1832 Asset Management L.P.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from subsection 5.1(4) of NI 81-101 to permit simplified prospectus of alternative mutual funds to be consolidated with simplified prospectus of mutual funds that are not alternative mutual funds.
Applicable Legislative Provisions
National Instrument 81-101 Mutual Funds Prospectus Requirements, ss. 5.1(4) and 6.1.
September 23, 2022
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF 1832 ASSET MANAGEMENT L.P. (the Filer)
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of Dynamic Alpha Performance II Fund, Dynamic Credit Absolute Return II Fund, Dynamic Liquid Alternatives Private Pool, Dynamic Premium Yield PLUS Fund and Dynamic Real Estate & Infrastructure Income II Fund (together, the Existing Alternative Funds), and any alternative mutual fund established or restructured in the future and managed by the Filer or an affiliate of the Filer (collectively with the Existing Alternative Funds, the Alternative Funds), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that grants relief to the Alternative Funds from the requirement in subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) which states that a simplified prospectus for an alternative mutual fund must not be consolidated with a simplified prospectus of another mutual fund if the other mutual fund is not an alternative mutual fund (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions, MI 11-102 and National Instrument 81-102 Investment Funds (NI 81-102) have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a limited partnership, the general partner of which is 1832 Asset Management G.P. Inc., an Ontario corporation that is wholly owned by The Bank of Nova Scotia. The Filer's head office is located in Toronto, Ontario.
2. The Filer is registered as (i) a portfolio manager in all of the provinces of Canada and in the Northwest Territories and the Yukon; (ii) an exempt market dealer in all of the provinces of Canada (except Prince Edward Island and Saskatchewan); (iii) an investment fund manager in Ontario, Québec, Newfoundland and Labrador and the Northwest Territories; and (iv) a commodity trading manager in Ontario
3. The Filer, or an affiliate of the Filer, is, or will be, the investment fund manager of each of the Alternative Funds.
4. The Filer is not in default of the securities legislation in any of the Jurisdictions.
5. Each Alternative Fund is, or will be, established as a trust under the laws of Ontario as an alternative mutual fund and is, or will be, a reporting issuer in one or more of the Jurisdictions.
6. None of the Existing Alternative Funds are in default of the securities legislation in any of the Jurisdictions.
7. The securities of each Alternative Fund are, or will be, qualified for distribution in one or more of the Jurisdictions using a simplified prospectus and fund facts document prepared and filed in accordance with the securities legislation of such Jurisdictions. Each Alternative Fund is, or will be, subject to the requirements of NI 81-101 and NI 81-102.
8. On October 18, 2022, the Filer is scheduled to hold a meeting of unitholders of the Dynamic Retirement Income+ Fund (the Retirement Fund), at which unitholders will vote on a proposal to change the investment objective of the Retirement Fund (the Investment Objective Change). If approved by the unitholders, the Investment Objective Change will result in the Retirement Fund no longer being an alternative mutual fund and instead being a Conventional Fund (as defined below).
9. Currently, the Filer combines the simplified prospectus for the Retirement Fund and the Existing Alternative Funds. Following the Investment Objective Change, absent the Exemption Sought, the Filer would not be able to consolidate the simplified prospectus of the Retirement Fund and the Existing Alternative Funds.
10. The Filer wishes to combine the simplified prospectus of the Alternative Funds with the simplified prospectus of mutual funds existing today or created in the future (i) that are reporting issuers to which NI 81-101 and NI 81-102 apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer, or an affiliate of the Filer, acts as the investment fund manager (the Conventional Funds, and together with the Alternative Funds, the Funds), including to continue to combine the simplified prospectus of the Existing Alternative Funds and the Retirement Fund after the Investment Objective Change.
11. Offering the Alternative Funds using the same simplified prospectus as the Conventional Funds would reduce renewal, printing and related costs, facilitate the distribution of the Alternative Funds in the Jurisdictions under the same prospectus disclosure, and enable the Filer to streamline disclosure across the Filer's fund platform.
12. The Conventional Funds and the Alternative Funds share, or will share, many common operational and administrative features. Combining them in the same simplified prospectus, or continuing to combine them in the case of the Retirement Fund and the Existing Alternative Funds, will allow investors to more easily compare the features of the Conventional Funds and the Alternative Funds.
13. The ability to file the same simplified prospectus for the Conventional Funds and the Alternative Funds, including for the Retirement Fund and the Existing Alternative Funds, will ensure that the Filer can make corresponding changes to the operational and administrative features of the Funds in a consistent manner, if required.
14. Investors will continue to receive the fund facts document(s) when purchasing securities of the Funds as required by applicable securities legislation. The form and content of the fund facts document(s) of the Funds will not change as a result of the Exemption Sought.
15. The simplified prospectus of the Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
16. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision equivalent to subsection 5.1(4) of NI 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under NI 41-101 for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. There is no reason why mutual funds filing a prospectus under NI 81-101 should be treated differently from ETFs filing a prospectus under NI 41-101.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.