Companion Policy to NI 81-102 Investment Funds
Part 2 Comments on Definitions Contained in the instrument
Section 2.5

“fundamental investment objectives”

(1) The definition of “fundamental investment objectives” is relevant in connection with paragraph 5.1(1)(c) of the Instrument, which requires that the approval of securityholders of an investment fund be obtained before any change is made to the fundamental investment objectives of the investment fund. The fundamental investment objectives of an investment fund are required to be disclosed in a prospectus under Part B of Form 81-101F1 Contents of Simplified Prospectus or under the requirements of Form 41-101F2 Information Required in an Investment Fund Prospectus. The definition of “fundamental investment objectives” contained in the Instrument uses the language contained in the disclosure requirements of Form 81-101F1 and Form 41-101F2, and the definition should be read to include the matters that would have to be disclosed under the Item of the applicable form concerning “Fundamental Investment Objectives”. Accordingly, any change to the investment fund requiring a change to that disclosure would trigger the requirement for securityholder approval under paragraph 5.1(1)(c) of the Instrument.

(2) Form 41-101F2 and Part B of Form 81-101F1 set out, among other things, the obligation that an investment fund disclose in a prospectus both its fundamental investment objectives and its investment strategies. The matters required to be disclosed under the Item of the applicable form relating to “Investment Strategies” are not “fundamental investment objectives” under the Instrument.

(3) Generally speaking, the “fundamental investment objectives” of an investment fund are those attributes that define its fundamental nature. For example, investment funds that are guaranteed or insured, or that pursue a highly specific investment approach such as index funds or derivative funds, may be defined by those attributes. Often the manner in which an investment fund is marketed will provide evidence as to its fundamental nature; an investment fund whose advertisements emphasize, for instance, that investments are guaranteed likely will have the existence of a guarantee as a “fundamental investment objective”.

(4) [Deleted]

(5) One component of the definition of “fundamental investment objectives” is that those objectives distinguish an investment fund from other investment funds. This component does not imply that the fundamental investment objectives for each investment fund must be unique. Two or more investment funds can have identical fundamental investment objectives.