Central Fund of Canada Limited is “The Sound Monetary Fund”.

Central Fund's purpose is to hold gold and silver bullion on a secure basis for the convenience of investors in the shares of Central Fund.

(At least 90% of Central's assets are Gold and Silver at all times.)

Central is listed on the NYSE Alternext - Symbol CEF and the Toronto Stock Exchange - Symbols: Cdn. $ CEF.A and U.S. $ CEF.U

Advantages

Easy to make a bullion investment. Central Fund shares trade on the open market like any other listed stock. A call to your broker is all you need.

No contract, delivery logistics, storage, insurance or assay headaches for Share Owners.

No transactions fees or sales taxes of any kind, other than your broker's commission.

Safety: Central Fund's Gold and Silver Bullion is stored in the highest security rated treasury vaults at a Canadian chartered bank on an unencumbered, allocated, segregated and insured basis.

Long-term administration: Central Fund was founded in 1961 by its Chairman.

Eligibility: Central Fund's Shares qualify for inclusion in many North American regulated accounts.

Certainty: Central Fund is known as:"The Sound Monetary Fund"

Factors You Should Consider

Central Fund of Canada is an Alberta based Canadian company that passively holds gold and silver bullion which are both priced worldwide in U.S. dollars.

The prices of Central shares, quoted and traded on The American Stock Exchange and The Toronto Stock Exchange, may fluctuate more or less than the prices of gold and silver bullion.

Outstanding Shares

There were 152,467,713 Class A retractable shares and 40,000 Common shares issued and outstanding at October 31, 2008.

Central Fund has no employees. It is party to an Administrative and Consulting Agreement with The Central Group Alberta Ltd., which is related to the Company through four of its officers and directors.

The Central Group Alberta Ltd., which acts as Administrator, has operating offices with employees, advisors and consultants who provide administrative and consulting services to the Company.

For such services, the Company pays an administrative and consulting fee, payable monthly, at an annual rate for at least until October 31, 2015 of: 0.30% on the first $400 million of total net assets; 0.20% on the next $600 million of total net assets; and 0.15% on total net assets exceeding one billion dollars.

In fiscal 2008, net assets as reported in U.S. dollars decreased by $33.5 million or 2.7%.

Three public offerings were completed during the year as described in Note 4 to the financial statements. Treasury shares were issued in these offerings at a premium over the net asset value per Class A share at the time of pricing, such that there was no dilution of the interests of existing Class A shareholders.

The net proceeds from the share issues inclusive of share issue costs reductions from fiscal 2007 ($127,523) totalled $320,577,113, of which $155,836,446 was used t opurchase 165,496 fine ounces of gold bullion, and $139,701,851 was used to purchase 8,274,868 ounces of silver bullion, primarily in physical bar form.

The balance of the proceeds, $24,911,293, was retained in interest-bearing cash deposits for working capital purposes.

Liquidity and Capital Resources

All of Central Fund's assets are liquid. The Company’s objective is to hold cash reserves that generate some income primarily to be applied to pay expenses and Class A share dividends. At October 31, 2008, Central Fund's cash reserves, including cash equivalents, were $46,969,312.

The comparable figure at October 31, 2007 was $27,530,873. The ability of Central Fund to have sufficient cash for expenses and dividend payments, and to meet demands for redemption (if any), is primarily dependent upon its ability to realize cash flow from its cash equivalents.

Should Central Fund not have sufficient cash to meet its needs, portions of Central Fund's bullion holdings may be sold to fund dividend payments, provide working capital and pay for redemptions (if any) of Class A shares. Sales of bullion holdings could result in Central Fund realizing capital gains or losses.

Central Fund qualifies as a Mutual Fund Corporation for share redemption purposes only but is not a mutual fund as defined by securities regulators. As a Mutual Fund Corporation, any Canadian tax payable by Central Fund to the extent that it relates to taxable capital gains is fully refundable when the realized gains are distributed to shareholders. Should

Central Fund not qualify as a Mutual Fund Corporation at any time in the future, Central Fund would have to pay non-refundable tax on such capital gains, if any. Payments for such distributions or tax would be a further use of Central Fund's cash resources.

During the fiscal year ended October 31, 2008, Central Fund's cash reserves increased by $19,438,439 from those held at October 31, 2007. The primary sources and uses of cash were as follows:

Sources of Cash

The primary inflow of cash was the cash portion retained from the proceeds of the issuances of Class A shares which totalled $320,577,113 net of share issue costs of $1,572,477. An additional $980,499 represents interest generated on short-term securities.

Uses of Cash

The primary outflow of cash during the year involved the purchase of gold and silver bullion with the proceeds from the share issues referred to above. Central Fund paid $155,836,446 to purchase 165,496 fine ounces of gold and $139,701,851 to purchase 8,274,868 ounces of silver during the year. Central Fund paid total expenses of $5,329,532 during the 2008 fiscal year, $1,063,139 of which related to amounts which had been accrued at October 31, 2007 and which were reflected in the accounts of that year.

Other cash outflows include $1,251,345 paid in the 2008 fiscal year with respect to Central Fund's October 31, 2007 Class A share dividend.

Central Fund’s Board of Directors made the decision to build up cash reserves by retaining in cash and cash equivalents a portion of the proceeds from share issues in recent years. Consistent with this objective, $24,911,293 of the $320,577,113 received upon the issuance of Class A shares was placed into interest-bearing cash deposits.

These amounts are to be used to pay expenses and dividend payments, and to meet demands for redemption of shares (if any). The Board of Directors is mindful of the need to make these payments each year, while continuing to meet the Company’s stated objective of holding the maximum amount the Board deems reasonable in the form of gold and silver bullion. Although it could readily generate cash by liquidating a small portion of its holdings,

Central Fund seeks to avoid any liquidation in the foreseeable future. However, were reserves to become too low and in the absence of other sources of capital at the time, liquidation of a portion of the holdings could be made which would result in gains or losses on such holdings.