Real Estate Fund Update

London Life and the Fund manager, GWL Realty Advisors Inc., are working to lift the current suspension on withdrawals and transfers from the London Life Real Estate Fund.

Although the suspension remains in place, the Fund was in a position to process an initial payment for unitholders who requested a withdrawal or transfer during the redemption period as specified in our letter dated Sept. 30, 2009.

The total amount of redemptions requested by unitholders of the London Life Real Estate Fund exceeded the amount of cash available for distribution on Dec. 4. Therefore, payments were made on a proportional basis. The cash available for distribution from the Fund was 60% of the total redemptions requested by unitholders. The amount of each unitholder’s payment reflected this percentage or $500 (whichever is greater), less applicable fees and taxes. If unitholders requested $500 or less, they received the full amount of their request (100%), less fees and taxes. Regardless of the amount requested, we did not pay out more than the value of the Real Estate Fund units in a client’s policy, as of Dec. 4, 2009.

The remaining balance of the requests is being carried forward to the next payout. The timing of the next payout is not yet known and depends on how long it takes to rebuild the cash position of the Fund. We will contact unitholders at that time.

Lifting the suspension remains a top priority for us, and we continue to work towards that goal. We will be able to fully lift the suspension once the Fund has enough cash to process withdrawals and transfers on a daily basis. The primary way to increase cash in the Fund is to continue selling selected commercial properties held by the Fund.

Seven properties were sold from Jan. 1 to Oct. 31, 2009, generating $50 million in total net cash proceeds. A further 5 property sales are agreed upon or under contract, with expected closing dates ranging from December 2009 to early 2010. Additional properties are in the early stages of marketing for sale. For more details, please see the most recent Fund report on the GWL Realty Advisors website.

Protecting the Long-Term Value of the Fund

While we work to build the Fund’s cash position, the Fund manager continues to actively manage its portfolio of high-quality properties that generate stable, long-term income. The Fund’s value has been relatively stable during the suspension.

The Fund has performed well over time and continues to be an excellent component of a well-balanced portfolio. Over the long term, the Fund’s returns have been stable and positive.

The Real Estate Fund is not the same as other equity investments such as stocks. The stock market is generally accepted as a leading indicator of where the economy is headed. However, the Real Estate Fund’s assets are commercial real estate properties which are generally slower than equities to respond to an economic downturn. They are also slower to recover when the market improves. This pattern makes real estate more stable than equities and it’s why the Real Estate Fund is such a good diversifier in a portfolio.

For more information about the Real Estate Fund, please contact your financial security advisor or the Client Service Centre at
1-877-566-5433. More information about the Fund manager is available on the GWL Realty Advisors website.