Exemption Orders (Discretionary)

CLASSES OF SHARES OF FIDELITY CAPITAL STRUCTURE CORP.


2001 BCSECCOM 904


Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from certain of the self-dealing restrictions regarding investments by top funds, comprised of classes of shares of a mutual fund corporation, of substantially all of the assets of the top funds in units of underlying funds under common management.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, ss 120 (1), 120(2), 121(2)(b), 121(2)(c), 126(a), 126(d), 127(a) and 130(b).

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, NOVA SCOTIA and NEWFOUNDLAND

AND

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

AND

IN THE MATTER OF CLASSES OF SHARES OF FIDELITY CAPITAL STRUCTURE CORP. (THE "CORPORATION"), BEING
FIDELITY CANADIAN GROWTH COMPANY CLASS,
FIDELITY DISCIPLINED EQUITY CLASS,
FIDELITY TRUE NORTH CLASS,
FIDELITY AMERICAN OPPORTUNITIES CLASS,
FIDELITY GROWTH AMERICA CLASS,
FIDELITY SMALL CAP AMERICA CLASS,
FIDELITY EUROPEAN GROWTH CLASS,
FIDELITY FAR EAST CLASS,
FIDELITY INTERNATIONAL PORTFOLIO CLASS,
FIDELITY JAPANESE GROWTH CLASS,
FIDELITY FOCUS CONSUMER INDUSTRIES CLASS,
FIDELITY FOCUS FINANCIAL SERVICES CLASS,
FIDELITY FOCUS HEALTH CARE CLASS,
FIDELITY FOCUS NATURAL RESOURCES CLASS,
FIDELITY FOCUS TECHNOLOGY CLASS,
FIDELITY FOCUS TELECOMMUNICATIONS CLASS,
FIDELITY CANADIAN BALANCED CLASS,
FIDELITY CANADIAN SHORT TERM INCOME CLASS (COLLECTIVELY, THE “CLASSES”) AND FIDELITY INVESTMENTS CANADA LIMITED

MRRS DECISION DOCUMENT

WHEREAS the Canadian securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia, and Newfoundland (the "Participating Jurisdictions") has received an application from Fidelity Investments Canada Limited ("Fidelity"), on its own behalf and on behalf of the Classes (the "Current Top Funds") and other classes of the Corporation managed by Fidelity after the date of this Decision (defined herein) having an investment objective that invests substantially all of its assets in another mutual fund managed by Fidelity (individually, a "Top Fund" and, together with the Current Top Funds, the "Top Funds") for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that the following provisions of the Legislation (the "Applicable Requirements") shall not apply to the Top Funds or Fidelity, as the case may be, in respect of certain investments to be made by a Top Fund in an Underlying Fund (as defined herein) from time to time:

(a) the restrictions contained in the Legislation prohibiting a mutual fund from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder; and

(b) the requirements contained in the Legislation requiring a management company or, in British Columbia, a mutual fund manager, to file a report relating to a purchase or sale of securities between the mutual fund and any related person or company, or any transaction in which, by arrangement other than an arrangement relating to insider trading in portfolio securities, the mutual fund is a joint participant with one or more of its related persons or companies.

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

AND WHEREAS it has been represented by Fidelity to the Decision Makers that:

1. Fidelity is a corporation continued under the laws of the Province of Ontario and is or will be the manager of each of the Top Funds and each of the Underlying Funds (collectively, the "Fidelity Funds"). Fidelity's head office is located in Toronto, Ontario.

2. Each of the Top Funds is or will be classes of shares of the Corporation, a mutual fund corporation incorporated under the laws of the Province of Alberta, the shares of which will be offered for sale in each of the provinces and territories of Canada.

3. Each of the Current Underlying Funds (as defined herein) is and will be an open-ended mutual fund trust established under the laws of Ontario by a Declaration of Trust.

4. Each of the Fidelity Funds is or will be a reporting issuer in each of the provinces and territories of Canada.

5. Securities of each of the Fidelity Funds will be qualified for distribution by means of a simplified prospectus and an annual information form filed in accordance with the legislation applicable in each of the provinces and territories of Canada.

6. Each of the Top Funds seeks to achieve its investment objective by investing substantially all of its assets in securities of its corresponding Underlying Fund. Except for transitional cash, each of the Top Funds will be 100% invested in securities of its corresponding Underlying Fund.

7. Fidelity is currently the manager of Fidelity Canadian Growth Company Fund, Fidelity Disciplined Equity Fund, Fidelity True North Fund, Fidelity American Opportunities Fund, Fidelity Growth America Fund, Fidelity Small Cap America Fund, Fidelity European Growth Fund, Fidelity Far East Fund, Fidelity International Portfolio Fund, Fidelity Japanese Growth Fund, Fidelity Focus Consumer Industries Fund, Fidelity Focus Financial Services Fund, Fidelity Focus Health Care Fund, Fidelity Focus Natural Resources Fund, Fidelity Focus Technology Fund, Fidelity Focus Telecommunications Fund, Fidelity Canadian Balanced Fund and Fidelity Canadian Money Market Fund (the "Current Underlying Funds") and may in the future establish other mutual fund trusts or corporations (together with the Current Underlying Funds, the "Underlying Funds").

8. The simplified prospectus for the Top Funds will disclose the investment objectives, investment strategies, risks and restrictions of the Top Fund.

9. Except to the extent evidenced by this Decision and specific approvals granted by the Decision Makers pursuant to National Instrument 81-102 Mutual Funds ("NI 81-102"), the investments by the Top Funds in the Underlying Funds have been structured to comply with the investment restrictions of the Legislation and NI 81-102.

10. In the absence of the Decision, pursuant to the Legislation, each Top Fund is prohibited from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder. As a result, in the absence of this Decision the Top Fund would be required to divest itself of any such investments.

11. In the absence of the Decision, Legislation requires Fidelity to file a report on every purchase or sale of securities of the Underlying Funds by the Top Fund.

12. The investments by the Top Funds in securities of the Underlying Funds will represent the business judgement of “responsible persons” (as defined in the Legislation) uninfluenced by considerations other than the best interests of the Top Funds.

AND WHEREAS pursuant to the System this MRRS Decision Document evidences the Decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the tests contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that the Applicable Requirements shall not apply so as to prevent the Top Funds from making and holding an investment in securities of the Underlying Funds or require Fidelity to file a report relating to the purchase or sale of such securities.

PROVIDED IN EACH CASE THAT:

1. the 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 dealing with matters in subsection 2.5 of NI 81-102.

2. the Decision shall only apply if, at the time a Top Fund makes or holds an investment in its Underlying Fund, the following conditions are satisfied:

(a) the securities of both the Top Fund and the Underlying Fund are being offered for sale in the jurisdiction of the Decision Maker pursuant to a simplified prospectus and annual information form which has been filed with and accepted by the Decision Maker;

(b) the investment by the Top Fund in the Underlying Fund is compatible with the fundamental investment objectives of the Top Fund;

(c) the simplified prospectus of the Top Fund discloses the name of the Underlying Fund and the name of its portfolio adviser, the investment objectives, investment strategies, and top ten holdings of the Underlying Fund, and the risks associated with investing in the Underlying Fund;

(d) the investment objective of the Top Fund discloses that the Top Fund invests substantially all of its assets in securities of the Underlying Fund and the name of the Underlying Fund;

(e) the Underlying Fund is not a mutual fund whose investment objective includes investing directly or indirectly in other mutual funds;

(f) if the Underlying Fund disclosed in the simplified prospectus has been changed, securityholders of the Top Fund have given prior approval and the simplified prospectus has been amended or a new simplified prospectus has been filed to reflect the change;

(g) there are compatible dates for the calculation of the net asset value of the Top Fund and the Underlying Fund for the purpose of the issue and redemption of the securities of such mutual funds;

(h) no sales charges are payable by the Top Fund in relation to its purchases of securities of the Underlying Fund;

(i) no redemption fees or other charges are charged by the Underlying Fund in respect of the redemption by the Top Fund of securities of the Underlying Fund owned by the Top Fund;

(j) no fees or charges of any sort are paid by the Top Fund and the Underlying Fund, by their respective managers or principal distributors, or by any affiliate or associate of any of the foregoing entities, to anyone in respect of the Top Fund's purchase, holding or redemption of the securities of the Underlying Fund;

(k) the arrangements between or in respect of the Top Fund and the Underlying Fund are such as to avoid the duplication of management fees;

(l) any notice provided to securityholders of the Underlying Fund as required by applicable laws or the constating documents of that Underlying Fund has been delivered by the Top Fund to its securityholders;

(m) all of the disclosure and notice material prepared in connection with a meeting of securityholders of the Underlying Fund and received by the Top Fund has been provided to its securityholders, the securityholders have been permitted to direct a representative of the Top Fund to vote its holdings in the Underlying Fund in accordance with their direction, and the representative of the Top Fund has not voted its holdings in the Underlying Fund except to the extent the securityholders of the Top Fund have directed;

(n) in addition to receiving the annual and, upon request, the semi-annual financial statements of the Top Fund, securityholders of the Top Fund have received appropriate summary disclosure in respect of the Top Fund's holdings of securities of the Underlying Funds in the financial statements of the Top Fund; and

(o) to the extent that the Top Fund and the Underlying Fund do not use a combined simplified prospectus and annual information form containing disclosure about the Top Fund and the Underlying Fund, copies of the simplified prospectus and annual information form of the Underlying Fund have been provided upon request to securityholders of the Top Fund and the right to receive these documents is disclosed in the simplified prospectus of the Top Fund.

DATED this 28th day of August, 2001.

Paul Moore J. A. Geller
©2024 British Columbia Securities Commission