MFS Global Equity Segregated Fund – Tax Impact for Non-Registered Members

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

Action may be required by your members if they hold the fund in a Non-Registered plan.

We’re writing to inform you of a potential tax impact for one of the funds in your Non-Registered (taxable) plan(s).

The MFS Global Equity Segregated Fund (“Segregated Fund”) received multiple special distributions in 2025. The Segregated Fund invests in units of the MFS Global Equity pooled fund (the “underlying fund”). The underlying fund made the special distributions. As a reminder, the fund also received a significant special distribution in August 2025.

Investment managers may make special distributions to investors in their funds (including Sun Life’s segregated funds) for various reasons. In this case, MFS made the distributions due to significant redemptions by other investors in 2025. The sale led to the underlying fund realizing investment income, including capital gains. MFS distributed part of the investment income to the Segregated Fund. Sun Life in turn allocated this investment income to all members who had money in the Segregated Fund, based on their unit holdings on the distribution dates in August, October and December 2025.

When Sun Life allocated the investment income, the members’ Adjusted Cost Base (“ACB”) increased by the amount of the investment income allocated to their account. As such, they won’t see a transaction for the distribution in their account. The ACB is similar to the cost or ‘book value’ of the investment.

How will this affect your members?

The special distribution may result in capital gains or other investment income (dividend or interest income) for all members who had money in the Segregated Fund within a Non-Registered plan as of the distribution date. In 2026, they will receive a tax slip for the 2025 tax year which will include this income likely resulting in additional tax owing. We recommend that they speak with a tax professional for personalized guidance.

The special distribution doesn’t affect your members if they started investing in the Segregated Fund after the distribution date(s) or had no holdings in the Segregated Fund on the distribution date(s) within a taxable plan.

If you also offer the Segregated Fund within Registered (non-taxable) plan(s), the special distribution will have no impact on your members tax situation.

What to expect next?

Sun Life will provide the applicable tax slip(s) in February or March 2026. The tax slip(s) will also reflect all income from your members’ Non-Registered investments.

For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Members can find their ACB on Plan Member Services website mysunlife.ca and selecting Check on Account > Balances.

We will send email communication in December 2, 2025 to Non-Registered members who held this fund as of end of October 2025.

Questions?

Please contact your Sun Life Group Retirement Services representative*.

*In Quebec, registered as a Group annuity plans advisor.