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Mackenzie Financial Corporation
Headnote
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.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under subsection 62(5) of the Securities Act to permit extension of fund's prospectus lapse date by 226 days to facilitate consolidation with the manager's primary fund family prospectus -- no conditions.
Applicable Legislative Provisions
National Instrument 81-101 Mutual Funds Prospectus Requirements, ss. 5.1(4) and 6.1.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
October 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 MACKENZIE FINANCIAL CORPORATION (the Filer) AND IN THE MATTER OF MACKENZIE ALTERNATIVE ENHANCED YIELD FUND MACKENZIE CREDIT ABSOLUTE RETURN FUND MACKENZIE GLOBAL MACRO FUND MACKENZIE MULTI-STRATEGY ABSOLUTE RETURN FUND MACKENZIE PRIVATE EQUITY REPLICATION FUND (the Funds)
DECISION
Background
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 the simplified prospectus, fund facts and annual information form of the Funds, other than Mackenzie Private Equity Replication Fund (the Renewal Prospectus) be extended to those time limits that would apply if the lapse date was September 29, 2022 (the Lapse Date Extension), and that grants relief to the Funds and any alternative mutual fund established or restructured in the future and managed by the Filer (collectively with the 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):
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) 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 (the Other Jurisdictions and together with the Jurisdiction, the Jurisdictions).
Interpretation
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.
Representations
This decision is based on the following facts represented by the Filer:
Background Facts
The Filer
1. The Filer is a corporation amalgamated under the laws of Ontario with its head office in Toronto, Ontario.
2. The Filer is registered as an investment fund manager, portfolio manager, exempt market dealer and commodity trading manager in Ontario. The Filer is also registered as a portfolio manager and exempt market dealer in the Other Jurisdictions, as an investment fund manager in Newfoundland and Labrador and Québec, and as an adviser in Manitoba.
3. The Filer is or will be the manager, trustee and portfolio manager of each Alternative Fund.
4. The Filer is not in default of securities legislation in any of the Jurisdictions.
The Funds
5. Each Alternative Fund is or will be an open-ended mutual fund trust established under the laws of Ontario, and is or will be a reporting issuer as defined in the securities legislation of each of the Jurisdictions.
6. None of the Funds is in default of 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, 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.
8. The Funds, other than Mackenzie Private Equity Replication Fund, currently distribute securities in the Jurisdictions under a simplified prospectus dated February 5, 2021 (the Funds Prospectus).
Reasons for the Simplified Prospectus
9. 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 Mackenzie 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.
10. 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 Mackenzie Funds and combining them in the same simplified prospectus will allow investors to compare the features of the Alternative Funds and the Mackenzie Funds more easily.
11. 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.
12. 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.
13. 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
14. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the Funds' Prospectus is February 5, 2022, other than Mackenzie Private Equity Replication Fund. Accordingly, under subsection 62(2) of the Act, the distribution of securities of each Fund, other than Mackenzie Private Equity Replication Fund, would have to cease on its current lapse date unless: (i) the Funds, other than Mackenzie Private Equity Replication Fund, file a pro 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.
15. The Filer is the investment fund manager of the Mackenzie Funds that currently distribute their securities under a simplified prospectus with a lapse date of September 29, 2022 (the Mackenzie Funds Prospectus).
16. The Funds share many common operational and administrative features with the Mackenzie Funds and combining them in the same simplified prospectus will allow investors to compare the features of the Funds and the Mackenzie Funds more easily.
17. 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 Mackenzie Funds (the Mackenzie Funds Renewal Prospectus Documents), and unreasonable to incur the costs and expenses associated therewith, so that the Mackenzie 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).
18. If the Lapse Date Extension is not granted, it will be necessary to renew the Funds' prospectus, other than Mackenzie Private Equity Replication Fund, twice within a short period of time in order to consolidate the Funds' Prospectus with the Mackenzie Funds' Prospectus.
19. The Filer may make minor changes to the features of the Mackenzie Funds as part of the Mackenzie Funds' Renewal Prospectus Documents. The ability to file the Renewal Prospectus Documents with the Mackenzie Funds' Renewal Prospectus Documents will ensure that the Filer can make the operational and administrative features of the Funds and the Mackenzie Funds consistent with each other.
20. There have been no material changes in the affairs of the Funds since the relevant current prospectus filings. Accordingly, the Funds' Prospectus and current fund facts document(s) of each of the Funds represent current information regarding the Funds.
21. 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.
22. New investors of the Funds will receive delivery of the most recently filed fund facts document(s) of the applicable Fund(s). The Funds' Prospectus will still be available upon request.
23. The Exemption Sought will not affect the accuracy of the information contained in the Funds' Prospectus and therefore will not be prejudicial to the public interest.
Decision
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 Requested Relief is granted.
"Darren McKall"
Manager, Investment Funds and Structured Products
Ontario Securities Commission
Application File #: 2021/0532