Exemption Orders (Discretionary)
FIDELITY INVESTMENTS CANADA LIMITED
2001 BCSECCOM 483
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF
FIDELITY INVESTMENTS CANADA LIMITED
Exemption Order Under Section 76
[para 1]
WHEREAS Fidelity Investments Canada Limited has applied to the Executive Director for an order under section 76 of the Securities Act, R.S.B.C. 1996, c. 418that:
(i) certain trades in units of the Funds (as defined below) are not subject to section 139 of the Securities Rules, B.C. Reg. 194/97, provided a Form 20 is filed and the prescribed fees are paid annually; and
(ii) the automatic reinvestment of distributions which are a return of capital in additional units of the Funds is exempt from the prospectus requirement of section 61 of the Act;
[para 2]
AND WHEREAS Fidelity has represented to the Executive Director that:
1. Fidelity is a corporation continued under the laws of Ontario and is registered under the Act as a dealer in the category of mutual fund dealer;
2. Fidelity has applied to the British Columbia Securities Commission for registration as an adviser in the categories of investment counsel and portfolio manager;
3. Fidelity intends to establish pooled funds (the “Funds”) from time to time and will act as the manager of the Funds;
4. each Fund will be established under the laws of Ontario pursuant to a declaration of trust and Fidelity will act as trustee of the Funds;
5. each of the Funds will be a “mutual fund” as such term is defined in section 1(1) of the Act;
6. none of the Funds is, nor is it expected that any of the Funds will become, a “reporting issuer” as such term is defined in section 1(1) of the Act;
7. Fidelity intends to offer discretionary investment management services to pension plans and other investors in Canada (the “Private Clients”);
8. Fidelity will carry out the investment mandate of the Private Clients through the purchase of units of the Funds (the “Units”) or through segregated accounts;
9. Fidelity may also permit Private Clients to subscribe for Units directly (the “Direct Sales”);
10. trades in Units will be effected through Fidelity or its affiliates;
11. Units will be issued in British Columbia in reliance upon the prospectus exemption contained in section 74(2)(4) of the Act (the “74(2)(4) Exemption”) or on other exempt bases;
12. the minimum initial investment in Units by or on behalf of a Private Client made in reliance upon the 74(2)(4) Exemption is $97,000 (the “Initial Investment”);
13. following an Initial Investment in a Fund, it is proposed that additional Units (the “Additional Units”) of that Fund be permitted to be purchased by or on behalf of Private Clients without being subject to any minimum purchase amount by:
(a) automatically reinvesting distributions attributable to outstanding Units; or
(b) subscribing and paying for Additional Units;
14. the issuance of Additional Units upon reinvestment of income or capital gains distributions otherwise payable will be made in reliance upon the exemption from the prospectus requirement contained in section 74(2)(22) of the Act;
15. the minimum net asset value, or the aggregate acquisition cost, of Units held by a Private Client in British Columbia purchasing Additional Units of a Fund will not be less than $100,000; such purchases of Additional Units in a Fund will be made in reliance upon the exemption from the prospectus requirement contained in section 74(2)(19) of the Act;
16. Units of the Funds will be redeemable upon the request of the unitholder at the net asset value per Unit on a valuation date, all as set out in each Fund’s respective declaration of trust and in accordance with rules established from time to time by Fidelity;
17. section 139 of the Rules requires the Funds to file reports on Form 20 on or before the 10th day after a distribution under any of sections 74(2)(3), 74(2)(4) or 74(2)(19) of the Act or section 128(c) of the Rules (the “Exempt Distributions”);
18. upon filing a Form 20 required by section 139 of the Rules, Fidelity will be required, pursuant to item 19 of section 22(1) of the Securities Regulation, B.C. Reg. 388/2000, to pay a fee equal to the greater of $100 and 0.03% of the proceeds realized from any Exempt Distributions;
19. it represents an administrative burden for Fidelity to file Form 20s and pay fees within the time frames required by the Rules, given the nature of the exempt fund business in which Fidelity is engaged; and
20. with respect to the distribution of Units of the Funds that are not Direct Sales to accounts of Private Clients that are fully managed by Fidelity, Fidelity intends to rely on the exemption from the requirements of section 139 of the Rules provided by British Columbia Instrument 45-505;
[para 3]
AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;
[para 4]
IT IS ORDERED, pursuant to section 76 of the Act, that:
1. Direct Sales that are Exempt Distributions are exempt from section 139 of the Rules, provided that each of the Funds:
(a) files a report of exempt distribution in Form 20 for each financial year of the Fund, which gives the date of each trade listed in item 6 of the Form 20 and is signed by the chief financial officer of Fidelity or, if the chief financial officer is not available, another senior officer of Fidelity; and
(b) pays the fee prescribed by item 19 of section 22(1) of the Regulation;
on or before the 30th day after the financial year end of the Fund; and
2. the automatic reinvestment of distributions which are a return of capital in Additional Units of a Fund is exempt from the prospectus requirement of section 61 of the Act.
[para 5]
DATED May 9, 2001.
Derek E. Patterson
Manager