2001 BCSECCOM 222

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Exemption granted to mutual fund management companies from the prohibition contained in subsection 5.4(1) of National instrument 81-105 Mutual Fund Sales Practices to permit the managers to pay a portion of the costs incurred by a financial planners industry association in organizing educational conferences, provided certain conditions are met

Applicable British Columbia Provisions

National Instrument 81-105, ss. 5.4(1), 9.1

IN THE MATTER OF NATIONAL INSTRUMENT 8l-105 MUTUAL FUND SALES PRACTICES

AND

IN THE MATTER OF THE MUTUAL RELIANCE SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF THE CANADIAN ASSOCIATION OF FINANCIAL PLANNERS

AND

IN THE MATTER OF FIDELITY INVESTMENTS CANADA LIMITED

MRRS DECISION DOCUMENT

WHEREAS the Canadian securities regulatory authority or regulator (the "Decision Maker”) in each of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Saskatchewan, Yukon, Nunavut and the Northwest Territories (the “Jurisdictions") have received an application from the Canadian Association of Financial Planners (the "Association") on behalf of Fidelity Investments Canada Limited (“Fidelity”) and on behalf of amember of the organization (as defined the National Instrument) of any other mutual fund (collectively with Fidelity, the "Mutual Fund Organizations”) for a decision pursuant to section 9.1 of National Instrument 81-105 Mutual Fund Sales Practices (the “National Instrument”) for an exemption from subsection 5.4(1) of the National Instrument to permit the Mutual Fund Organizations to pay a portion of the cost incurred by the Association in organizing its annual national conference to be held in June 2001, its Fall Conference to be held in October 2001 and other conferences and seminars organized and presented by the Association or its affiliates or its chapters in the future (collectively “Association Educational Events");

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemption Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Association has on its own behalf and on behalf of the Mutual Fund Organizations represented to the Decision Makers that:

1. The Association is Canada’s national professional association for practicing financial planners, some of whom are licensed to sell life insurance and related financial products and services such as investment funds. The head office of the Association is located in Toronto, Ontario. The Association serves its members and their individual, family and business clients primarily by providing specialized and comprehensive programs of professional development in financial services and also by advocating policy and legislation before government, legislators and regulators at all levels; collaborating with trade and industry associations in Canada and abroad; and administering a code of ethics that is binding on its 3300 members.

2. Approximately 75% of Association members are licensed to sell life insurance or certain other financial products that are ordinarily provided by life insurance companies. Approximately 75%of Association members are registered to sell mutual funds. Approximately 30% of Association members are licensed to sell securities. Approximately 20% of Association members are not licensed to sell any financial products. A small minority occupies non-sales and/or management positions with financial services organizations. The common activity of the Association's members may be described as providing financial planning advice to Canadians wherein life and health insurance and other financial products may be used to achieve financial objectives.

3. The Association also proposes to hold a national educational conference in conjunction with its annual general meeting for 2001.

4. The Association’s national conference (the “2001 Conference") is to take place in Montreal, Quebec from June 6 to 9, 2001. Approximately 2000 members of the Association are expected to attend. The 2001 Conference will be an educational event. Attendees will be able to earn 15 credit hours towards the annual continuing education credits required by the Association of its members and required by several provincial life insurance and securities regulators forholders of certain designations and licenses administered by such regulators.

5. The Association proposes to hold one regional educational conference in October 2001 (the "Association’s Fall Conference").

6. The Association’s Fall Conference will be held at the Banff Springs Hotel, Banff, Alberta, from October 12 to 14, 2001. Approximately 350 students will attend, 75 percent of whom will be residents of Alberta and 10 to 15 percent of whom will be residents of British Columbia. Attendees will be able to earn 12 continuing education credit hours.

7. Fidelity is a member of the organization of a mutual fund family within the meaning of the National Instrument and is registered in or may otherwise distribute mutual funds in each of the Jurisdictions. Fidelity has agreed to pay a portion of the costs of the Association’s Fall Conference and the 2001 Conference.

8. The Association anticipates that other members of the organization of a mutual fund will similarly offer to pay part of the costs of the Association in organizing and presenting the 2001 Conference, the Association’s Fall Conference and other Association Educational Events.

9. Subsection 5.4(1) of the National Instrument prohibits a member of the organization of a mutual fund from sponsoring the costs or expenses relating to a conference, seminar or course that is organized and presented by The Investment Funds Institute of Canada (“IFIC"), the Investment Dealers Association of Canada (the “IDA”) or another trade or Industry association. Subsection 5.4(2) of the National Instrument provides an exemption to permit members of the organization of a mutual fund to sponsor conferences, seminars or courses organized and presented by IFIC, the IDA or their respective affiliates in accordance with the conditions set out therein.

10. Fidelity proposes to sponsor a portion of the costs of the 2001 conference and the Association’s Fall Conference and in accordance with the conditions set out in subsection 5.4(2) of the National Instrument that are applicable to a conference organized and presented by IFIC or the IDA. The Association anticipates that other members of the organization of a mutual fund will similarly propose to sponsor a portion of the costs of the 2001 Conference, the Association’s Fall Conference and other Association Educational Events in accordance with those conditions. In particular:

(a) the primary purpose ofthe 2001 Conference, the Association’s Fall Conference and other Association Educational Events will be the provision of educational information about financial planning and matters relating to mutual funds and related products;

(b) none of the Mutual Fund Organizations in a mutual fund family will pay in the aggregate more than ten percent of the total direct costs incurred by the Association for the organization and presentation of the 2001 Conference, the Association’s Fall Conference and other Association Educational Events;

(c) the selection of a representative of a participating dealer to attend the 2001 Conference, the Association’s Fall Conference and other Association Educational Events will be made exclusively by the participating dealer, uninfluenced by the Mutual Fund Organizations; and

(d) the 2001 Conference, the Association’s Fall Conference and other Association Educational Events will be held in Canada;

AND WHEREAS pursuant to the System this Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);

AND WHEREAS the Decision Makers are satisfied that the test contained in the National Instrument that provides the Decision Makers with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers pursuant to the National Instrument is that the prohibition contained in subsection 5.4(1) prohibiting members of the organization of a mutual fund from sponsoring the costs or expenses relating to a conference, seminar or course that is organized and presented by IFIC, the IDA or another trade or industry association shall not apply to each Mutual Fund Organization in paying a portion of the direct costs (as defined in the National Instrument) incurred by the Association relating to the Association’s Fall Conference, 2001 Conference or other Association Educational Events, provided that the Mutual Fund Organization and the Association comply with the conditions set out in subsection 5.4(2)of the National Instrument in respect of the 2001 Conference, the Association’s Fall Conference and other Association Educational Events.

PROVIDED that this Decision, as it relates to the jurisdiction of a Decision Maker, will terminate one year after the publication in final form of any legislation or rule of that Decision Maker which modifies the provisions of section 5.4 of the National Instrument in a manner which makes the relief provided for in this Decision unnecessary or provides similar relief on a different basis or subject to different conditions.

DATED February 13th , 2001.

J.A. Geller Howard I. Weston