Canadian securities regulators propose pre-sale delivery of Fund Facts for mutual funds

Toronto – The Canadian Securities Administrators (CSA) today published for a second comment period, proposed amendments to National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), which would require a Fund Facts document to be delivered to investors before they buy a mutual fund.

Central to the proposal is the Fund Facts document. It is written in plain language, no more than two pages double-sided, and highlights key information that is important to investors, including risk, past performance and the costs of investing in a mutual fund.

Initially published for comment in 2009, today’s proposal represents the third and final stage of the implementation of the CSA’s point-of-sale disclosure regime for mutual funds. To address operational and compliance issues raised on the 2009 proposal, and to allow for further stakeholder consultation, the CSA took a staged approach to the delivery of the Fund Facts.

Stage one, which came into force on January 1, 2011, required the Fund Facts document to be made available to investors online or upon request. Effective June 13, 2014, stage two requires delivery of the Fund Facts instead of the simplified prospectus to satisfy prospectus delivery requirements. Currently, a prospectus must be delivered to investors within two days of buying a mutual fund.

“Requiring pre-sale delivery of the Fund Facts document is an important investor protection initiative as it will give investors a better opportunity to make informed investment decisions,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission.

As part of the final steps in stage three, the CSA expects to publish for comment a summary document for exchange-traded funds that is similar to the Fund Facts.

The proposed amendments to NI 81-101 are available on CSA member websites. The comment period is open until May 26, 2014.

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.