January 16, 2001    For Immediate Release

Mutual fund calculator reveals impact of fees

TORONTO -- Securities regulators across Canada have joined forces to promote the Mutual Fund Fee Impact Calculator, an interactive web-based tool that allows investors to calculate the impact of fees on their investments over time.

"We want people to see the impact fees can have on a mutual fund before they invest," said Doug Hyndman, chair of the Canadian Securities Administrators, an umbrella organization of Canada's 13 provincial and territorial securities regulators.

"What at first can seem like a small difference in the fee level can have a large impact on an investment's returns over time."

The kinds of fees usually associated with mutual funds are management, loading, transfer and administrative fees:

Management fees are the annual fees of the mutual fund manager. They generally represent between one per cent and three per cent of the fund’s net assets. They are paid directly by the fund that then deducts them from its rate of return.

Loading fees are the sales charges or commissions paid by the investor to the broker when the units are purchased (front-end load) or when the units are redeemed (back-end load). The fees are negotiable but generally vary between one per cent and five per cent of the amount invested.

Transfer fees for moving money from one fund to another are negotiable but on average represent two per cent of the amount transferred.

Administrative fees include, among others, legal, audit and registration fees. They vary from one mutual fund to another and are listed in the prospectus.

Some mutual funds do not charge all these fees. To know if this is to your advantage, you must consider the fund’s return, management fee ratio and the quality of the service it offers.

Mutual funds are trusts or corporations that sell shares or units to investors so they can pool their funds, usually to buy stocks or bonds. Mutual funds are diversified, accessible and managed by professionals. Units can be redeemed on demand and their performance is easy to follow in newspapers. Mutual funds have been growing in popularity in Canada. Ten years ago, Canadians invested $30 billion in mutual funds. Today that figure has now grown to $400 billion.

The calculator was launched earlier this year as a joint initiative of Industry Canada and the Ontario Securities Commission. It has proved popular with investors.

"We have received many positive comments from the investing public," said Michael Jenkin, director general of Industry Canada's office of consumer affairs. "In the coming weeks as Canadians think about RRSPs and mutual funds, we encourage them to use the Mutual Fund Fee Impact Calculator."

The calculator can be found through links on CSA member websites:

Alberta: www.albertasecurities.com
British Columbia www.bcsc.bc.ca
Manitoba www.msc.gov.mb.ca
Ontario: www.osc.gov.on.ca/en/investor.html

It is also posted on Industry Canada’s Consumer Connection Web-site

http://consumerconnection.ic.gc.ca.
For more information, please contact:

Nancy Stow Ontario Securities Commission (416) 593-8297	Dean Pelkey B.C. Securities Commission (604) 899-6880
Denis Dubé Commission des valeurs mobilières du Québec (514) 940-2163	Bonnie Beswick Alberta Securities Commission (403) 297-2664
Ainsley Cunningham Manitoba Securities Commission (204)-945-4733	Suzanne Ball New Brunswick Securities Administration Branch (506) 658-3117