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20 th Annual Conference

20 th Annual Conference. Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry. Overview. Confidence in Mutual Funds Meeting Financial Goals Comfort with Understanding of Mutual Fund Investing Method of Purchasing Mutual Funds and Information Sources Consulted

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20 th Annual Conference

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  1. 20th Annual Conference Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry

  2. Overview Confidence in Mutual Funds Meeting Financial Goals Comfort with Understanding of Mutual Fund Investing Method of Purchasing Mutual Funds and Information Sources Consulted The Advisor Relationship, Fees & Suitability Point of Sale Information The Mutual Fund Investment Decision Staying Informed Dealing with Problems

  3. Methodology

  4. Confidence in Mutual Funds Meeting Financial Goals

  5. Confidence in Investment Products Meeting Financial Goals TotalConfident 88% 85% 71% 63% 54% Mean 7.4 6.5 5.9 5.5 4.8 Real estate investments, incl. your primary residence Mutual funds GICs and other term deposits Bonds, incl. Canada Savings Bonds Stocks Very confident (10) Confident (7-9) Somewhat confident (5-6) Not veryconfident (2-4) Not at allconfident (1) Don't know/Refused Q4-8: Using a 10 point scale, where 1 means ‘not at all confident’ and 10 means ‘completely confident’; overall, how confident are you that each of the following investment products would help you meet your household’s financial goals? How about: (RANDOMIZE AND READ) (June 2006, n=1865)

  6. Comfort With Understanding of Mutual Fund Investing

  7. Investors’ Comfort with Their Understanding of the Mutual Funds They Own Total Comfortable: 83%Mean: 6.4 Q2B: And using a scale from 1 to 10 where 1 means you are ‘not at all comfortable’ and 10 means you are ‘very comfortable’, how comfortable are you with your understanding of the mutual funds you own? (RECORD ONE ONLY) (June 2006, n=1865)

  8. Methods of Purchasing Mutual Funds and Information Sources Consulted

  9. Methods of Purchasing Mutual Funds Purchase Them From Someone Who Provided You With Advice And Guidance Purchase Them Online Or From An Individual Who Just Took Your Mutual Fund Order Don’t Know Refused Q18: For the next few questions I would like you think about the last time you invested in a mutual fund. When buying those mutual funds did you: (READ AND RECORD ONE ONLY) (June 2006, n=1865)

  10. Sources Consulted When Last Purchased Mutual Funds Your advisor, meaning the person you purchased the mutual fund from(n=1596) Printed information from the mutual fund company(n=1865) Your friends, family and colleagues(n=1865) The mutual fund company’s website(n=1865) No Yes Don't know/Ref. Q23-26: Still thinking back to the last time you invested in a mutual fund, did you consult the following sources: (RANDOMIZE AND READ. RECORD YES/NO FOR EACH) (June 2006)

  11. The Advisor Relationship, Fees & Suitability

  12. Satisfaction with Advice ProvidedBy Advisor Mean: 8.0 Q45: I would now like to ask you about your relationship with your financial advisor - meaning the advisor who you buy your mutual funds from. Using a scale from 1 to 10 where 1 means ‘not at all satisfied’ and 10 means ‘completely satisfied’, how satisfied are you with the advice provided by your financial advisor? (RECORD ONE ONLY) (June 2006, n=1596)

  13. Whether Advisor Has Ever Discussed Investment Objectives and Risk Tolerance Had a discussion with you about the amount of investment risk you are comfortable with Had a discussion with you about your overall investment objectives and goals No Yes Don't know/Ref. Q47-48 Has your advisor ever: (RANDOMIZE AND READ. RECORD YES/NO FOR EACH)(June 2006, n=1596)

  14. Whether Advisor Has Ever Administered Questionnaire and Discussed Compensation Asked you to complete a questionnaire to identify your risk tolerance and overall financial objectives Had a discussion with you about how he/she is compensated No Yes Don't know/Ref. Q46 & 49: Has your advisor ever: (RANDOMIZE AND READ. RECORD YES/NO FOR EACH)(June 2006, n=1596)

  15. Comfort with Fees & Understandingof Fees TotalComfortable 84% 82% Mean 6.8 6.7 Any fees that you pay for your mutual funds Your understanding of any fees that you pay for your mutual funds Very comfortable (10) Comfortable (7-9) Somewhat comfortable(5-6) Not very comfortable (2-4) Not at all comfortable (1) Don't know/Refused Q50-51: Overall, using a scale from 1 to 10 where 1 is ‘not at all comfortable’ and 10 is ‘very comfortable’ how comfortable are you with: (RECORD ONE ONLY FOR EACH) (June 2006, n=1586)

  16. Point of Sale Information

  17. Comfort with Information to Make Informed Investing Decision Total Comfortable: 91% Q19: Still thinking back to the last time you invested in a mutual fund, prior to making this last investment, did you feel very comfortable, somewhat comfortable, not too comfortable or not at all comfortable that you had the right information to make an informed decision? (RECORD ONE ONLY) (June 2006, n=1865)

  18. Information Considered When Last Purchased Mutual Funds TotalConsidered 94% 86% 82% 77% 77% 65% 65% 60% 52% 50% Mean 7.7 7.1 6.9 6.3 6.3 5.5 5.5 5.2 4.7 4.6 Your advisor’s opinion The risks associated withinvesting in the fund The fund’s past performance comparedto other funds in its category Information about the companyoffering the fund The companies, holdings orsectors the fund invests in The price per share Information about the mutual fundcompany’s portfolio manager The fee the mutual fund companyreceives for managing the fund Fees your advisor receives for you investment in the fund The fund’s rating from a service likeMorningstar or Globe Fund Consideredin depth (10) Consideredsomewhat (7-9) Considereda bit (5-6) Did not reallyconsider (2-4) Did not consider at all (1) Don't know/Refused Q27,Q28, Q30, Q32, Q37: Still thinking back to the last time you invested in a mutual fund, and using a 10 point scale where 1 means you “did not consider it at all” and 10 means you “considered it in depth”, to what extent did you consider each of the following pieces of information? How about: (RANDOMIZE AND READ. RECORD ONE FOR EACH) (June 2006, n=1865 - *n=1596)

  19. Whether Advisor Discussed Fees/Compensation When Last Purchased Mutual Funds Whether or not you will be charged a sales commission when you buy or sell the mutual fund - also called “front-end load” and “back-end load” fees How the person you bought them from would be compensated for your purchase of that fund No Yes Don't know/Ref. Q21-22: (ASK IF PURCHASED MUTUAL FUNDS FROM SOMEONE WHO PROVIDED ADVICE/GUIDANCE AT Q18) And still thinking back to the last time you invested in a mutual fund did the person you purchased it from discuss the following issues with you? How about: (RANDOMIZE AND READ LIST) (June 2006, n=1596)

  20. Whether Advisor Discussed Suitability When Last Purchased Mutual Funds Q20: (ASK IF PURCHASED MUTUAL FUNDS FROM SOMEONE WHO PROVIDED ADVICE/GUIDANCE AT Q18) And still thinking back to the last time you invested in a mutual fund did the person you purchased it from discuss the following issues with you? How about: How well suited that mutual fund is for reaching your investment objectives (RANDOMIZE AND READ LIST) (June 2006, n=1596)

  21. The Mutual Fund Investment Decision

  22. Importance of Issues in Decision to Invest in Mutual Funds TotalImportant 89% 89% 86% 81% 81% 76% The management of mutual funds by professional investors That mutual funds are an effectiveway to diversify and manage risk The easy access mutual funds provide to a wide rangeof investments The ease of moving investmentswithin a family of mutual funds The ability to buy mutual fundswith small amounts of money The amount of regulation inthe mutual fund industry Very important Somewhat Important Not tooimportant Not at allimportant Don't know/Refused Q10-16 Are each of the following issues very important, somewhat important, not too important, or not at all important in your decision of whether or not to invest in mutual funds? How about: (RANDOMIZE AND READ LIST) (June 2006, n=1865)

  23. Staying Informed

  24. Methods Used to Stay Informed About Mutual Fund Investments Your account statement which you receive monthly or quarterly, and that shows the current value of your personal mutual fund holdings The annual reports sent out by the mutual fund company. These are descriptive reports prepared by the mutual fund that you receive once or twice a year, separately from your account statement The prospectus sent out by the mutual fund company - this is a written document prepared by the mutual fund company that you receive either at the time of purchase or shortly after purchasing a mutual fund Yes, Always Yes, Sometimes Yes,Rarely/Never Did not receivethat info Don’t Know/Refused Q40-42: There are different ways to stay informed about your mutual fund investments. Overall, do you always, sometimes, rarely or never read any of the following information? If you didn’t receive this information, please let me know. (DO NOT RANDOMIZE AND READ) (June 2006, n=1865)

  25. Amount of Information Received About Mutual Funds They Invest In Q3: Overall, do you feel that you receive (ROTATE TOO MUCH AND NOT ENOUGH) too much, not enough or the right amount of information about the mutual funds you invest in? (RECORD ONE ONLY) (June 2006, n=1865)

  26. Whether Information Received from Mutual Fund Companies Answers Questions Q43: Overall do you feel the information you receive from mutual fund companies answers all, most, some, a few or none of your questions about your mutual fund investments? (RECORD ONE ONLY) (June 2006, n=1865)

  27. Preferred Format For Annual Report Q44: Mutual fund companies send out annual report documents to their investors at the same time each year. These reports outline issues such as the fund’s investment objectives and summarize the investments the fund has made over the year. Would you prefer to receive a (RANDOMIZE DETAILED AND 2 PAGE SUMMARY) detailed annual report that tends to be about 50 or more pages or a two page summary annual report? (RECORD ONE ONLY) (June 2006, n=1865)

  28. Dealing with Problems

  29. Experienced Problems with Investments Q52: Have you ever experienced any problems with your investments, other than normal market fluctuations? (RECORD ONE ONLY) (June 2006, n=1865)

  30. First Step Taken to Resolve Problems with Investments Speak To Advisor’s Superiors Contact The Mutual Fund Company Contact Advisor/Banker/Financial Planner - Insisted Move Investments To Another Advisor Sell/Take Money Out/Cancel/Close Account Take Action/Research/Review/Do It Myself Other Nothing Don’t Know/Refused Q53: If you were to experience a problem with your investments in the future, what would be the first thing you would do to resolve the issue? (IF RESPONSE IS CONTACT ADVISOR/BANKER/FINANCIAL PLANNER DO NOT ALLOW RESPONSE – PROMPT “What would you do next” )(June 2006, n=1865)

  31. Next Step Taken to Resolve Problems with Investments Move Investments To Another Advisor Contact The Mutual Fund Company Speak To Advisor’s Superiors Sell/Take Money Out/Cancel/Close Account Contact A Regulatory Body (General) Contact Lawyer/Police/Take Legal Actions Other Nothing Don’t Know/Refused Q54: And if it wasn’t resolved after that, what other steps would you take to resolve the issue? PROBE: And what would you do next? (DO NOT READ OR PROBE WITH LIST. RECORD ALL THAT APPLY) (June 2006, n=1865)

  32. 20th Annual Conference Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry

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