Segregated Fund Buying Process

Before you buy a segregated fund, your advisor must give you the following

  • information folder
  • summary fact statement
  • financial statements

and you will sign a receipt to acknowledge that you have received this information

(In contrast, with a mutual fund you are deemed to have received a prospectus after it has been mailed to you. No proof of receipt is needed.)

Information Folder

  • like a prospectus for mutual funds
  • key document
  • describes the policy contract
  • your advisor must give you one and get your signed acknowledgment
  • includes
    • audited financial statements
    • notes to the audited financial statements
    • identification of guaranteed benefits and nonguaranteed benefits
    • that benefits fluctuate
    • charges on withdrawals
    • how benefits are determined
    • tax status of the segregated fund and policyowners ("contractholders"_
    • management fees, …

Summary Fact Statement

  • like a simplified prospectus for mutual funds
  • snapshot of the fund, including
    • historical performance
    • investment policies
    • three largest single holdings (though more are often included)
  • updates sent regularly (e.g., semiannually)

Financial Statements

  • included in the Information Folder at the time of purchase
  • must be current and audited
  • updated sent annually

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