Mutual Fund Glossary

Every term you'll meet in a Fund Facts document, a statement, or an advisor meeting — defined in one sentence each. Bookmark this; quiz the Genie on anything missing.

Costs

• MER (Management Expense Ratio) — total annual cost of the fund as a % of assets, deducted before returns are reported.
• TER (Trading Expense Ratio) — the fund's internal trading costs, on top of the MER.
• Trailing commission — annual payment from the fund company to your dealer for as long as you hold a Series A fund.
• Front-end load — sales charge at purchase (often negotiable to 0%).
• DSC (Deferred Sales Charge) — exit penalty schedule; banned for new purchases since 2022.
• Switch fee — charge for moving between funds in a family.

Structure

• NAV / NAVPS — net asset value (per unit/share): the fund's daily price.
• Unit / unitholder — your slice of the trust and you, the owner of it.
• Series / class (A, F, D, I…) — same portfolio, different fee/compensation packaging.
• Fund Facts — the mandatory 4-page disclosure document; read it before buying.
• Prospectus / simplified prospectus — the full legal disclosure behind Fund Facts.
• Mandate — what the fund is allowed/required to invest in.

Performance & income

• Distribution — payout of the fund's interest/dividends/realized gains to unitholders.
• ROC (Return of Capital) — a distribution that's your own money back; lowers your ACB.
• ACB (Adjusted Cost Base) — your tax cost for computing capital gains; reinvested distributions add to it (track them!).
• Benchmark — the index a fund measures itself against.
• Alpha / beta — return above benchmark / sensitivity to benchmark moves.
• Standard deviation — the usual volatility yardstick.

People & rules

• CIRO — regulator of Canadian investment dealers and their reps.
• CSA / OSC / AMF — the provincial securities regulators (and their national coordination body).
• CIFSC — the committee that assigns funds to standard categories.
• KYC / suitability — your dealer's obligation to know you and recommend accordingly.
• PAC — pre-authorized contribution; automatic investing, the good kind of autopilot.

Frequently asked questions