In addition to the investment strategies section of a prospectus, ETFs and non-redeemable investment funds are required to provide disclosure in the section of the prospectus relating to the IFM about an overall investment strategy or approach used by the IFM in connection with the funds that it manages,24 which may include any ESG strategies. Similarly, mutual funds that are not ETFs are also permitted to include such disclosure in their prospectus.25 Where such disclosure is provided in the section of the prospectus about the IFM, staff’s view is that the disclosure should be clear as to which of the funds in the prospectus the ESG strategy applies to, in order to provide transparency to investors as to which specific funds managed by the IFM use the ESG strategy. In addition, if the IFM’s approach to considering ESG factors in its investment process varies for different types of funds managed by the IFM (e.g. if the IFM considers ESG factors in its in vestment process differently for its passive index-tracking funds as compared to its actively managed funds), this should be clearly articulated, and the differences in the IFM’s ESG approach should be clearly explained.
For mutual funds that provide disclosure about an ESG strategy that is applied across more than one of its funds in the intro duction to Part B of the prospectus rather than in the fund-specific sections for each individual fund,26 staff’s view is that the fund-specific sections of the prospectus should include a cross-reference to such disclosure in the introduction to Part B of the prospectus so that it is clear to investors as to which of the funds in the prospectus uses the ESG strategy. In addition, if the IFM’s app roach to considering ESG factors varies for different types of funds, this should also be clearly explained.
24 Item 19.1(5) of Form 41-101F2.
25 Item 4.1(6) of Part A of Form 81-101F1.
26 For mutual fund prospectuses, the investment strategies disclosure required by Item 5 of Part B of Form 81-101F1 may be disclosed under the heading “What Does the Fund Invest In?” as per Item 5(1)(a) and (b) of Part B of Form 81-101F1 or in the introduction to Part B of the prospectus as per Item 2(3) of Part B of Form 81-101F1.