The Securities Commission has granted an exemption to a mutual fund management company, allowing it to consolidate the simplified prospectuses (SPs) of its alternative mutual funds with those of its conventional mutual funds. This decision is based on the provisions of National Instrument 81-101 Mutual Fund Prospectus Disclosure, specifically subsections 5.1(4) and 6.1(1), which typically prevent such consolidation unless both funds are alternative mutual funds.
The management company, which operates across various Canadian jurisdictions, sought this exemption to reduce costs associated with renewals and printing, and to streamline the distribution and disclosure process across its fund platform. The company argued that the alternative and conventional funds share many operational and administrative features, and combining their SPs would allow for easier comparison for investors.
The exemption was granted under the condition that investors will continue to receive the required fund facts or ETF facts documents, and that the SP and annual information form (AIF) will be provided upon request, in line with securities legislation. The decision was influenced by the fact that exchange-traded funds (ETFs) managed under National Instrument 41-101 do not face the same restriction and can consolidate prospectuses for alternative and conventional funds, suggesting that mutual funds should be treated similarly.
The Ontario Securities Commission, acting as the principal regulator, concluded that the exemption met the necessary legislative tests and therefore approved the application.