The Securities Commission has granted I.G. Investment Management, Ltd. (IGIM) and its affiliates (collectively, the Filers) exemptions from certain requirements of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) regarding the delivery of fund facts documents for automatic switching programs in mutual funds.
Key Facts:
– IGIM manages mutual funds offering up to 16 series of securities, including High Net Worth Series with lower fees for eligible investors.
– Automatic Switches allow investors in Retail Series to be switched to corresponding High Net Worth Series upon meeting eligibility criteria (Household Investments of $500,000 or more).
– No switch fees or adverse tax consequences are associated with Automatic Switches.
Reasoning:
– The Commission recognized that delivering a fund facts document for each automatic switch provides little benefit to investors who already receive a Consolidated Fund Facts Document before their initial investment.
– The Consolidated Fund Facts Document includes comprehensive disclosure about the Automatic Switches and both series in the applicable Pair, which is considered to provide better information to investors than separate documents for each series.
Outcome:
– The Commission granted relief from the requirement to deliver a fund facts document for purchases of High Net Worth Series securities made pursuant to Automatic Switches.
– The Commission also allowed for a Consolidated Fund Facts Document that deviates from certain requirements to include information about both the Retail Series and High Net Worth Series, as well as the Automatic Switches.
Relevant Laws and Regulations:
– The exemptions are based on sections 2.1, 3.2.01(1), and 6.1 of NI 81-101, which govern mutual fund prospectus disclosure requirements.
– The decision also references National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions, which facilitates the application process across different Canadian jurisdictions.
Conditions:
– IGIM must implement a notification plan for existing investors prior to the implementation date, detailing the Automatic Switches and their implications.
– Disclosure about the Automatic Switches must be incorporated into the simplified prospectus for each Fund participating in the Automatic Switches.
– IGIM must send an annual reminder notice to Retail Series and High Net Worth Series investors about their rights and the availability of the most recently filed Consolidated Fund Facts Document.