July 13, 2023
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)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of all investment funds currently managed by the Filer (the Existing Funds), and all future investment funds that are, or will be managed by the Filer (the Future Funds, and together with the Existing Funds, the Funds), for a decision under the securities legislation of the Jurisdiction (the Legislation) granting an exemption from section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) for the purposes of granting an exemption from item 2 of Part B of Form 81-101F1 Contents of Simplified Prospectus to permit the Part B Introductions of a Renewal Prospectus (as hereinafter defined) of the Funds to be consolidated into a single Part B Introduction and combined with the Part A section of a Renewal Prospectus (as hereinafter defined) of the Funds (the Exemption Sought).
Under National Policy 11-203 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 by the Filer in each of the provinces and territories of Canada outside Ontario (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions, NI 81-101 and MI 11-102 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:
The Filer is a corporation amalgamated under the laws of Alberta and has its head office in Toronto, Ontario.
The Filer is registered as follows: (i) as a portfolio manager, mutual fund dealer and exempt market 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 in Ontario under the Commodity Futures Act (Ontario).
The Filer is, or will be, the trustee and investment fund manager of the Funds.
Neither the Filer nor the Existing Funds are in default of securities legislation in any of the Jurisdictions.
Securities of certain Existing Funds are currently distributed to the public in the Jurisdictions pursuant to a simplified prospectus dated November 10, 2022, as amended from time to time (the Current Simplified Prospectus) and Fund Facts dated November 10, 2022, as amended from time to time.
The Funds are, or will be, open-end mutual fund trusts governed by a declaration of trust under the laws of the Province of Ontario. The Funds are, or will be, reporting issuers under the securities legislation of each of the Jurisdictions and are governed by the provisions of National Instrument 81-102 Investment Funds (NI 81-102).
There have been no material changes in the affairs of the Existing Funds distributed to the public in the Jurisdictions pursuant to the Current Simplified Prospectus, since the filing of the Current Simplified Prospectus.
On October 7, 2021, the Canadian Securities Administrators published amendments implementing eight initiatives aimed at reducing regulatory burden for investment funds (the Amendments). One of the initiatives was to repeal the requirement for a mutual fund in continuous distribution to file an Annual Information Form (an AIF). In lieu of an AIF, the Amendments repealed Form 81-101F1 Contents of Simplified Prospectus, as it was in force at that time (the Old Form 81-101F1), and replaced it with a revised Form 81-101F1 Contents of Simplified Prospectus (the New Form 81-101F1) which included unique requirements from Form 81-101F2 Contents of Annual Information Form.
The New Form 81-101F1 came into force on January 6, 2022, and the Canadian Securities Administrators provided an exemption from compliance with the requirements of the New Form 81-101F1 for the period before September 6, 2022.
The Current Simplified Prospectus was drafted in accordance with the New Form 81-101F1 for its annual renewal filing on November 10, 2022.
The Current Simplified Prospectus is divided into separate documents. In particular, as permitted under section 5.3(1) of NI 81-101, the Part A (General Disclosure) section is bound separately from the Part B (Fund-Specific Information) section.
The Part B section is further divided into four separate Part B documents, as follows:
(a) Part B1 - Equity Funds;
(b) Part B2 - Fidelity ETF Funds and Alternative Mutual Funds;
(c) Part B3 - Asset Allocation and Balanced Funds, Fidelity Managed Portfolios, Fidelity ClearPath Retirement Portfolios, Fixed Income Funds and Fidelity Private Investment Pools; and
(d) Part B4 - Building Blocks
(collectively, the Part B Books).
In the Current Simplified Prospectus, each Part B Book contains a Part B Introduction prepared in accordance with Item 2 (Part B Introduction) of the Part B (Fund-Specific Information) requirements of the New Form 81-101F1.
On or about September 25, 2023 and approximately every year thereafter, the Filer intends to file some or all of the following in respect of the renewal of the Current Simplified Prospectus: (a) a preliminary simplified prospectus in respect of Future Funds; (b) a pro forma simplified prospectus in respect of the Funds; and (c) a simplified prospectus in respect of the Funds (collectively, a Renewal Prospectus).
As part of preparing a Renewal Prospectus, the Filer is seeking to consolidate the Part A section and the Part B Introduction currently existing in each Part B Book, into a single document, which will be bound separately from each of the Part B Books.
In the absence of the Exemption Sought, disclosure contained in the Part B Introduction of each Part B Book will be duplicated in each Part B Book of a Renewal Prospectus.
Historically, the Old Form 81-101F1 provided, for a multiple SP, an option for the Part B Introduction to be included at the end of the Part A section or the beginning of a Part B section. However, the New Form 81-101F1 does not provide this option and requires a Part B Introduction to be placed at the beginning of a Part B section
In addition, paragraph 5.3(2)(a) of NI 81-101 requires that all Part B sections of a multiple SP must be bound separately from the Part A section if a Part B section is bound separately from the Part A section.
Combining a single Part B Introduction with the Part A section of a Renewal Prospectus will reduce duplication and provide investors with a more convenient way to review this information, as compared to having four separate Part B Introductions, one for each Part B Book.
The Exemption Sought will not affect the content of the Part B Introduction disclosure, only its location in a Renewal Prospectus. The Exemption Sought is not prejudicial to the public interest.
There is no similar exemptive relief that has been granted with respect to the Exemption Sought. However, exemptive relief from the requirements of versions of Form 81-101F1 Contents of Simplified Prospectus in force in the past have previously been granted.
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 Exemption Sought is granted.
"Darren McKall"
Darren McKall
Manager, Investment Funds and Structured Products Branch
Ontario Securities Commission
Application No. 2023/0263