The line every fund prospectus must add before October 2026
Canadian mutual fund managers with a principal distributor will soon have to spell out that arrangement, and its cost, for investors.
The Ontario Securities Commission has published amendments to National Instrument 81-101 Mutual Fund Prospectus Disclosure, adding new disclosure requirements to two of the documents that shape how investors learn about a fund before they buy it: Form 81-101F1, which sets out the contents of a simplified prospectus, and Form 81-101F3, which governs the fund facts document that most investors actually see.
Any mutual fund with a principal distributor must now say so plainly. The simplified prospectus and fund facts document will need to state that the principal distributor has an exclusive right to distribute the fund's securities, or holds a material competitive advantage over other distributors in doing so. That disclosure points investors to a "Dealer Compensation" section for more detail, including a description of the services the distributor provides to the fund or its manager.
Cost gets its own line item. If a principal distributor receives a payment beyond a trailing commission for services it provides to the manager or the fund, the prospectus and fund facts document must disclose the maximum percentage of the management fee that flows to the distributor for that work. Where the fee arrangement varies under the agreement between the distributor and the manager, fund managers will need to describe the variables used to determine the fee and explain how it's calculated.
Fund managers and principal distributors now have a practical job ahead: updating standard prospectus and fund facts language before the deadline. That deadline is October 1, 2026, when the amendments come into force. There's some runway built in - an investment fund doesn't have to comply with the amended instrument before October 1, 2028, as long as it keeps following National Instrument 81-101 as it stood on September 30, 2026, giving fund managers roughly two years before compliance is mandatory.
Saskatchewan works on its own clock. If the instrument is filed with that province's Registrar of Regulations after October 1, 2026, it comes into force there on the day it's filed, rather than on the general effective date that applies elsewhere.
The full text of Amendments to National Instrument 81-101 Mutual Fund Prospectus Disclosure is available at https://www.osc.ca/en/securities-law/instruments-rules-policies/8/81-101-81-101cp/amendments-national-instrument-81-101-mutual-fund-prospectus-disclosure-5.
