The Fund Facts provides core information about the fund and briefly explains the fees and expenses you will pay, the dealer’s remuneration, and your rights. For more details, consult the fund’s simplified prospectusA simplified prospectus is an abbreviated prospectus that meets all the legal requirements and provides the information to which investors are entitled..

Here is a sample Fund Facts that will be given to you. This document is also available on the website of the institution offering the fund. We have broken the Fund Facts down into its different sections. To view a specific section, click on the image to enlarge it.

On the first page, you will find the sections Quick facts, What does the fund invest in? and How risky is it?.

1- Quick facts section

The manager, sometimes referred to as the investment fund manager, directs the business, operations and affairs of the fund.

The portfolio manager provides investment advice and portfolio management services to the fund.

Pay attention to the management expense ratio (MER). To calculate the total percentage of the fund's expenses you will pay each year, add in the trading expense ratio (TER), which you will find in the Fund expenses section of Fund Facts. For example, if the total of the MER and the TER is 2.3%, each year you will pay $23 for every $1,000 invested in the fund.

2- What does the fund invest in? section

This section gives you a snapshot of the companies and sectors in which the fund invests.

Listed are the fund’s 10 largest investments as of the date shown in Fund Facts. The percentage of net asset value of the fund is also shown for each top 10 investment. The total number of investments in the fund gives you a sense of how diversified the fund’s investments are.

The investment mix provides a breakdown of the fund’s investment portfolio to give you a better idea of the fund’s investment exposure. Depending on the type of the fund, this breakdown can be by industry, asset class, geographic location, etc.

3- How risky is it? section

All investments involve risks. Understanding those risks can help you choose the right fund for you.

Insight

Investment risk

When you invest in a fund, the value of your investment can go down as well as up. In some cases, you may see large changes in value. These changes can happen quickly.

End of the insight

XYZ Mutual Funds is required to rate the level of risk of its funds. The scale ranges from Low to High based on how the fund is invested and the level of risk and return involved.

In most cases, a lower rating means lower risk and lower returns, with a lower chance of losses. A higher rating generally means higher risk and higher returns, with a greater chance of losing money.

Warning

Risk rating

You must use all of the information shown in the Fund Facts document to decide how risky the investment is. Since each investor has his or her own scale for evaluating the risk of an investment, a good way of gauging whether the level of risk is suitable is to look at the fund's past returns.  See the section How has the fund performed?.

End of the warning

Page 2 : How has the fund performed? and Who is this fund for?

4 - How has the fund performed? section

This shows you how the fund has performed over the long term. The time period shown is up to 10 years, but if the fund is less than 10 years old, only the years available will be shown. The returns are net of expenses.

Important! How the investment has performed in the past does not necessarily indicate how it will perform in the future. Nonetheless, the fund's performance does allow you to see if the fund fluctuates greatly and to evaluate how risky it is.

Warning

Beware of past returns

Be cautious if someone is trying to sell you a fund using past returns as a main argument. Past returns may have occurred in a different market environment.

Key members of the management team may have changed.

End of the warning

Knowing the average return of the fund may help you assess whether or not the investment will enable you to reach your objectives. Again, remember that past returns are not necessarily indicative of future returns.

Pay attention to the section Best and worst 3-month return. How would you have reacted to the 24.7% loss in 2008?

5- Who is this fund for? section

Carefully read the section Who is this fund for.

For example, in the case of fund XYZ, it may be suitable for you if you are looking for a long-term investment but not so if you need regular income.

Page 3 How much does it cost?

How much does it cost? section

This section is very important: It tells you how much your investment will cost. Before investing, decide whether the investment is suitable for you. For more information, consult the publication on mutual fund fees.

The tables show the fees and expenses you could pay to buy, own and sell units of the fund. The fees and expenses can vary among series. Ask your representative about other series that may be suitable for you.

6- Initial sales charge section

Initial sales charges generally are negotiable. There are funds on the market that do not charge a purchase fee (no load funds).

In the above fund, if you don't negotiate the initial sales charge (purchase fee), you may end up paying 4% of the amount you invest. For example, if you pay a 4% purchase fee, you are actually investing only $960 of your $1,000 investment. The fund would have to yield a return of 4.17% in order for its value to reach $1,000.

Generally, a deferred sales charge (redemption fee) is payable only if you sell your investment in the first few years after purchasing it. For example, if you invest $50,000 in XYZ Canadian Equity Fund and sell your units less than a year later, you would pay a redemption fee of $3,000. However, if you wait six years, the redemption fee is not payable. Also, some mutual funds allow you to withdraw a portion of your money from the fund, for example 10%, each year free of charge.

7- Fund expenses section

You don't pay those expenses directly. They affect you because they reduce the fund's return.The expenses that you pay EACH YEAR on your investment are the ones to watch out for!

Suppose you invest $100,000 and the fund's expenses are 2.30%. You would therefore pay $2,300 each year to invest in this fund. In addition, if the fund's returns are positive, these expenses will be higher the following year, since they are calculated on the market value of your investment.

For example, if the value of the fund before expenses increases by 3.3% in the first year, the fund's net value will only increase by 1% (3.3 - 2.3). If the fund’s value before expense and fees had increased by only 1.5%, the net value would have decreased by 0.8% (1.5 - 2.3). The value of the fund is always deducted of expenses.

Trailing commission

Naturally, your representative will be remunerated for the advice he gives you. His trailing commission is paid through the fees and expenses previously mentioned. It is important to know if your representative is paid according to the type of investment sold, as this could encourage him to sell you one kind of investment over another. However, representatives do have a code of ethics which requires them to place their clients' interests above their own.

Page 4 Other fees

8- Other fees section

Short-term trading fee

This fee applies to frequent fund redemptions substitutions. For example, you may have to pay up to 1% of the value of the securities traded if you redeem or substitute securities within 90 days of purchasing them. This fee is paid to the fund.

Change fee

This fee may be charged when an investor substitutes his funds for another fund within the same fund family; for example, if you hold units of ABC's equity fund and you replace them with units of ABC's bond fund.

Switch fee

This fee may be charged when an investor exchanges units of a series within the same fund. For example, Simon holds units of Series A of ABC's Short-term Fund. He switches his units to Series F units of the same fund.

Other fees

  • Fees to withdraw funds from an RRSP can be $50.
  • Fees to transfer money to another financial institution can be $50.

What if I change my mind?

You may decide, after you purchase the fund, that it is not right for you. You may have the right to cancel your order within a certain time period if you change your mind.