October 2020

Announcement for Subscribers of the Children’s Education Trust of Canada (CET) Registered Education Savings Plans Group Option Plan

Plan Changes

Dear Subscriber:

We are very pleased to announce two important changes made by CET for the benefit of current and future Subscribers in the Group Option Plan.

Automatic Transfer to the Self-Initiated Plan to Avoid Cancellation of Group Option Plans

Effective immediately, where a Subscriber has made contributions to a Group Option Plan but has (a) missed three or more scheduled Contributions and has not addressed those missed Contributions through the available options within 36 months of their last honoured Contribution, or (b) requested and been granted a temporary suspension of Contributions and has not taken steps to end that suspension within 36 months of their last honoured Contribution, or (c) held a Plan for 35 years (less 90 days) that has not been paid out (whichever of these three occurs first), THE PLAN WILL NOT BE CANCELLED. Instead, Subscribers will retain any net Contributions, Income on net Contributions, Government Grants, and Income on Government Grants. Those amounts will be automatically transferred to a CET Self-Initiated Option Plan for the same Beneficiary. (Any insurance held for the Group Option Plan will be cancelled and the insurance premiums will not be refunded. A service fee of $50.00 plus applicable taxes will be charged to the Subscriber to cover the costs of the transfer.)

A Subscriber whose Group Option Plan is automatically transferred has the option to transfer back to the Group Option Plan for up to two years after the date of transfer as long as it is prior to the original Maturity Date of the Group Option Plan and the procedures described in the prospectus dated August 24, 2020 are complied with (including the payment of any required Contributions, interest deficiency administrative adjustments, and any other required payments). Unless the Self-Initiated Plan is transferred back to the Group Option Plan, the Subscribers whose Group Option Plan has been transferred will be bound by the terms and conditions of the Self-Initiated Option Plan, and will no longer have any entitlement to a potential return of sales charge, EAP top-up, or any other benefits specific to the Group Option Plan.

New Lower Interest Deficiency Administrative Adjustment Rate

Effective immediately, the interest deficiency administrative adjustment for each month after September 1, 2020 that a Contribution was outstanding will be lowered to 0.583% (compounded monthly) of the Contributions that each Contribution was overdue under the Contribution Schedule (being an effective rate of 7.23% per year). The interest deficiency administrative adjustment for each month prior to September 1, 2020 that a Contribution was outstanding will remain equal to 1% (compounded monthly) of the Contributions that each Contribution was overdue under the Contribution Schedule (being an effective rate of 12.68% per annum). In all cases, this is subject to the lifetime contribution limit of $50,000 and applicable fees.

We are excited to announce these changes. We believe that they enhance the options available to CET Subscribers and help to ensure that Beneficiaries receive the funds they need for their post-secondary education.

Yours very truly,

Children’s Education Funds Inc.