Fidelity Investments Canada ULC et al.
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 -- relief from subsection 62(5) of the Securities Act granting an extension of the lapse date of three prospectuses so that funds qualified for distribution by the three prospectuses be incorporated into a fourth prospectus when it is renewed.
Applicable Legislative Provisions
National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 62(5).
July 13, 2021
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 FIDELITY INVESTMENTS CANADA ULC (the Filer) AND IN THE MATTER OF THE FUNDS LISTED IN SCHEDULE "A" HERETO (the September Funds), THE FUNDS LISTED IN SCHEDULE "B" HERETO (the October Funds), AND THE FUNDS LISTED IN SCHEDULE "C" HERETO (the Existing Alternative Funds, and together with the September and October Funds, the Funds and each a Fund)
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction (the Legislation) that the time limits for the renewal of each simplified prospectus, fund facts and annual information form of the Funds (each, a Renewal Prospectus) be extended to those time limits that would apply if the lapse date was November 1, 2021 (the Lapse Date Extension), and that grants relief to the Existing Alternative Funds and any alternative mutual fund established or restructured in the future and managed by the Filer (collectively with the Existing Alternative Funds, 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 Simplified Prospectus Consolidation, together with the Lapse Date Extension, 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 section 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 corporation amalgamated under the laws of Alberta and has its head office in Toronto, Ontario.
2. The Filer is registered as follows: (i) as a portfolio manager and mutual fund dealer in each of the Jurisdictions; (ii) as an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador; and (iii) as a commodity trading manager under the Commodity Futures Act (Ontario).
3. The Filer is the trustee and investment fund manager of the Funds.
4. Each of the Funds is an open-end mutual fund trust established under the laws of the Province of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.
5. Neither the Filer nor any of the Funds is in default of securities legislation in any of the Jurisdictions.
6. The securities of each Alternative Fund are, or will be, qualified for distribution in one or more of the Jurisdictions using a simplified prospectus, annual information form and fund facts documents 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.
7. The September Funds currently distribute securities in the Jurisdictions under a simplified prospectus dated September 18, 2020, as amended January 12, 2021 (the September Funds Prospectus). The October Funds currently distribute securities in the Jurisdictions under a simplified prospectus dated October 2, 2020 (the October Funds Prospectus). The Existing Alternative Funds currently distribute securities in the Jurisdictions under a simplified prospectus dated October 5, 2020 (the Alternative Funds Prospectus).
Reasons for the Simplified Prospectus Consolidation
8. The Filer wishes to combine the simplified prospectus and annual information form of the Alternative Funds with the simplified prospectus and annual information form of the 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 acts as the investment fund manager (the "Fidelity Funds"), in order to reduce renewal, printing and related costs. Offering the Alternative Funds using the same simplified prospectus and annual information form as the majority of the mutual funds managed by the Filer would 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.
9. Even though the Alternative Funds are, or will be, alternative mutual funds, they share, or will share, many common operational and administrative features with the Fidelity Funds and combining them in the same simplified prospectus will allow investors to more easily compare the features of the Alternative Funds and the Fidelity Funds.
10. Investors will continue to receive a fund facts document when purchasing securities of an Alternative Fund as required by applicable securities legislation. The form and content of the fund facts document of the Alternative Funds will not change as a result of the Simplified Prospectus Consolidation.
11. The simplified prospectus and annual information form of the Alternative Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
12. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision which is 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. The Filer submits that 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.
Reasons for the Lapse Date Extension
13. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the September Funds Prospectus is September 18, 2021, the lapse date of the October Funds Prospectus is October 2, 2021 and the lapse date of the Alternative Funds Prospectus is October 5, 2021. Accordingly, under subsection 62(2) of the Act, the distribution of securities of each Fund would have to cease on its current lapse date unless: (i) the Funds file apro forma simplified prospectus at least 30 days prior to its current lapse date; (ii) the final simplified prospectus is filed no later than 10 days after its current lapse date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days after its current lapse date.
14. The Filer is the investment fund manager of the Fidelity Funds that currently distribute their securities under a simplified prospectus with a lapse date of November 1, 2021 (the Fidelity Funds Prospectus).
15. The Funds share many common operational and administrative features with the Fidelity Funds and combining them in the same simplified prospectus will allow investors to more easily compare the features of the Funds and the Fidelity Funds.
16. It would be impractical to alter and modify all the dedicated systems, procedures and resources required to prepare the renewal simplified prospectus, annual information form and fund facts for the Fidelity Funds (the Fidelity Funds Renewal Prospectus Documents), and unreasonable to incur the costs and expenses associated therewith, so that the Fidelity Funds Renewal Prospectus Documents can be filed earlier with any renewal simplified prospectus, annual information form and fund facts documents of the Funds (the Renewal Prospectus Documents).
17. If the Lapse Date Extension is not granted, it will be necessary to renew the September Funds Prospectus, the October Funds Prospectus and the Alternative Funds prospectus twice within a short period of time in order to consolidate the September Funds Prospectus, the October Funds Prospectus and the Alternative Funds Prospectus with the Fidelity Funds Prospectus.
18. The Filer may make minor changes to the features of the Fidelity Funds as part of the Fidelity Funds Renewal Prospectus Documents. The ability to file the Renewal Prospectus Documents with the Fidelity Funds Renewal Prospectus Documents will ensure that the Filer can make the operational and administrative features of the Funds and the Fidelity Funds consistent with each other.
19. There have been no material changes in the affairs of the Funds since the relevant current prospectus filings, other than as described in the amendments to the September Funds Prospectus. Accordingly:
a. the September Funds Prospectus and current fund facts document(s) of each of the September Funds represent current information regarding the September Funds,
b. the October Funds Prospectus and current fund facts document(s) of each of the October Funds represent current information regarding the October Funds, and
c. the Alternative Funds Prospectus and current fund facts document(s) of each of the Existing Alternative Funds represent current information regarding the Existing Alternative Funds.
20. Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the current simplified prospectus and fund facts document(s) of the applicable Fund(s) will be amended as required under the Legislation.
21. New investors of the Funds will receive delivery of the most recently filed fund facts document(s) of the applicable Fund(s). The September Funds Prospectus, the October Funds Prospectus and the Alternative Funds Prospectus will still be available upon request.
22. The Exemption Sought will not affect the accuracy of the information contained in the September Funds Prospectus, the October Funds Prospectus or the Alternative Funds Prospectus and therefore will not be prejudicial to the public interest.
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.
The September Funds
The October Funds
The Existing Alternative Funds