractholder. The portfolio turnover rates presented in the financial statements reflects the Canadian Life and Health Insurance Association Inc. (CLHIA) Guideline G2, Individual Variable Insurance Contracts Relating to Segregated Funds 12.3(a)(iii). The portfolio turnover rates indicate how actively the portfolio investments have been bought or sold throughout the year. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year.

22 The Canada Life Assurance Company Flex Investment Funds Enhanced Dividend Fund (Laketon) SF039 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands) Statement of Financial Position Statement of Comprehensive Income December 31 December 31 For the years ended December 31 December Assets Income Cash and shortterm deposits 70, ,205 Net gain (loss) on investments (48,572) 150,189 Investment income due and accrued 4,453 3,762 Investment properties income Due from The Canada Life Assurance Company (note 8) 82 Due from brokers 201 Miscellaneous income (loss) Total Income (48,392) 150,428 Due from outside parties Investments Bonds Stocks 910,208 Investment fund units Investment properties Mortgages and sales agreements Derivatives 1,006,448 Total investments 910,208 1,006,448 Total assets 984,831 1,129,616 Liabilities Overdrafts Due to The Canada Life Assurance Company (note 8) Due to brokers Due to outside parties Mortgages on investment properties Derivatives Total liabilities excluding net assets attributable to contractholders Net assets attributable to contractholders 984,831 1,129,616 Expenses Management fees (note 8) 23,780 Investment properties expenses Other 2,375 Total expenses 26,240 26,542 Statement of Changes in Net Assets Attributable to Contractholders Net assets attributable to contractholders beginning of year Contractholder deposits 80, ,245 Contractholder withdrawals (150,299) (151,426) Increase (decrease) from operations 23,955 Transaction costs Withholding taxes 5 3 2,441 Net increase (decrease) in net assets from operations attributable to contractholders (74,632) 123,886 For the years ended December 31 December ,129, ,911 (74,632) 123,886 Change in net assets attributable to contractholders (144,785) 155,705 Net assets attributable to contractholders end of year 984,831 1,129,616

23 Enhanced Dividend Fund (Laketon) SF039 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands) Statement of Cash Flows For the years ended December 31 Net Inflow (Outflow) of Cash Related to the Following Activities Operating Activities Increase (decrease) in net assets from operations attributable to contractholders (74,632) 123,886 Adjustments Realized (gains) losses (4,405) (73,939) Unrealized (gains) losses 92,086 (41,062) Gross proceeds of disposition of investments 54, ,900 Gross payments for the purchase of investments (45,846) (96,547) Change in investment income due and accrued (691) (598) Change in due from/to The Canada Life Assurance Company Change in due from/to brokers Change in due from/to outside parties Change in mortgages on investment properties 21,036 29,835 Financing Activities Contractholder deposits 80, ,245 Contractholder withdrawals (150,299) (151,426) (70,153) 31,819 Net increase (decrease) in cash, shortterm deposits and overdrafts (49,117) 61,654 Cash, shortterm deposits and overdrafts, beginning of year 119,205 57,551 Cash, shortterm deposits and overdrafts, end of year 70, ,205 Supplementary cash flow information Dividends received 37,863 32,994

24 The Canada Life Assurance Company Flex Investment Funds Enhanced Dividend Fund (Laketon) SF039 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except per unit amounts) The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the past five years. Net Assets Attributable to Contractholders Per Unit (note 7) For the years ended December 31 Number of units outstanding Emperor Net asset value per unit Flex Generations/Mosaic Generations I Generations II Generations Core Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 75/100 guarantee policy 100/100 guarantee policy 1,375,402 1,564,063 1,683,322 1,888,505 2,161,208 11,021,030 13,093,571 14,558,661 15,576,382 17,780,163 5,920,466 6,376,549 6,023,196 5,582,330 5,405,340 1,573,249 1,734,657 1,235,247 1,000,653 1,127,609 2,974,232 3,297,024 2,458,129 2,033,439 1,739,560 1,708,149 1,959,087 2,086,994 2,428,405 2,065,788 2,007,672 1,897,554 1,265, , ,837 8,665,167 8,091,780 5,412,594 3,169,612 1,920,145 2,289,209 2,459,126 1,644, , , PS1 75/75 guarantee policy 114,345 74,334 58, PS1 75/100 guarantee policy 1,596,145 1,043, , , PS1 100/100 guarantee policy 5, PS2 75/75 guarantee policy 509, , , , PS2 75/100 guarantee policy 1,424,615 1,296,468 1,636, , PS2 100/100 guarantee policy 25,730 60,830 8,640 3, Net Assets Attributable to Contractholder by Category For the years ended December 31 Net asset value Emperor Flex 51,763 63,289 60,549 57,525 60,778 Generations/Mosaic 403, , , , ,716 Increase (decrease) per unit (2.82) 4.49 (2.75) 4.37 Generations I 89, ,231 86,698 68,061 60,864 (1.14) 1.80 Generations II 20,723 24,689 15,706 10,828 11,321 (1.06) 1.52 Generations Core 40,812 48,627 32,216 22,561 17,812 (1.03) 1.64 Group Prestige/PrestigePlus Private Collections 75/75 guarantee policy 31,708 32,213 19,088 9,956 6,976 (1.19) /100 guarantee policy 136, ,897 81,420 40,388 22,599 (1.19) /100 guarantee policy 34,959 40,578 24,239 8,502 4,829 (1.23) 1.76 PS1 75/75 guarantee policy 1,545 1, (0.95) 1.67 PS1 75/100 guarantee policy 21,401 15,007 6,906 1,583 (0.97) 1.63 PS1 100/100 guarantee policy 74 (0.19) PS2 75/75 guarantee policy 7,454 7,147 5,160 3,479 (0.69) 2.05 PS2 75/100 guarantee policy 20,821 19,850 21,704 8,481 (0.69) 2.05 PS2 100/100 guarantee policy (0.69) 2.05

25 Enhanced Dividend Fund (Laketon) SF039 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Canadian Common Stock Consumer Discretionary Hudson's Bay Co. 583,779 12,020 10,566 Magna International Inc. 1,079,207 24,649 60,565 Consumer Staples George Weston Ltd. 289,419 19,445 30,950 Loblaw Companies Ltd. 201,330 12,232 13,155 Saputo Inc. 755,566 13,402 25,009 Energy Canadian Natural Resources Ltd. 245,849 8,769 7,430 Crescent Point Energy Corp. 985,154 29,186 15,881 EnCana Corp. 185,236 5,009 1,302 Imperial Oil Ltd. 163,073 6,766 7,351 Suncor Energy Inc. 1,227,455 38,940 43,845 Vermilion Energy Inc. 613,262 21,926 23,065 Financials Bank of Montreal 879,070 51,210 68,638 Canadian Imperial Bank of Commerce 538,741 42,046 49,128 CI Financial Corp. 532,615 11,878 16,298 First Capital Realty Inc. 984,727 13,056 18,070 Granite Real Estate Investment Trust Holdings LP 57,749 2,186 2,192 Manulife Financial Corp. 1,097,109 26,087 22,754 National Bank of Canada 973,921 26,377 39,259 Royal Bank of Canada 1,219,652 57,386 90,437 Sun Life Financial Inc. 682,891 24,799 29,467 The Bank of Nova Scotia 967,293 42,409 54,139 The TorontoDominion Bank 1,731,942 59,183 93,941 Industrials Canadian National Railway Co. 127,972 9,511 9,899

26 Enhanced Dividend Fund (Laketon) SF039 Managed By: Laketon Investment Management, a division of GLC Asset Management Group Ltd. (in Canadian $ thousands, except number of units, shares or par value) Schedule of Investment Portfolio No. of Units, Shares or Average Fair Par Value Cost Value Canadian Common Stock (continued) Perpetual Brookfield Asset Management Inc. Perpetual 65,650 1,595 1,308 Fortis Inc. Perpetual 135,900 3,398 3,094 Telecommunication Services BCE Inc. 1,606,156 71,948 85,865 Rogers Communications Inc. Class B nonvoting 484,408 16,864 23,116 TELUS Corp. 717,202 11,930 27,440 Utilities Capital Power Corp. 734,179 16,499 13,046 Fortis Inc. 553,800 13,246 20,718 TransAlta Corp. 464,337 10,579 2,280 Total Canadian Common Stock 704, ,208 Total Stocks 704, ,208 Total Investments 704, ,208

27 ENHANCED DIVIDEND FUND (LAKETON) SF039 MANAGED BY: LAKETON INVESTMENT MANAGEMENT, A DIVISION OF GLC ASSET MANAGEMENT GROUP LTD. NOTES TO THE SCHEDULE OF INVESTMENT PORTFOLIO (in Canadian $ thousands) Introduction The Fund's objective in managing risk is the creation and protection of contractholder value. Risk is inherent in the Fund's activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Fund's continuing profitability. The Fund can be exposed to liquidity risk, market risk (which includes currency risk, interest rate risk and other price risk) and credit risk arising from the financial instruments it holds. A. Risk Management The Fund s investment activities expose it to a variety of financial risks. The Schedule of Investment Portfolio presents the securities held by the Fund as at December 31, 2015, and groups the securities by asset type, geographic region and/or market segment. The following sections describe the significant risks that are relevant to the Fund. To assist with managing risk, The Canada Life Assurance Company (the Company) maintains a governance structure that oversees the Fund's investment activities and monitors compliance with the Fund's stated investment strategy and other regulations. B. Liquidity Risk Liquidity risk arises when a Fund encounters difficulty in meeting its financial obligations as they come due. The Fund is exposed to liquidity risk due to potential daily cash redemptions of redeemable units. The Fund retains sufficient cash and cash equivalent positions to maintain adequate liquidity to meet the obligation to fund daily cash redemptions of their redeemable units. Some securities are illiquid due to legal restrictions on their resale, the nature of the investment, or simply a lack of interested buyers for a particular security or security type. Certain securities may become less liquid due to changes in market conditions, such as interest rate changes or market volatility, which could impair the ability of a Fund to sell such securities quickly. In accordance with the Fund's policy, the Company monitors the Fund's liquidity positions on a regular basis. C. Currency Risk Currency risk is the risk that financial instruments which are denominated or exchanged in a currency other than the Canadian dollar, which is the Fund s reporting currency, will fluctuate due to changes in exchange rates. The table below indicates the foreign currencies to which the Fund had significant exposure as at period end in Canadian dollar terms, including the underlying principal amount of forward currency contracts, if any. The table also illustrates the potential impact to the Fund s net assets attributable to contractholders, all other variables held constant, as a result of a 1% change in these currencies relative to the Canadian dollar. In practice, the actual results may differ from this sensitivity analysis and the difference could be significant. Currency Investments 2015 Cash, Shortterm Deposits and Overdrafts Total* Impact on Net Assets Attributable to Contractholders Other Currencies Total As Percent of Net Assets Attributable to Contractholders *includes both monetary and nonmonetary instruments