Fidelity Investments Canada ULC and The Top Funds

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Mutual fund that is not a reporting issuer granted extensions of the annual financial statement filing and delivery deadlines and the interim financial statement filing and delivery deadlines under NI 81-106 to permit the fund to file and deliver annual financial statements within 120 days of its most recently completed financial year and to file and deliver interim financial statements within 90 days of its most recently completed interim period -- Fund invests the majority of its assets in Underlying Funds with later financial reporting deadlines -- Relief subject to conditions including disclosure of extended financial reporting deadlines in the offering memorandum of the Fund.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 2.4, 5.1(2) and 17.1.

December 11, 2024

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
THE TOP FUNDS
(as defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of itself, Fidelity Alternative Assets Institutional Trust (FAAIT) and Fidelity Alternative Real Estate Trust (FARET, and collectively with FAAIT, the Top Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (Legislation) to request relief from section 2.2, section 2.4, paragraph 5.1(2)(a) and paragraph 5.1(2)(b) of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) on behalf of the Filer.

The Filer and the Top Funds, request a decision, pursuant to section 17.1 of NI 81-106, exempting the Top Funds from:

(a) the requirement in section 2.2 of NI 81-106 that the Top Funds file their audited annual financial statements and auditor's report (the Annual Financial Statements) on or before the 90th day after the Top Funds' most recently completed financial year (the Annual Filing Deadline);

(b) the requirement in paragraph 5.1(2)(a) of NI 81-106 that the Top Funds deliver to securityholders their Annual Financial Statements by the Annual Filing Deadline (the Annual Delivery Requirement)

(c) the requirement in section 2.4 of NI 81-106 that the Top Funds file their unaudited interim financial statements (the Interim Financial Statements) on or before the 60th day after the Top Funds' most recently completed interim period (the Interim Filing Deadline)

(d) the requirement in paragraph 5.1(2)(b) of NI 81-106 that the Top Funds deliver to securityholders their Interim Financial Statements by the Interim Filing Deadline (the Interim Delivery Requirement), (collectively, 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 (the Principal Regulator) for this application as the head office of the Filer is located in Ontario, 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 (the Other Jurisdictions and, together with the Jurisdiction, the Jurisdictions).

Interpretation

Unless expressly defined herein, terms used have the respective meanings given to them in MI 11-102, National Instrument 14-101 Definitions, National Instrument 81-102 Investment Funds and NI 81-106.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation amalgamated under the laws of the Province of Alberta with its head office located in Toronto, Ontario.

2. The Filer is registered as an investment fund manager in Ontario, Québec and Newfoundland and Labrador. The Filer is also registered as a portfolio manager, mutual fund dealer and exempt market dealer in each of the Jurisdictions and is registered under the Commodity Futures Act (Ontario) in the category of commodity trading manager.

3. The Filer acts as investment fund manager and portfolio manager of each Top Fund.

4. The Filer, a related party of the Filer or a third party acts as trustee or general partner of each Top Fund.

5. The Filer is not a reporting issuer in any jurisdiction and is not in default of securities legislation in any of the Jurisdictions.

The Top Funds

6. Each Top Fund is an investment fund established as a trust under the laws of Ontario.

7. Each Top Fund is a mutual fund under the securities legislation of the Jurisdictions.

8. Securities of the Top Funds are offered for sale to qualified investors in one or more Jurisdictions pursuant to an exemption from the prospectus requirements, including the accredited investor exemption under National Instrument 45-106 Prospectus Exemptions or equivalent. In the case of Fidelity Alternative Assets Institutional Trust, securities are only offered for sale to other investment funds that are not reporting issuers and that are managed by the Filer (collectively, Institutional Pooled Funds).

9. The Top Funds are not a reporting issuer in any Jurisdiction.

10. The Top Funds have a financial year end of December 31.

11. Each Top Fund's investment objective is to invest, or will be achieved by investing, in Underlying Funds, which may pursue a variety of investment strategies.

12. The investment objective of FAAIT is to seek to provide total return, consisting of income and long-term capital growth through investments in private issuers of securities that: (i) invest directly and indirectly in private market assets, globally; and/or (ii) deploy alternative investment strategies (collectively, the FAAIT Underlying Funds, and individually, a FAAIT Underlying Fund).

13. The investment objective of FARET is to aim to provide a combination of long-term capital appreciation and income by investing in both private and public real estate assets in Canada. FARET seeks to achieve its investment objective by investing, directly or indirectly, in a portfolio of private and public real estate assets.

14. The Underlying Funds will be managed by the Filer, an affiliate of the Filer or a third party.

15. The Filer believes that the Top Funds' investment in the Underlying Funds offers benefits not available through a direct investment in the investment vehicles, companies, other issuers or assets held by the relevant Underlying Fund(s).

16. Securities of the Top Funds will typically be redeemable at various intervals, as will securities of certain Underlying Funds. As each Top Fund has a medium- to long-term investment horizon, each Top Fund will be able to manage its own liquidity requirements by: (i) investing a portion of its assets in liquid securities; (ii) imposing redemption conditions, which will be disclosed in the Top Fund's offering memorandum; and/or (iii) taking into consideration the frequency at which securities of the Underlying Funds may be redeemed.

17. The net asset value of each Top Fund is calculated monthly, as of the last business day of each calendar month, and investors will be provided with the net asset value within ninety to 120 days of the relevant valuation date.

18. Certain holdings of each Top Fund invested in securities of the Underlying Funds may be disclosed in the Top Fund's financial statements.

The Underlying Funds

19. The FAAIT Underlying Fund and the FARET Underlying Fund are both organized under the laws of Canada or a Jurisdiction.

20. The Underlying Funds may have varying financial year-ends and may be subject to a variety of financial reporting deadlines. Currently, each of the Underlying Funds held by each Top Fund has a financial year-end of December 31. Therefore, the Top Funds will not be able to obtain the finalized financial statements of the Underlying Funds prior to the Annual Filing Deadline or the Interim Filing Deadline for filing the Financial Statements and, in all cases, no sooner than other investors in the Underlying Funds receive the financial statements of the Underlying Funds. The Filer expects this timing delay in the completion of the Annual Financial Statements and the Interim Financial Statements of each Top Fund to occur every year for the foreseeable future.

21. The offering memorandum of each Top Fund that will be provided to prospective investors, except Institutional Pooled Funds, will disclose, or such investors will be otherwise notified, that: (i) the Annual Financial Statements for such Top Fund will be delivered to each investor within 120 days of such Top Fund's financial year end; and (ii) the Interim Financial Statements for such Top Fund will be delivered to each investor within 90 days following the end of each interim period of such Top Fund.

22. The Filer will notify securityholders of the Top Funds that it has received and intends to rely on relief from the Annual Filing Deadline and Annual Delivery Requirement and the Interim Filing Deadline and the Interim Delivery Requirement.

Financial Statement Filing and Delivery Requirements

23. Section 2.2 and paragraph 5.1(2)(a) of NI 81-106 require a Top Fund to file and deliver its annual audited financial statements by the Annual Filing Deadline. As each Initial Top Fund's financial year end is December 31, it has a financial statement filing and delivery deadline of March 31 in a non-leap year.

24. Section 2.4 and paragraph 5.1(2)(b) of NI 81-106 require a Top Fund to file and deliver its interim financial statements by the Interim Filing Deadline. As each Top Fund's interim period-end will be June 30 in a non-leap year, the Top Funds will have an interim filing and delivery deadline of August 29 in a non-leap year.

25. Section 2.11 of NI 81-106 provides an exemption (the Filing Exemption) from the Annual Filing Deadline if, among other things, an investment fund delivers its annual financial statements in accordance with Part 5 of NI 81-106 by the Annual Filing Deadline and the Interim Filing Deadline, as applicable.

26. As noted above, the Underlying Funds may have varying financial year ends and may be subject to a variety of financial reporting deadlines contemplated by NI 81-106 and that are applicable to the Top Funds. In addition, even if such reporting deadlines are aligned, they do not allow for sufficient time for the Filer, the Top Funds and the auditor of the Top Funds, as applicable, to prepare the applicable financial statements and reports in a manner to meet the deadlines set out in NI 81-106.

27. In order to formulate an opinion on the financial statements of each Top Fund, the Top Fund's auditor requires audited financial statements of its respective Underlying Fund(s) as at the date of the financial year-end of the Top Fund in order to audit the information contained in the Top Fund's financial statements.

28. The auditors of the Top Funds have advised the Filer that they will be unable to complete the audit of the Top Funds' annual financial statements until the audited financial statements of the FAAIT Underlying Fund and FARET Underlying Fund, respectively, are completed and available to the applicable Top Fund.

29. With respect to Underlying Funds managed by the Filer, the added costs associated with expedited auditing services in order to provide their financial statements at an earlier date outweigh the expected benefit to the unitholders of the Top Funds.

30. Each Top Fund therefore seeks an extension of the Annual Filing Deadline and Annual Delivery Requirement to within 120 days after its year end, to enable the Top Fund's auditors to receive the audited financial statements of the relevant Underlying Fund(s) and then prepare the Top Fund's annual audited financial statements.

31. Each Top Fund seeks an extension of the Interim Filing Deadline and the Interim Delivery Requirement to permit delivery within 90 days of such Top Fund's most recently completed interim period, to enable the Top Fund to first receive the interim financial reports of the relevant Underlying Funds so as to be able to determine the net asset value of the relevant Underlying Funds and prepare such Top Fund's interim financial statements.

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 provided that:

(a) The Top Funds have a financial year ended December 31.

(b) Each Top Fund's investment strategy is to primarily invest the Top Fund's investable assets in securities of one or more Underlying Funds whose investment objectives are compatible with the Top Fund's investment objectives.

(c) Each Top Fund invests the majority of its assets in Underlying Funds.

(d) No less than 25% of the total assets of each Top Fund as at its financial year end of December 31 are invested in Underlying Funds that have financial years ends corresponding to each Top Fund and are subject to laws of their jurisdictions, or applicable exemptive relief, that require annual financial statements of the Underlying Funds to be delivered within 120 days of their financial year ends and interim financial statements to be delivered between 60 and 90 days of their most recent interim period.

(e) The offering memorandum provided to prospective investors, except Institutional Pooled Funds, regarding the Top Funds discloses that:

1. the Annual Financial Statements for the Top Funds will be filed and delivered on or before the 120th day after the Top Fund's most recently completed financial year; and

2. the Interim Financial Statements for the Top Funds will be filed and delivered on or before the 90th day after the Top Fund's most recently completed interim period, subject to regulatory approval.

(f) Each of the Top Funds notify its securityholders that the Top Funds have received and intends to rely on relief from the filing and delivery requirements under section 2.2, section 2.4, paragraph 5.1(2)(a) and paragraph 5.1(2)(b) of NI 81-106.

(g) The Top Fund is not a reporting issuer in any jurisdiction of Canada, and the Filer has the necessary registrations to carry out its operations in each jurisdiction of Canada in which it operates.

(h) The conditions in section 2.11 of NI 81-106 will be met, except for subsection 2.11(b), and:

1. the Annual Financial Statements will be delivered to securityholders of the Top Fund in accordance with Part 5 of NI 81-106 on or before the 120th day after the Top Fund's most recently completed financial year; and

2. the Interim Financial Statements will be delivered to securityholders of the Top Fund in accordance with Part 5 of NI 81-106 on or before the 90th day after the Top Fund's most recently completed interim period.

(j) This Exemption Sought terminates within one year of the coming into force of any amendment to NI 81-106 or other rule that modifies how the Annual Filing Deadline, Annual Delivery Requirement, Interim Filing Deadline or Interim Delivery Requirement applies in connection with mutual funds under the Legislation.

"Darren McKall"
Investment Management Division
Ontario Securities Commission

Application File #: 2024/0580
SEDAR+ File #: 6191027