Securities Law & Instruments


Headnote

Investment by mutual finds in securities of another mutual fund that is under commonmanagement for specified purposes exempted from the requirement of section 101,clause 111(2)(b), and subsection 111(3), clause 117(1)(a) and 117(1)(d), subject tocertain specified conditions under which an "active" investment structure may be used.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c.S.5, as am. Ss. 101, 104(2)(c), 111(2)(b),111(2)(c), 111(3), 113, 117(1)(a), 117(1)(d), 117(2).


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

AND

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

AND

IN THE MATTER OF
FIDELITY INVESTMENTS CANADA LIMITED, FIDELITY RSP GROWTH AMERICA FUND,FIDELITY RSP EUROPEAN GROWTH FUND, FIDELITY RSP JAPANESE GROWTH FUND, FIDELITY RSP FAR EAST FUND,FIDELITY RSP OVERSEAS FUND FIDELITY RSP FOCUS TECHNOLOGY FUND, FIDELITY RSP FOCUS HEALTH CARE FUNDAND FIDELITY RSP FOCUS FINANCIAL SERVICES FUND

DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec,Nova Scotia and Newfoundland, (the "Jurisdictions") has received an application fromFidelity Investments Canada Limited ("Fidelity"), as manager and trustee of Fidelity RSPGrowth America Fund, Fidelity RSP European Growth Fund, Fidelity RSP JapaneseGrowth Fund, Fidelity RSP Far East Fund, Fidelity RSP Overseas Fund, Fidelity RSPFocus Technology Fund, Fidelity RSP Focus Health Care Fund and Fidelity RSP FocusFinancial Services Fund (collectively, the "RSP Funds"), for a decision pursuant to thesecurities legislation of the Jurisdictions (the "Legislation") that the following requirementsand restrictions contained in the Legislation (the "Requirements") shall not apply in respectof certain investments to be made by the RSP Funds in Fidelity Growth America Fund,Fidelity European Growth Fund, Fidelity Japanese Growth Fund, Fidelity Far East Fund,Fidelity Overseas Fund, Fidelity Focus Financial Services Focus Fund, Fidelity FocusHealth Care Fund and Fidelity Focus Technology Fund (collectively, the "CorrespondingFunds").

A. the requirements contained in the Legislation requiring each RSP Fund and Fidelity(as manager) to issue a news release and file a report where the aggregateholdings by an RSP Fund or RSP Funds of securities of a Corresponding Fundexceed ten percent of the outstanding securities of the Corresponding Fund and therequirements to not acquire or offer to acquire securities of such CorrespondingFund pending the expiration of one business day from the date the report is filed;

B. the restrictions contained in the Legislation prohibiting the RSP Funds fromknowingly making 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;

C. the requirements contained in the Legislation prohibiting the RSP Funds fromknowingly holding an investment in a person or company which the mutual fund,alone or together with one or more related mutual funds, is a substantial securityholder; and

D. the requirements contained in the Legislation requiring Fidelity to file a reportrelating to the purchase or sale of securities between an RSP Fund and any relatedperson or company, or any transaction in which, by arrangement other than anarrangement relating to insider trading and portfolio securities, the RSP Fund is ajoint participant with one or more of its related persons or companies;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this Application;

AND WHEREAS Fidelity has represented to the Decision Makers that:

1. Fidelity is a corporation continued under the laws of Ontario and has its head officelocated in Toronto. Fidelity will be the manager, trustee and promoter of eachRSP Fund and is currently the manager, trustee and promoter of each of theCorresponding Funds.

2. Fidelity proposes to establish the RSP Funds which will be open-end mutual fundtrusts established under the laws of Ontario and which will be qualified fordistribution in all Jurisdictions under a simplified prospectus and annualinformation form (the "Prospectus").

3. Each of the Corresponding Funds is an open-end mutual fund trust establishedunder the laws of Ontario and each of which is qualified for distribution in allJurisdictions by means of a simplified prospectus and annual information form.Each RSP Fund will be, and each of the Corresponding Funds is, a reporting issuerunder the securities laws of each of the provinces and territories of Canada. Noneof the Corresponding Funds is in default of any requirements of the Legislation.

4. The Prospectus will contain disclosure with respect to the investment objective,investment practices and restrictions of each RSP Fund. The investment objectiveof the RSP Funds is to achieve long-term capital growth, in each case, primarily byinvesting in derivative instruments that permit the RSP Fund to link its performanceto a specified Corresponding Fund. In order to achieve its investment objectives,each RSP Fund will use derivative instruments to obtain exposure to a specifiedCorresponding Fund and invest directly in the applicable Corresponding Fund asdescribed below. All purchases of the Corresponding Funds will be made throughFidelity.

5. Each of the RSP Funds will invest its assets in securities such that its units will be"qualified investments" for registered retirement savings plans, registeredretirement income funds and deferred profit sharing plans (the "Registered Plans")under the Income Tax Act (Canada) (the "Tax Act") and, based on an opinion ofcounsel to Fidelity, will not constitute foreign property in a Registered Plan. Thedirect investment by an RSP Fund in a Corresponding Fund (the "Permitted RSPFund Investment") will be in an amount which will not exceed the amountprescribed from time to time as the maximum permitted amount capable of beingmade as a foreign property investment under the Tax Act without the imposition oftax under Part XI of that Act (the "Foreign Property Maximum").

6. The investment in, or redemptions of, securities of the Corresponding Funds by theRSP Funds will represent the business judgment of responsible personsuninfluenced by considerations other than the best interests of the RSP Funds.

7. Except to the extent evidenced by this Decision and specific approvals granted bythe Canadian securities administrators pursuant to National Policy No. 39, theinvestments by the RSP Funds in the Corresponding Funds have been structuredto comply with the investment restrictions of the Legislation and National Policy No.39.

8. In the absence of this Decision, as soon as the aggregate holdings by an RSP Fundof securities of a Corresponding Fund exceed 10% of the outstanding securities ofthe Corresponding Fund, Fidelity and possibly the RSP Fund, would be requiredto comply with the reporting and other requirements of the Legislation.

9. In the absence of this Decision, pursuant to the Legislation, each of the RSP Fundsis prohibited from (a) knowingly making an investment in a person or company inwhich the mutual fund, alone or together with one or more related mutual funds, isa substantial security holder; and (b) knowingly holding such an investment. As aresult, in the absence of this Decision, an RSP Fund would be required to divestitself of any investment referred to in subsection (a) herein,

10. In the absence of this Decision, the Legislation requires Fidelity to file a report onevery purchase or sale of securities of the Underlying Funds by the RSP Funds.

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

AND WHEREAS each Decision Maker is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdiction to make the Decision hasbeen met;

The Decision of the Decision Makers pursuant to the Legislation is that theRequirements shall not apply to the purchase and sale by an RSP Fund of units of aCorresponding Fund provided that:

1. this Decision, as it relates to the jurisdiction of a Decision Maker, will terminate oneyear after the publication in final form of any legislation or rule of that DecisionMaker dealing with the matters in clause2.04(4)(b) of National Policy No.39; and

2. The foregoing Decision shall only apply to purchases and sales by an RSP Fundof units of a Corresponding Fund made in compliance with the following conditions:

(a) the RSP Funds and the Corresponding Funds are under commonmanagement and the Corresponding Funds' securities are offered for salein the jurisdiction of the Decision Maker pursuant to a prospectus which hasbeen filed with and accepted by the Decision Maker;

(b) each RSP Fund restricts its aggregate direct investments in itsCorresponding Fund to a percentage of its assets that is within the ForeignProperty Maximum;

(c) the investment by the RSP Fund in the Corresponding Fund is compatiblewith the fundamental investment objectives of the RSP Fund;

(d) the prospectus of the RSP Funds describes the intent of the RSP Funds toinvest in specified Corresponding Funds;

(e) the RSP Funds may change the Permitted RSP Fund Investments if theychange their fundamental investment objectives in accordance with theLegislation;

(f) the arrangements between or in respect of the RSP Funds and theCorresponding Funds are such as to avoid the duplication of managementfees;

(g) no sales charges are payable by an RSP Fund in relation to its purchasesof securities of a Corresponding Funds;

(h) no redemption fees or other charges are charged by a Corresponding Fundin respect of the redemption by an RSP Fund of securities of theCorresponding Fund owned by the RSP Fund;

(i) no fees and charges of any sort are paid by an RSP Fund or by aCorresponding Fund or by the manager or principal distributor of an RSPFund or a Corresponding Fund or by any affiliate or associate of any of theforegoing entities to anyone in respect of an RSP Fund's investment in, orredemption of, the securities of a Corresponding Fund;

(j) in the event of the provision of any notice to securityholders of aCorresponding Fund as required by the constating documents of theCorresponding Fund or by the laws applicable to the Corresponding Fund,such notice will also be delivered to the securityholders of the relevant RSPFund; all voting rights attached to the securities of a Corresponding Fundwhich are owned by a RSP Fund will be passed through to thesecurityholders of the RSP Fund; in the event that a securityholders'meeting is called for the Corresponding Fund, all of the disclosure andnotice material prepared in connection with such meeting will be provided tothe securityholders of the RSP Fund and such securityholders will be entitledto direct a representative of the RSP Fund to vote that RSP Fund's holdingin the Corresponding Fund in accordance with their direction; and, therepresentative of the RSP Fund will not be permitted to vote the RSP Fund'sholdings in the Corresponding Fund except to the extent the securityholdersof the RSP Fund so direct;

(k) there are compatible dates for the calculation of the net asset value of theRSP Funds and the Corresponding Funds for the purpose of the issue andredemption of the securities of such mutual funds;

(l) to the extent that the RSP Funds and the Corresponding Funds do not usea combined report containing both the RSP Funds' and the CorrespondingFunds' financial statements, in addition to receiving the annual and, uponrequest, the semi- annual financial statements of the RSP Funds, thesecurityholders of the RSP Funds will receive the annual and, uponrequest, the semi-annual financial statements of the Corresponding Funds;and

(m) to the extent that the RSP Funds and the Corresponding Funds do not usea combined simplified prospectus and annual information form containingdisclosure about the RSP Funds and the Corresponding Funds, copies ofthe simplified prospectus and annual information form relating to theCorresponding Funds may be obtained upon request by a securityholder ofan RSP Fund.

January 20th, 2000.

"J. A. Geller"      "Robert W. Korthals"