1. MUTUAL FUNDS A pre-packaged portfolio of investment securities, managed by a professional MF pool (put together)the capital of investors When you invest in a MF you are essentially buying a small piece of every security in the fund’s portfolio The professional fund manager controls what the fund invests in When the value of the securities in the fund rises, so does the value of your units held 1Mutual Funds

2. The type of fund and its objectives determines the types of securities that make up the fund Growth Funds  capital growth  equities Fixed Income Funds  cash flow payout  High dividend equities and bonds Money Market Funds  safety  Safe government bonds Other…. 2Mutual Funds

3. NAVPS and Redemption NAVPS (net asset value per share) Each unit is valued at the end of the trading day Unit value = Most funds are open ended  no set maximum number of units “cashing in your units” is at the discretion of the holder (fund must buy back units) 3Mutual Funds total assets – liabilities number of units O/S

4. PRO’s of MF Professional management Diversification Flexibility Commission (+/-!?) Liquid Record keeping Mutual Funds4

5. CON’s of MF (disadvantages)  Fees….  Professional Management – Management often focuses on the short term – < 50% beat the TSX S&P 60 Mutual Funds5

6. EXPESES / FEES 1.MER (management expense ratio) 0.5 to 3+% of assets (not profits!) Overhead, legals, audits, salaries, trailers, advertising, communication 2.“Load” A.Front End: pay a commission when purchased B.Back End / declining load: pay a commission when the fund is redeemed C.No Load: no commission fee! Mutual Funds6