Mutual Funds - Discount Brokerage

Labour Sponsored Investment Funds

Labour Sponsored Investment Funds (LSIFs) are corporations sponsored by labour organizations designed to invest in small and mid-size Canadian businesses subject to the following criterion:

• Less than 500 employees
• Less than $50 million in assets at the time of investment
• Maximum $15 million investment

LSIFs now account for approximately 40% of all venture capital raised in Canada. LSIFs are a way to try to reduce risk and enhance potential returns. A typical LSIF investor reduces the risk exposure of investing in venture capital by holding a diversified portfolio of small- to mid-size companies. LSIFs may specialize in certain sectors of activity, such as biotechnology or information technology. They also differ in the investment stage of companies.

LSIF Tax Benefits

Since venture capital supports technologies important to Canada's long-term economic well being, federal and provincial governments offer tax credits to Canadians who invest in LSIFs. The Federal Government offers a 15% tax credit on a maximum LSIF investment of $5,000 each year. Most provincial governments across the country offer an additional 15% tax credit on eligible LSIF investments, creating a total federal and provincial tax credit of 30%. The Ontario Government offers a 20% tax credit on research oriented investment funds (ROIF) LSIFs, generating a total of 35% in tax credits. If investors redeem their LSIF investment within 8 years, then the tax credits will be clawed back by the governments.

The LSIF Advantage

LSIFs offer a diversified portfolio of venture capital to investors who have a long-term investment horizon and a willingness to assist in the development of Canada's highest growth industrial sectors. Investors looking for the potential of higher returns and tax benefits ought to take a closer look at LSIFs. However, it is important to remember that due to the nature of the companies being invested in, this asset class has an inherently higher level of risk associated with it.

For more information, contact one of our Mutual Fund Specialists at 1-800-461-FUND (3863).

The following Labour Sponsored Investment Funds are available from TD Waterhouse Discount Brokerage.

This list is subject to change. Certain funds are not available in every province. For complete information and confirmation of availability, including details of inclusions or exceptions with respect to our pricing programs, please contact a TD Waterhouse Mutual Fund Specialist at 1-800-461-FUND (3863).