IFC Exam Dumps - CSI Canadian Investment Funds Questions and Answers

Mutual fund registrants are expected to:

Act in clients’ best interests.

Provide advice to help achieve client financial goals.

A (circumventing rules) is illegal.

B (developing financial plans) may be part of the role, but the CSC stresses suitability and addressing client goals.

D (cross-selling) benefits the dealer, not the client.

✅ Correct = Addressing client goals.

Asset allocation should be reviewed when the investment environment changes to ensure it remains suitable for the client’s objectives. The feedback from the document states:

"In general terms, an equity weighting of less than 25% is considered conservative and more than 75% is considered aggressive. Only if the client is very aggressive should the weighting of his equity component reach 90%."

Trailer fees are ongoing fees that are paid by mutual fund managers to mutual fund dealers for providing ongoing services to their clients who hold units of their funds. Trailer fees are calculated as a percentage of the value of assets under management (AUM) of the clients who hold units of the fund. Trailer fees are paid out of the management fee that is charged by the mutual fund manager to cover the costs of operating and administering the fund. Therefore, option C is correct regarding mutual fund fees. The other options are incorrect. Option A is false because redemptions are not made from units held by investors to pay trailer fees; rather, trailer fees are paid out of the management fee that is deducted from the net asset value (NAV) of the fund. Option B is false because trailer fees are not only paid to mutual fund dealers when a purchase is made; rather, trailer fees are paid on an ongoing basis as long as the clients hold units of the fund. Option D is false because trading commissions are not paid from the management fee; rather, trading commissions are paid from the trading expense ratio (TER) that reflects the costs of buying and selling securities within the fund. References: [Mutual Fund Fees Explained | Wealthsimple], [Mutual Fund Fees | GetSmarterAboutMoney.ca], [Understanding Mutual Fund Fees | Investopedia]

Capital gains are realized when an investor sells a fund at a profit. Selling units at $18.80 (purchased at $17.60) triggers a taxable capital gain in a non-registered account. The feedback from the document states:

"Capital gains are generated when an investor sells an investment for more than the price paid; for example, selling a stock at a profit will generate a capital gain. Capital gains are not realized when an investment goes up in price; a sale must occur."

According to CSC ethical guidelines, integrity requires an advisor to act honestly and avoid conflicts of interest.

By recommending his brother’s private equity fund without disclosing the relationship, Seth risks a conflict of interest and breaches the principle of integrity.

Duty of care relates to suitability and due diligence.

Compliance refers to following regulations.

Confidentiality refers to safeguarding client information.

Thus, the violated value is Integrity.

 An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. ETFs have lower management expense ratios (MERs) compared to mutual funds because they are passively managed and do not incur high costs for research, analysis, and portfolio rebalancing. Therefore, this statement is true about ETFs. References: Exchange-Traded Fund (ETF) Explanation With Pros and Cons - Investopedia, The Best ETFs - Exchange Traded Funds Rankings | US News Investing

A Registered Education Savings Plan (RESP) is a tax-advantaged savings plan that helps parents and family members save for a child’s post-secondary education. The government also contributes to the plan through the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), depending on the family income and the amount of contributions. However, there are some rules and limits that apply to RESP contributions and government grants. One of them is the lifetime contribution limit, which is the maximum amount that can be contributed to an RESP for a beneficiary from all sources. The lifetime contribution limit is $50,000 per beneficiary, regardless of how many RESPs are opened for them or who contributes to them. Therefore, statement A is correct. Justin and Yvonne may contribute a combined lifetime maximum of $50,000 for Grace to their RESP.

The other statements are incorrect for the following reasons:

Statement B: RESPs are not tax-free investment plans. They are tax-deferred plans, meaning that the contributions are made with after-tax dollars and the investment income earned in the plan is not taxed until it is withdrawn as an educational assistance payment (EAP) for the beneficiary. The EAPs are taxed in the hands of the beneficiary, who usually has little or no income and pays little or no tax.

Statement C: There is no annual contribution limit for RESP contributions. However, there is an annual limit for the CESG, which is 20% of the first $2,500 contributed per beneficiary per year, up to a maximum of $500 per year. The CESG also has a lifetime limit of $7,200 per beneficiary.

Statement D: Contributions made to an RESP are not eligible for a tax deduction in the year they are contributed. They are made with after-tax dollars and do not reduce the contributor’s taxable income.

Canadian Investment Funds Course, Unit 9, Section 9.1

The life-cycle hypothesis suggests that as people move through different life stages, their objectives, financial circumstances, risk tolerance, and investment knowledge change. Advisors can use this framework to make general assumptions about investment objectives based on age and stage (e.g., younger investors focus on short-term goals, older investors on retirement and estate building).

Therefore, the correct answer is C.

The question specifies that the fund’s objective is to “bet on the future movement of the market to increase returns.”

This is speculation, not hedging.

Under NI 81-102, conventional mutual funds may use derivatives, but only under restrictions (hedging, market entry/exit, or income enhancement). Speculative use must be disclosed in the prospectus.

Hedge funds and some alternative mutual funds can use derivatives for speculation with leverage.

Thus, Jeremy should note that this fund uses derivatives for speculation.