The Securities Commission has granted an exemption to a financial management company, allowing it to consolidate the simplified prospectus (SP) of an alternative mutual fund with the SP of a conventional mutual fund. This decision deviates from the standard requirement under subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), which typically prohibits such consolidation unless both funds are alternative mutual funds.
The rationale for the exemption is to reduce costs associated with renewals and printing, and to streamline the distribution and disclosure processes for the company’s fund platform. The Commission recognized that despite being alternative mutual funds, the funds in question share many operational and administrative features with conventional funds, and combining them in the same SP would allow for easier comparison for investors.
The decision was also influenced by the fact that there is no equivalent provision to subsection 5.1(4) of NI 81-101 in National Instrument 41-101 General Prospectus Requirements (NI 41-101), which governs exchange-traded funds (ETFs). This means that ETFs that are alternative mutual funds can be consolidated with ETFs that are conventional mutual funds, suggesting a precedent for similar treatment of mutual funds under NI 81-101.
The Commission concluded that the exemption meets the legislative test and granted it accordingly. The outcome allows the financial management company to combine the SPs of its alternative and conventional mutual funds, facilitating a more efficient and cost-effective disclosure process.