The Securities Commission granted an investment fund relief from certain provisions of the National Instrument 81-102 Investment Funds (NI 81-102) and National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101). The fund, designed to provide monthly cash distributions tied to the lifespan of retiree investors, received permission to calculate the redemption price of its Decumulation Class units in a manner different from the standard net asset value (NAV) per security requirement. Specifically, the redemption price will be the lesser of the original purchase price minus all cash distributions paid prior to redemption or the NAV per unit, which may result in a redemption amount less than the NAV per unit.
Additionally, the fund was allowed to include charts in its fund facts document that are not typically required or permitted, showing targeted annual income payments and total return value at death, along with related assumptions. This information is deemed essential for investors to understand the fund’s risks and assess investment suitability.
The relief was granted on the condition that the fund prominently discloses on the prospectus and fund facts document the method for determining the Decumulation Class Redemption Price and the possibility of receiving less than the NAV per unit upon death or voluntary redemption. The decision was based on the belief that this disclosure is crucial for investor understanding and will not mislead them.
The relevant laws and regulations underpinning the outcome are subsection 10.3(1) of NI 81-102, subsection 2.1(1), and paragraphs 4.1(3)(a) and 4.1(3)(d) of NI 81-101. The relief is contingent upon the fund’s adherence to the conditions set forth in the decision.