Introducing the Altamira Inflation-Adjusted Bond Fund

What will a dollar buy when your kids graduate from university? What will it buy when you retire? Whether you're saving for retirement, your children's education or any other long-term goal, inflation can seriously undermine the value of your savings.

The Altamira Inflation-Adjusted Bond Fund is ideally suited to investors with a long-term focus who are concerned about the effects of inflation over time and have an average tolerance for risk.

• How the Fund can help
• Objective and Strategy
• Investment Risks

Recommended for Investors Seeking:

• Income hedged against the effects of inflation;
• Moderate capital growth;
• Exposure to a distinct asset class; and
• Significant portfolio diversification.

The Altamira Inflation-Adjusted Bond Fund Can Help:

Protect your savings and future income against the effects of Inflation. The challenge for regular bond investors is to accurately forecast Inflation, which if higher than anticipated could result in a lower real return than expected. Investing primarily in real return government bonds, the Altamira Inflation-Adjusted Bond Fund seeks to greatly reduce this risk by providing investors with a return that is hedged against Inflation.

Better match your future expenses and income. Inflation affects the cost of most goods and services. For your retirement expenses or your children's college or university tuition, the Altamira Inflation-Adjusted Bond Fund can help compensate for the effects of Inflation and better equip you to pay for future expenses.

Enhance diversification when combined with other asset classes. Real return bond performance has historically exhibited a low correlation to both equities and regular bonds. When held in combination with regular bond funds and equity funds, the Altamira Inflation-Adjusted Bond Fund can reduce overall portfolio volatility.

Fund Objective and Strategy:

The Fund's objective is to provide investors with regular income that is hedged against the effects of Inflation, by investing primarily in Canadian (Federal and Provincial) real return government bonds and those issued by the governments of other countries, up to the current 30% foreign content limit. As part of its strategy, the Fund may also invest in other Canadian (Federal and Provincial) debt securities in order to provide greater diversification and improve upside potential during periods when attractive investment opportunities in the real return bond market are lacking.

Real Return Bonds:

A real return bond is one that pays a rate of return that is adjusted for Inflation. Unlike regular bonds, interest payments are adjusted in step with the general level of prices, as represented by the Consumer Price Index (CPI)**. Also, the principal of a real return bond is adjusted for Inflation. While other asset classes like equities have historically provided protection from Inflation, real return bonds move more closely in line with Inflation over shorter time periods, and are typically less volatile.

**The CPI is a general measure of price movements in a fixed basket of goods and services that is organized into commodity groups, such as food, shelter and transportation.

How Does Inflation Affect Me?

Inflation in Canada

Expectations of what Inflation will be in the future are powerfully Influenced by the memory of the late 1970s and early 1980s, a time when the general level of prices in Canada rose more than 70%.

Even smaller increases in Inflation can have a significant impact over time. For instance, the price of a basket of goods and services that cost $100 in 1970 was $519 by 2004 (Source: Bank of Canada). That's a 419% increase and an almost 5% annual decline in the value of money over the same period.

Real return bonds offer a measure of Inflation protection that regular bonds do not. They hold considerable appeal for those saving for retirement as well as those who are already retired, by offering a unique combination of characteristics. These include Inflation insurance, low volatility, and a low return correlation with other asset classes over the long-term.

How Does Inflation Affect Bonds?

Given 3% annual inflation for the next five years, $10,000 will be worth just under $8,600. In fifteen years, it will be worth just over $6,300.

Inflation erodes the future purchasing power of both the fixed rate interest payment (i.e. coupon) as well as the principal to be repaid at maturity. An unexpected increase in Inflation poses a substantial risk for bondholders, with bond prices tending to fall as their coupon payments become relatively less attractive. The nominal interest rate offered on a bond indicates how much a sum of money invested in that instrument can be expected to grow in absolute terms. The real interest rate reflects the growth in actual purchasing power. Investors need only be concerned about the real value of their savings – specifically, what their savings will be able to purchase.

The Altamira Inflation-Adjusted Bond Fund aims to provide investors with a lower-risk hedge against the adverse effects of Inflation compared to other asset classes, such as equities. It's an ideal component for registered accounts, since any income generated within these plans is tax-sheltered. If the Fund is held in a non-registered plan, investors will be required to pay tax on the income payments every year, as well as on any principal adjustments to the bonds held in the portfolio.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Fund Details:

Altamira Inflation-Adjusted Bond Fund - Series A

Altamira Inflation-Adjusted Bond Fund - Series I

The Fund aims to provide investors with regular income that is hedged against the effects of inflation by investing primarily in Canadian Federal and Provincial real return government bonds and those issued by the governments of foreign countries, up to the foreign property limit.
Fund units are categorized into Series I units and Series A units.

Investment Risks
Since the majority of real return bonds are of a longer maturity (e.g. 30 years), the Fund will likely experience a higher level of volatility than that associated with shorter-term bond funds. However, in return for the inflation protection qualities offered by real return bonds, investors should expect slightly lower long-term returns than similarly invested nominal bond funds, but with potentially lower volatility over the long run. Deflation is when the general level of prices falls. In the unlikely event deflation occurs, the interest payments on real return bonds would shrink and the principal of the real return bonds held in the Fund would be adjusted downward. However, an investor's purchasing power would still be preserved. Please see the prospectus for a summary of other risks associated with investing in the Fund.	Altamira Inflation-Adjusted Bond Fund Risk/Return

Contact an Altamira Investment Specialist at 1-866-351-6925 or e-mail us today.

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