Canada: Implementation of Point of Sale Disclosure for Mutual Funds

On October 8, 2010, the Canadian Securities Administrators ("CSA") published the Implementation of Stage 1 of Point of Sale Disclosure for Mutual Funds. This notice of amendments contains changes to National Instrument 81-101 Mutual Fund Prospectus Disclosure, Form 81-101F1 Contents of Simplified Prospectus, Form 81-101F2 Contents of Annual Information Form, and Companion Policy 81-101CP Mutual Fund Prospectus Disclosure. New Form 81-101F3 Contents of Fund Facts Document is part of the amended Instrument. The Instrument only applies to mutual funds subject to National Instrument 81-101 Mutual Fund Prospectus Disclosure.

1.  Substance and Purpose of the Amendments to the Instrument

The CSA believes that investors do not use the information contained in the simplified prospectus because they have trouble finding and understanding the information they need. In view of this, the Fund Facts document has been developed to make it easier for investors to find and use key information. The Fund Facts document (described in detail in Form 81-101F3) is concise, and is written in plain language that highlights the potential benefits, risks and costs of investing in a mutual fund. The CSA believes that these amendments will enhance investor protection by providing investors with an increased understanding and a tool for meaningful comparison with other funds. The CSA also believes that the efficiency of Canadian capital markets will be increased through the harmonization of disclosure regimes for mutual funds and segregated funds.

2.  History of the Amendments

On October 24, 2008, The Joint Forum of Financial Market Regulators published a framework paper ("the Framework") with the goal of harmonizing the disclosure regime of mutual funds and segregated funds. In order to achieve this, the Framework focused on three main principles: providing investors with key information about a fund; providing the information in a simple, accessible and comparable format; and providing the information before investors make their decision to buy. An article discussing the Framework is available here.

Concurrent to the release of the Framework, CSA Notice 81-318 Request for Comment - Framework 81-406 Point of sale disclosure for mutual funds and segregated funds was published, requesting comments on issues related to the implementation of the Framework and its principles. On June 19, 2009 proposed amendments were published. An article discussing the proposed amendments is available here.

The 54 comment letters received indicated that stakeholders generally agreed with the benefits of providing more meaningful and simplified information to investors through a Fund Facts document. Significant comments were made related to operational and compliance concerns with the point of sale delivery for mutual funds, and a large number of comments received requested a point of sale disclosure regime for other types of publicly offered investment funds and other securities at the same time.

3.  Summary of Changes to the 2009 Proposal

The Instrument only finalizes those aspects of the 2009 proposal consistent with the first stage of the approach to implementation described in the staff notice. As it pertains to Fund Facts documents, this consists of the production requirements, the online availability, and delivery obligations.

The Fund Facts document content requirements have changed in a number of ways, including:

  • a new introductory heading directing the investor to the simplified prospectus for further information must be added;
  • the "How risky is it?" section must contain a cross reference to the simplified prospectus for additional information;
  • a new section called "A word about tax" has been added to provide general information about the impact of income tax on mutual fund investments;
  • the renamed "Fund Expenses" category (previously "Ongoing Fund Expenses") no longer requires the individual management expense ratio ("MER") components to be listed separately, however it is now necessary to display the trading expense ratio ("TER") and the total of MER and TER as a percentage of the mutual fund's value;
  • dollar and cents figures must now be shown in Sales Charges, Fund Expenses and Trailing Commission; and
  • the maximum length of the Fund Facts has been increased from three pages to four pages (two double-sided) to accommodate the additional requirements.

While the Fund Facts document must still be written in plain language, using a format that assists in readability and comprehension, the requirement to conform to Grade 6 or lower readability according to the Flesch-Kincaid scale has been removed.

The Instrument no longer contemplates a regular three or six-month filing of the Fund Facts document. Instead, the Fund Facts must be filed any time there is a material change to the information contained in it or when the mutual fund wishes to provide more current information. Once filed, the Fund Facts document must be posted on the website of the mutual fund, the mutual fund family or the mutual fund manager, and a copy must be delivered or sent, free of charge, upon request.

The packaging / binding requirements have been revised to limit the requirements on binding. The Fund Facts document for each class or series of funds must be separately posted online; the Fund Facts document for all funds related to the simplified prospectus (or multiple simplified prospectuses) must be filed together on SEDAR; and, if the Fund Facts is being delivered to the investor with a simplified prospectus, Fund Facts document must be the first document in the package.

As the Fund Facts document is incorporated by reference to the Simplified Prospectus, existing statutory rights for misrepresentation in a prospectus will apply for any misrepresentations in the document. The Instrument no longer contemplates the replacement of the current withdrawal and rescission rights with the proposed harmonized two-day cooling-off right for investors.

The provisions related to point of sale delivery have been removed in this stage of the implementation.

Transition amendments include a transition period of slightly more than three months following the coming-into-force date of January 1, 2011. This provides a mutual fund with at least six months from the publication date of this Instrument to file and post a Fund Facts document.

4.  Conclusion

The CSA has stated that the project has two remaining stages. Stage 2 involves publishing for comment a proposal to require delivery of a prospectus within two days of buying a mutual fund. Stage 3 involves a review of comments obtained and publishing the proposed requirements to implement point of sale delivery for mutual funds. During these stages, the CSA will also consider point of sale delivery for other types of publicly offered investment funds and the harmonization of the withdrawal and rescission rights of investors.

5.  Important Dates

The Transition Period - January 1, 2011 to April 7, 2011:

During the transition period, a mutual fund may choose to file a Fund Facts document for each class or series of the mutual fund. This may happen either concurrently with the mutual fund's filing of its simplified prospectus and annual information form or by the mutual fund initially filing a Fund Facts document separately on SEDAR. Once filed, the Fund Facts document must be posted to the website of the mutual fund or the mutual fund's manager.

After April 7, 2011

A mutual fund that files a preliminary or pro forma simplified prospectus and annual information form must concurrently file a Fund Facts document for each class or series of the mutual fund offered under the simplified prospectus. A preliminary or pro forma Fund Facts should not be posted to the website of the mutual fund or the mutual fund's manager.

On or before July 8, 2011

If the mutual fund has not already done so, a Fund Facts document for each class or series of the mutual fund must be filed before July 8, 2011. This may occur either concurrently with the filing of the mutual fund's simplified prospectus and annual information form or by the mutual fund initially filing a Fund Facts document separately on SEDAR. Once filed, the Fund Facts must be posted to the website of the mutual fund or the mutual fund's manager.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.