Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – mutual fund granted relief from preparing and filing annual management report of fund performance which would only cover a short operating period – first interim MRFP must include financial highlights.
Applicable Legislative Provisions
National Instrument 81-106 Investment Fund Continuous Disclosure, s.4.2
June 30, 2008
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 or Mackenzie)
and
Mackenzie Destination+ 2017 Fund (the Fund)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Fund for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption, pursuant to section 17.1 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106), from the requirement contained in section 4.2 of NI 81-106 to prepare and file a management report of fund performance (MRFP) for the financial year ended June 30, 2008 (the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Northwest Territories, Nunavut and Yukon.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless they are defined.
Representations
This decision is based on the following facts represented by Mackenzie:
Mackenzie is a corporation operating under the laws of the Province of Ontario with its head office in Toronto, Ontario.
Mackenzie is the manager of the Fund, which is sold in every Province and Territory of Canada through independent financial advisors that are members of the Mutual Fund Dealers Association or the Investment Dealers Association.
The Fund was created by Declaration of Trust on June 12, 2008.
The final simplified prospectus and annual information form (the Prospectus) of the Fund was filed on SEDAR on June 13, 2008 under SEDAR Project Number 1267666. A receipt for the Prospectus was issued the same day.
The Fund is available for sale through registered dealers on June 23, 2008, which implies that the Fund has public investors only for a maximum of 5 trading days during the current financial year.
The Fund is a target date fund-of-fund product that invests in model portfolios as set out in its simplified prospectus. The initial investment is in the Growth Model Portfolio which consists entirely of underlying Mackenzie-managed mutual funds.
Mackenzie prepares and files MRFPs for all of its funds in a timely manner as required by NI 81-106.
In the absence of the Requested Relief, the Fund would be required to prepare and file in the Jurisdictions an MRFP for the financial year ended June 30, 2008 for each of the Jurisdictions.
The limited activities of the Fund for the period June 13, 2008 to June 30, 2008 do not provide meaningful information for the purposes of the preparation of an MRFP.
In respect of certain MRFP requirements, Form 81-106F1 requires a discussion of how changes to the investment fund over the financial year affected the overall level of risk associated with an investment in the investment fund, a summary of the results of operations of the investment fund for the financial year in which the management discussion of fund performance pertains, a discussion of the recent developments affecting the investment fund, a discussion of any transactions involving related parties to the investment fund, disclosure of selected financial highlights for the investment fund, and a summary of the investment fund’s portfolio as at the end of the financial year of the investment fund to which the MRFP pertains. Given the minimal business carried on by the Fund and the fact that units of the Fund were not be made available to the public until June 23, 2008, no disclosure on these and other items required to be disclosed by Form 81-106F1 could be meaningfully provided in an MRFP.
Mackenzie will prepare, file, and deliver audited financial statements for the Fund for the financial year ended June 30, 2008 as required by NI 81-106.
The financial statements of the Fund for the year ended June 30, 2008 will include a statement advising investors that interim and annual MRFPs relating to the Fund will be prepared and provided to investors in accordance with the Legislation during all of the future interim and annual reporting periods of the Fund.
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 provided that:
(i) the Filer will prepare an MRFP for the period ended December 31, 2008 in accordance with Form 81-106F1, except that it will include financial highlights as required by Part B, Item 3 of Form 81-106F1.
“Rhonda Goldberg”
Rhonda Goldberg
Manager, Investment Funds Branch
Ontario Securities Commission