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Bulletin #0012-P

Policy Consultation Paper: CP 81-403 - Rethinking Point of Sale Disclosure for Segregated and Mutual Funds

Mutual Fund Dealers Association of Canada
Association canadienne des courtiers de fonds mutuels
121 King Street West, Suite 1600, Toronto, Ontario, M5H 3T9
TEL: 416-361-6332 FAX: 416-943-1218 WEBSITE:

Greg Ljubic
Director, Policy
March 24, 2003
Phone: 416-943-5836

MFDA Bulletin


For Distribution to Relevant Parties within your Firm

Policy Consultation Paper: CP 81-403
“Rethinking Point of Sale Disclosure for Segregated and Mutual Funds”

The Joint Forum of Financial Market Regulators recently released a consultation paper entitled
Rethinking Point of Sale Disclosure for Segregated and Mutual Funds”. The Consultation Paper
sets out proposed changes to the way information about investment choices is communicated to
consumers of segregated funds and mutual funds.

Regulators are concerned that consumers generally do not use the information folder or
prospectus to inform their segregated fund or mutual fund purchase decisions.

The proposals in the Consultation Paper are designed to bring information to consumers when
they need it, in a form they can use, and in a cost-effective and practical manner. The proposed
system of disclosure rests on four cornerstones:

1. Foundation Document: Each fund will have a base disclosure document containing core
information about the fund and its operator. The Joint Forum proposes that this document
will not be required to be provided to an investor. Rather, disclosure obligations will be
met provided the investor can “access” the document – either in electronic or paper form.
This is a new “access equals delivery” framework.

2. Continuous Disclosure Record: Each fund will prepare annual audited financial statements
and other prescribed disclosure. The continuous disclosure record will be available
electronically and in paper form. The Joint Forum proposes to treat this document like the
“Foundation Document” so that “access equals delivery”.

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3. Fund Summary Document: Each fund will prepare a one- or two-page summary to
communicate key information unique to the fund. Fund operators will make this
document available to sales representatives and sales representatives will offer it to all
consumers before a purchase is made. This will be the principal “point of sale” document
for both segregated funds and mutual funds.

4. Consumers Guide: Market participants will offer a consumer’s guide to those consumers
they believe will benefit. This document will contain objective educational information
about segregated funds and mutual funds. It will not be fund-specific.

In addition, the Joint Forum proposes to eliminate the existing rights of withdrawal and
rescission attached to the delivery of mutual fund prospectuses.

A copy of the Consultation Paper can be obtained online at regulators’ websites or by contacting
Stephen Paglia, Senior Policy Analyst, Joint Forum Project Office: (416) 590-7054;

The public has been invited to provide comments and feedback by April 30, 2003.

(doc. #12652)
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