LIFE INSURANCE

PENSION

GROUP INSURANCE

PENSION TERMS

Administration and Investment Management Fees: Charged for the administration and investment management of your Insurance Financial Institution Retirement Savings Plan. Administration fees are charged to your plan by Financial Institutions investment management fees are charged to Insurance Financial Institution's different segregated funds by our fund managers. For all of Insurance Financial Institution's segregated funds, investment management fees may reduce as the funds grow in size.

Annual Returns: Measures a fund's performance on a year-to-year basis.

Annualized Returns: Show the cumulative returns of a fund over a specific period of time (usually one, three, five and 10 years). Annualized returns level the short-term volatility of annual returns, giving a good indication of a fund's potential for long-term growth. Also known as annualized compound returns.

Asset: Anything owned that is of monetary value. An investment fund's assets are the securities its Portfolio contains.

Asset Mix: The distribution of investments among different types of assets. This distribution diversifies an investment portfolio. Diversification is an excellent Investment strategy.

Bond: An interest-bearing certificate issued by either a corporation, the government, or a government agency. Interest is paid on a bond in a specific amount at a specific time until the bond matures. Some bonds require a portion of the principal to be repaid annually.

Book Value: The value of your capital and accumulated interest to date based on the guaranteed Interest rate at which your funds were invested. You receive book value for your Guaranteed Interest Accounts on their maturity dates.

CPP (Canada Pension Plan): A government program that provides retirement, death and disability benefits for Canadians who have worked 10 or more years In Canada. Both employees and employers contribute equally for the benefit of the employee.

Capital Gain/Loss: The positive or negative difference between the sale price of an investment and its purchase price. If the difference is positive, it's a capital gain. If the difference is negative, it's a capital loss.

Capital Growth: The increase in value from the original purchase price of an investment to its current market value. Also known as capital appreciation.

Compound Interest: Earned on the original amount of money you've invested, as well as on the interest the investment has earned.

Convertible: When an investment (bond, debenture or preferred share) may be exchanged for common stock of the company that issued it.

Debenture: A promissory note backed by the general credit of a company. Debentures are not usually secured by any specific property.

Dividends: Distributions of earnings to a company's shareholders.

Diversification: An investment strategy that spreads money over several types of Investments. One example of diversification is to balance the risk of more aggressive market-based investments with the stability of the known returns of guaranteed investments in your retirement savings portfolio. You can also invest with more than one fund manager, diversifying your retirement savings through the use of different management styles.

Dollar-Cost Averaging: A strategy that allows you to obtain an overall reduction in a fund's cost per unit. By regularly investing the same amount of money, you buy more units when the price is low, and fewer units when the price is high.

Duration: A measurement of the price volatility of bonds. Bonds that have a longer duration are more sensitive to interest rates, making them more volatile than
Bonds of shorter duration.

EAFE: An index used as a benchmark to compare the performance of investments in Europe, Australia, and the Far East. An EAFE fund would invest in these areas of the world.

Equity: The value of common and preferred stock held by shareholders.

Fixed Income: Securities that mature at a specific date in the future and that pay interest to investors regularly.

Foreign Content: You may invest 20% of your registered retirement savings into eligible investments situated outside of Canada. If you exceed this limits Revenue Canada will charge you a monthly penalty of one percent of the amount exceeding the allowable limit. Canadian Equity and Balanced Funds may invest up to 20% of their assets in foreign content, but these investments do not count towards the 20% you are allowed to invest.

Fund Style Management: The investment strategy a fund manager uses to achieve the stated objectives of the funds they manage.

Fund Manager: A company that provides investment services to investment funds. (A portfolio manager manages individual investment funds.) Also known as a money manager.

GIS (Guaranteed Income Supplement): A payment from the government for seniors of limited income. Seniors must apply for this benefit and to qualify are subjected to an income test. This benefit, along with Old Age Security (OAS), will be replaced by the new Seniors Benefit in the year 2001.

Income: A regular return on an investment that is paid in the form of interest and/or dividends.

Inflation: An overall increase in the cost of living caused by a rise in prices.

Investment Growth: The increase in value, over time, of your investments.

Investment Management Fee: Every market-based fund offers is charged an investment management fee. The management fee covers the cost of managing the fund's portfolio of investments. The unit values on your statements are calculated after payment of these fees. These fees are charged for the investment management services provided the funds by our fund managers.

Interest: Amount a borrower pays a lender for the use of their money.

Liquidity: The ease with which an investment can be converted to cash.

Market-Based Fund: A Market-Based Fund pools money from many investors and invests it according to a fund's stated objectives for its performance. Market-Based Funds invest in a variety of stocks and bonds and are managed by professional investment managers.

Market Cycles: Economies regularly shift back and forth between growth and decline. These fluctuations are called market cycles and include stages of economic growth, stability, maturity, recession and stagnation. Market cycles usually range in length from four to seven years.

Market Risk: The chance that your investment portfolio will lose value because of market fluctuations.

Market Value: You receive market value for your Guaranteed Interest Accounts if you transfer them to another investment option prior to their maturity dates. The market value of your Guaranteed Interest Accounts reflects the value of the assets that back your accounts in the light of current interest rates. If interest rates are higher than when you invested, the market value of your account is lower than book value. If interest rates are lower than when you invested, the market value of your account is higher than book value.

Maturity Date: End date of the term for which a Guaranteed Interest Account was invested.

Market Sector: Distinct parts of the economy, such as consumer products, agriculture, and metals and minerals.

Mutual Fund: A Market-Based Fund, similar to a segregated fund, but not issued by an insurance company.

OAS (Old Age Security): A federal income support program guaranteed to Canadians who are residents and are aged 65 or older. This benefit is scheduled to be replaced by the Seniors benefits in the year 2001.

Pooled Fund: Pension funds that are combined with other funds for investment purposes.

Portfolio: A number of different investments owned by an individual or institution. A variety of securities held in a portfolio diversifies it, reducing investment risk.

Portfolio Manager: The individual who manages an investment fund on a day-to-day basis. They decide what investments a fund's portfolio should contain, within the restrictions of the fund's stated objective.

Principal: Amount of money initially borrowed or invested. Also known as capital.

QPP (Quebec Pension Plan): The QPP is very similar to the Canada Pension Plan.

RRSP (Registered Retirement Savings Plan): Federally regulated plans that offer Canadians the opportunity to save for retirement through tax-deductible and tax-sheltered savings. Plans like yours offer you a variety of different investment options. RRSPs are registered with Revenue Canada and are subject to certain investment limitations.

Scotia Capital Bond Markets Universe Index: An index used as a benchmark to compare the performance of various bond fund investments.

Segregated Funds: A type of Market-Based Fund, segregated funds are very similar to mutual funds. Segregated funds pool your money with that of other investors and invest in a variety of stocks and bonds, using the expertise of professional fund managers. This pooling of funds offers you lower transaction costs, better investment choice and often less risk than if you were to invest in individual securities. Segregated funds differ from mutual funds in that they are regulated as insurance products. This regulation allows you to designate your spouse, child or grandchild as beneficiary, offering you significant protection from creditors.

Short-Term Volatility: The fluctuations that occur in an investment's performance from one period of time to another.

Seniors Benefit: In 2001, the government programs of OAS and GIS are scheduled to be replaced by the Seniors Benefit. This new program will take affect for anyone who is under age 60 by the end of 1995.

Spousal Registered Retirement Savings Plan (Spousal RRSP): If you expect your spouse will be in a lower tax bracket than you during retirement, a spousal RRSP can increase your combined retirement income. By making contributions to a spousal RRSP you allow your spouse to accumulate some tax-sheltered savings, while you, the contributor, receive a tax break. This splits your income in retirement, and, as two incomes are currently taxed at lower levels than one larger income, you save tax dollars. The contributions you make come off your contribution limit, but the investments are owned by your spouse. If the money you contribute is withdrawn within three years of its deposit, and not placed in another tax-sheltered program, the money is considered to be your income and is taxed accordingly.

Stocks (Common): Issued by corporations to raise money. In exchange for this money, a company issues common stock, which represents an ownership interest in the company. Stockholders receive dividends from the company and have voting rights in its management. In the case of an investment fund, the fund receives the dividends and voting rights from the company whose common stock it holds.

Treasury Bills: Short-term securities offered by the federal government. Also known as T-bills.

Unit Value: What it costs to purchase one unit of an investment fund and the value of one unit upon redemption. A fund's unit value is determined by dividing the fund's total value by the total number of fund units.

Yield: The return an investment produces.