The Securities Commission has granted an exemption to allow the consolidation of the simplified prospectus (SP) of an alternative mutual fund with that of a conventional mutual fund, despite existing regulations typically prohibiting such consolidation. This decision is based on an application by TD Asset Management Inc. on behalf of the existing and future alternative mutual funds it manages, as well as conventional mutual funds for which it or its affiliate acts as the investment fund manager.
The exemption is grounded in the provisions of National Instrument 81-101 Mutual Fund Prospectus Disclosure, specifically subsections 5.1(4) and 6.1(1), which generally require separate prospectuses for alternative and conventional mutual funds. The rationale for the exemption includes anticipated cost savings, streamlined distribution, and simplified investor comparisons between alternative and conventional funds. The decision also notes that similar consolidation is already permitted for exchange-traded funds (ETFs) under National Instrument 41-101 General Prospectus Requirements, suggesting a precedent for mutual funds.
The decision ensures that investors will continue to receive the necessary fund facts and ETF facts documents, and that the content of these documents will not be affected by the exemption. The exemption was granted after the principal regulator concluded that it meets the test set out in the applicable legislation.