When it comes to investing…

keep your emotions in check

Emotions in an up or down market

Make decisions that will cost more money over the long term

Where’s the proof?

1. Investment return is far more dependent on investor behaviour than on fund performance.

2. Mutual fund investors who hold their investments are far more successful than those who time the market.1

1QAIB 2007, page 4: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

What is market timing?

Predict future market directions

Make investment decision based on predictions

Goal is to buy low and sell high or to switch investments

Emotions: An investor’s worst friend

Investing behaviour is lead by two dominant emotions:1. Greed

Investors pour cash into mutual funds as markets rise

2. Fear Investors frantically sell after a market decline2

2QAIB 2007, page 5: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

The proof is in the returns

Can the average investor get better results than the market?

Source: QAIB 2007, page 20: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

Annualized Returns for:

1 Year 3 Years 5 Years 10 Years 20 Years

Average Equity Fund Investor

14.7% 11.3% 7.1% 6.2% 4.3%

S&P 500 15.8% 10.4% 6.2% 8.4% 11.8%

Inflation 2.0% 2.8% 2.1% 2.2% 3.0%

Investors “guess right ratio”

Source: QAIB 2007, page 9: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

Best strategy for long term investors

Buy and hold high-quality mutual funds with a record of delivering strong risk-adjusted returns

Asset allocation funds

Long term investors concerned about market volatility

Professionally managed Makes decisions on your behalf

Portfolio to match your risk tolerance

Potential to achieve better results by staying invested

Projected retention based on 20 years

Source: QAIB 2007, page 10: Quantitative Analysis of Investor Behavior, undertaken by Dalbar Inc.

Work closely with your advisor

During periods of market volatility

Investment returns increase when emotional responses are replaced by disciplined investment behaviour

Important notes

The commentary in this presentation is for general information only and should not be considered investment or tax service to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.

Manulife Investments is the brand name identifying the personal wealth management lines of business offered by Manulife Financial and its subsidiaries in Canada. As one of Canada’s largest integrated financial services providers, Manulife Investments offers a variety of products and services including: segregated funds, mutual funds, principal protected notes, annuities and guaranteed interest contracts.

Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.