FOUR IN TEN (42%) CONCERNED ABOUT Y2K EFFECTS ON THE VALUE AND SAFETY OF THEIR INVESTMENTS

FOUR IN TEN (42%) CONCERNED ABOUT Y2K EFFECTS ON THE VALUE AND SAFETY OF THEIR INVESTMENTS

MISCONCEPTIONS STILL EXIST IN THE INVESTMENT WORLD - 49% OF CANADIANS BELIEVE A PORTION OF THEIR MUTUTAL FUNDS IS INSURED BY THE CANADIAN DEPOSIT INSURANCE CORP.- MANY ALSO UNAWARE OF RIGHT TO CANCEL (40%) AND RESTRICTIONS ON ABILITY TO RESELL PRIVATE COMPANY STOCKS (32%)

This Angus Reid Group/Canadian Securities Administrators poll was conducted by telephone between March 17th and April 5th, 1999 among a representative cross-section of 1,501 Canadian adults. These data were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 1996 Census data. With a national sample of 1,501, one can say with 95 percent certainty that the results are within +2.5 percentage points of what they would have been had the entire adult Canadian population been polled. The margin of error will be much larger within regions and for other sub-groupings of the survey population.

As the year 2000 rapidly approaches, four in ten (42%) Canadians indicate that they are concerned about the effects of Y2K on the value and safety of their investments. This survey also shows that there are still misconceptions regarding financial investments in Canada. Fully half (49%) of Canadians wrongly believe that a portion of their mutual funds is insured by the Canadian Deposit Insurance Corporation. Many (40%) are also unaware of their right to cancel a mutual fund purchase up to two business days after receiving the prospectus, while one third (32%) do not realize that there are restrictions on their ability to resell stocks they buy in a private company.

Highlights garnered by the Angus Reid Group/Canadian Securities Administrators telephone survey reflects Canadians' understanding of financial investments, the rights of investors and the role of the provincial securities commissions. In all, 1,501 adult Canadians were polled between March 17th and April 5th, 1999. With a national sample of this size, one can say with 95 percent certainty that the overall results are within +2.5 percentage points of what they would have been had the entire Canadian population been polled.

The Y2K Issue

Forty-two percent of Canadians say they are concerned with the value and safety of their personal investments due to Year 2000 computer compliance. Sixteen percent say they are 'extremely' or 'very concerned' about their personal investments.

Translating this concern into action, 15% of Canadians say they are planning to make a change in their savings or investments prior to the Year 2000. Their actions will take the form of taking their money out of the bank or converting their investment into cash (26%), having more cash on hand than normal (17%), and having paper records on hand (12%).

Investment Knowledge

Canadians' knowledge of the Canadian Deposit Insurance Corporation's coverage is quite low as less than half (45%) of Canadians are correctly aware that when investing in a mutual fund, none of their investment is insured by the Canadian Deposit Insurance Corporation. A larger percentage of Canadians (49%) wrongly believe that a portion of their mutual fund investment is covered.

Of those Canadians who own mutual funds, the following points highlight those who say their knowledge is not very/not at all good in the following areas:

• Four in ten (41%) do not have a good understanding of management expense ratios.
• Three in ten (29%) - say that sales charges, for example loads, redemption fees, and deferred sales charges is an area where their understanding is not good.
• 28% do not feel confident in their understanding of how their fund salesperson or advisor is paid when they purchase funds through them.

Knowledge of Securities Commissions & Their Roles

Six-in-ten (60%) Canadians are aware, on an aided basis, of their provincial securities commission. In comparison, 15 percent of Canadians have heard of the Canadian Securities Administrators on an aided basis.

Thirty four percent, of those who are aware of their provincial securities commission, wrongly believe that it is the role of the Provincial Securities Commission to award financial compensation to an investor if fraud or misconduct has occurred.

In other areas a significant majority of Canadians are knowledgeable about the role of their provincial securities commission. For five of the six roles tested, at least eight-in-ten Canadians correctly identified the role of the securities commissions.

• 95% of Canadians know that one of the roles of the securities commissions is to investigate fraud or misconduct.
• 83% of Canadians are correct in knowing that that the commissions establish qualifications for those who sell securities such as mutual funds, stocks, and bonds.
• 81% of Canadians are aware that the commissions ensure that companies issuing securities provide investors with the information they need to make informed investment decisions.
• 80% of Canadians are correct in realizing that the securities commissions do not ensure an investment will likely increase in value.

Do Investors Know Their Rights?

In terms of mutual fund purchases, the majority of Canadian investors are knowledgeable about the types of information that they are entitled to receive. There are still significant proportions of Canadian advisors who do not know their rights.

• 92% of Canadian Investors know that if they buy a mutual fund, they are entitled to receive a prospectus.
• However, one quarter (24%) does not realize that if they receive a prospectus that is false, they may have the right to sue the company, its directors and others for the losses.
• Nearly one third (30%) do not realize that they can cancel a mutual fund purchase up to two business days after receiving the fund's prospectus.
• Six in ten (62%) Canadian investors wrongly believe that if they buy shares in .
• Canadians are less likely to be aware of their rights in the case of a bankruptcy. Just under three-in-ten (29%) Canadians are aware that clients are covered for up to $500,000 per client account in the event of a dealer or brokerage firm going bankrupt.

Canadians' Views on Financial Advice

Financial advisors play an important role in the investment decisions made by Canadian investors. One-quarter (26%) of investors say they rely entirely on the recommendations of their financial advisors. A further 56% of investors say they consider the advice of their financial advisors, but often apply their own judgement and experience.

When asked about the financial community's success in providing clients with the information and objective advice needed to make sound investment decisions, 80% of Canadians agree (18% 'strongly agree', 62% 'moderately agree') that the financial community is doing a good job. On an individual level, 85% of investors agree (50% strongly agree and 35% moderately agree) that their financial advisor had a thorough understanding of their investment needs and objectives and their tolerance for risk.

A high proportion (80%) of Canadians are aware that those who trade securities or advise other people about their securities investments must be registered in each province or territory in which they do business; however, a smaller proportion of Canadians is aware of the educational requirements to be registered. Six-in-ten (61%) Canadians are correct in knowing that the educational requirements to advise on or trade securities are to complete courses that usually take from one to three months to complete.

Information on General Investing

The top three sources for general investment information are financial advisors (65% of Canadians have used this source in the past), friends and family (59%), and newspapers and magazines (51%). Financial advisors are revealed as the most relied upon source when Canadians were asked to pick one source that they have relied upon the most (46% of those who consulted another source chose this one).

Almost half (48%) of Canadians feel the quantity of investment information is 'just enough', while another 32% say it is 'more than enough'. Non-investors are more likely than investors to say it is 'not enough' (29% of non-investors versus 16% of investors). Those who say there is not enough information say that it needs to be clear and easier to understand (11%), in addition to being more detailed (9%), and readily available (5%).

Ninety percent of Canadians feel the quality of investment information is 'good' (67%) or 'very good' (23%). One-in-six (17%) Canadians who feel the quality of information is 'not good at all' say it should be easier to understand. This suggestion is driven by current investors rather than non-investors (24% of investors mentioned versus 11% of non-investors).

Financial advisors are seen as the most desirable channel through which to receive investment information. Just under four-in-ten (38%) Canadians feel financial advisors should be taking the lead role in general investor education, followed by the securities regulators (22%) and the school system (17%).

For further information, please contact:

John Wright
Senior Vice-Presiden
t Angus Reid Group
(416) 324-2900

Michael Bernard
Communications Manager
Canadian Securities Administrators
(604) 899-6524