Fund Facts: The plain-language 2-page pre-sale disclosure document that must be delivered to clients before a mutual fund purchase.

Fund Facts

The plain-language 2-page pre-sale disclosure document that must be delivered to clients before a mutual fund purchase.

Definition

Fund Facts is a standardized document required under NI 81-101 for every mutual fund series. It must be filed with regulators and made publicly available on the fund's website. Mandatory content: fund name and series, quick-reference data (date started, total value, management expense ratio), a top-10 holdings list, a 10-year performance bar chart, a risk rating on a 5-point scale, trading and redemption information, dealer compensation, and a plain-language statement of investor rights including the 2-day right of withdrawal. Effective January 9, 2017, dealers are required to deliver (or cause to be delivered) the most recently filed Fund Facts before a client completes a purchase of mutual fund units. Electronic delivery is permitted. Failure to deliver is a regulatory breach under NI 81-101 and a basis for rescission of the trade by the client.

Source

NI 81-101; Form 81-101F3 (Fund Facts); CSA Notice 81-342

Where this shows up on the CIRE

Outcome 5.1
Outcome 5.2

Test yourself

Two real CIRE-bank questions on this exact outcome. Click to reveal the answer and the rule citation.

1
Under UMIR, a registered trader at a CIRO marketplace participant enters a large buy order for a thinly traded security. The trader fragments the order into many small lots throughout the session to avoid triggering an uptick in the displayed quote. A colleague flags this as potentially problematic. Which UMIR concept is most relevant?
Outcome 5.1 · click for answer
A.Best execution, because the trader is failing to obtain the best available price.
B.Gatekeeper obligations, because the branch manager approved the order.
C.Manipulative and deceptive trading, because intentionally managing orders to affect the appearance of trading activity or price formation may constitute manipulation under UMIR.Correct
D.Short sale rules, because the order involves selling borrowed securities.
UMIR prohibits trading activity that creates a misleading appearance of trading activity or that manipulates the price of a security. Deliberately fragmenting orders to manage quote impact in a way designed to create a false impression of natural market activity can fall within UMIR's manipulation provisions. This is distinct from legitimate order management strategies because the intent is to avoid natural price discovery rather than to achieve best execution for a client.
2
A client places a limit order to buy 500 shares at $18.00. The current market is $18.20 bid and $18.35 ask. Under standard order-handling rules, what should happen to this order?
Outcome 5.2 · click for answer
A.The order should be rejected because the limit price is below the current ask.
B.The order should be immediately filled at the current ask price of $18.35 as a market order would be.
C.The order should be accepted and held in the order book until the ask price drops to $18.00 or below, at which point it may execute at the limit price or better.Correct
D.The order can only be filled if the bid price also falls to $18.00.
A limit buy order specifies the maximum price the client is willing to pay. Because the current ask of $18.35 exceeds the client's limit of $18.00, the order cannot execute immediately and is entered into the order book. It will execute when a seller is willing to sell at $18.00 or lower. A limit order does not convert to a market order, and it does not require the bid to reach $18.00, only a willing seller at or below that price.

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