The Securities Commission has granted an exemption allowing the consolidation of the simplified prospectus (SP) of an alternative mutual fund with that of a conventional mutual fund. This decision is based on the application by Northwest & Ethical Investments L.P., on behalf of the NEI Long Short Equity Fund and any future alternative mutual funds managed by the Filer or its affiliates, to combine their SPs with those of conventional funds managed by the same entities.
The exemption deviates from the requirement under subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), which typically prohibits the consolidation of SPs of alternative mutual funds with those of non-alternative mutual funds. The rationale for the exemption includes cost reduction, operational and administrative commonalities, and the facilitation of investor comparisons between fund types.
The decision also references the Ontario Securities Commission as the principal regulator and the reliance on subsection 4.7(1) of Multilateral Instrument 11-102 Passport System across Canadian jurisdictions.
The Filer is a registered entity in various capacities across Canadian provinces and territories, and neither it nor the funds are in default of securities legislation. The funds in question are or will be reporting issuers in Canada, subject to NI 81-101 and National Instrument 81-102 Investment Funds, with any granted exemptions.
The exemption is justified by the similarity in treatment between mutual funds under NI 81-101 and exchange-traded funds under National Instrument 41-101 General Prospectus Requirements, where the latter does not have a restriction equivalent to subsection 5.1(4) of NI 81-101.
The decision ensures that fund facts documents will continue to be provided to investors, and the SP will be available upon request. The list of conventional funds to which this decision applies is detailed in Schedule A.