17.5.4 Fund Facts Document

The Fund Facts Document

The Fund Facts document is designed to provide investors with essential information about a mutual fund. It must be crafted in plain language, consist no more than two double-sided pages, and presented in an easily comprehensible format that adheres to a universal standard, allowing investors to compare mutual fund data consistently.

Purpose

The primary purpose of the Fund Facts document is to provide timely information that may influence investors’ decisions. The pre-purchase delivery of the document is mandatory for each class or series of mutual funds. The distribution channels can include in-person delivery, email, or other means, depending on how the dealer typically interacts with investors.

Investor Rights

The following disclosure of investor rights related to withdrawal and misrepresentation must appear in the Fund Facts document:

• Withdrawal Right: Investors have the right to withdraw from the purchase within 48 hours after receiving the purchase confirmation.
• Right of Damages or Rescission: Investors can seek damages or rescission if the Fund Facts document, simplified prospectus, Annual Information Form (AIF), or financial statements contain a misrepresentation. The time frame within which investors can act to claim these rights varies by province.
• Access to the Simplified Prospectus: Investors have the right to request a copy of the simplified prospectus at no charge.

Disclosure Components of Fund Facts

The Fund Facts document is divided into two major sections, each containing subsections of related items as illustrated in Table 17.2.

Table 17.2 | Components of the Fund Facts Document

• Sales charges
• Fund expenses (e.g., MER, TER, trailing commissions)
• Other fees (e.g., short-term trading fees, switch fees, change fees) | | Quick Facts |
  Overview including the fund’s creation date, total value of units, MER, portfolio manager identity, distribution frequency/meta, minimum investment. | | Investment |
• Top 10 investments and their percentage of net asset value
• Investment mix and breakdown of fund’s investment exposure | | Risks |
  Indicates risk level (low to high) and the potential for investors not recovering their invested amount. | Statement of Rights | Rights to change the mind within 48 hours of purchase confirmation. | Past Performance |
  Provides past performance through charts, tables, and average return scenarios. | | Suitability |
  Describes the target investor’s profile and suitable portfolios. | | Impact of Income Taxes on Investor Returns | Mention tax consequences of the fund’s returns. | | More Information About the Fund |
  Contact information for more details. |

Charts and Diagrams

Fund Performance Over the Last 10 Years

    gantt
	dateFormat  YYYY-MM-DD
	section SamFund Returns
	2000-01-01 :active,a0, 2000-01-01, 2001-12-31
	2001-01-01 :active,a1, 2001-01-01, 2002-12-31
	2002-01-01 :active,a2, 2002-01-01, 2003-12-31
	2010-01-01 :active,a9, 2009-01-01, 2010-12-31

Glossary and Definitions

• MER (Management Expense Ratio): The total of a mutual fund’s annual operating expenses expressed as a percentage of its average net assets.
• TER (Trading Expense Ratio): Represents the cost of trading expenses incurred by the fund, given as a percentage of the fund’s net assets.
• Top 10 Investments: The largest investments held by the fund, disclosed as part of the investment breakdown.
• Net Asset Value (NAV): The total value of the fund’s assets minus its liabilities, usually expressed as per-share price or unit price.
• Deferred Sales Charges: Fees paid upon selling a mutual fund within a certain period after purchase, typically declining over time.

Key Takeaways

• The Fund Facts document is essential for mutual fund investors, providing uniformly structured and critical information for decision-making.
• It discloses crucial information about fund details, risks, past performance, and investor rights in a concise, easy-to-read format.
• Understanding the components of the Fund Facts document will empower investors to make more informed investment decisions.

Frequently Asked Questions (FAQs)

Q: What information does the Fund Facts document provide investors?

A: The Fund Facts document provides details on fund information, risks, past performance, suitability, tax implications, costs, and investor rights.

Q: Is it mandatory to deliver this document to investors before purchasing a fund?

A: Yes, pre-purchase delivery of the Fund Facts document is mandatory for each class or series of mutual funds.

Q: What should an investor do if they find misrepresentation in the Fund Facts document?

A: Investors have the right to seek damages or rescind their purchase if there is a misrepresentation in the Fund Facts document or related documents such as the simplified prospectus, AIF, or financial statements.