In response to historically low short-term interest rates, Fidelity Investments Canada ULC is temporarily waiving a portion of management fees charged on its money market funds. The goal of these changes is to maintain a positive yield for investors.
Funds affected
The temporary management fee reductions are being made on the following Fidelity funds:
- Fidelity Canadian Money Market Fund
- Fidelity Canadian Short Term Income Class
- Fidelity Premium Money Market Private Pool
- Fidelity U.S. Money Market Fund
In addition, for Fidelity Canadian Short Term Income Class, Fidelity is absorbing operating expenses normally charged in order to maintain a positive total return on a series-by-series basis. All other Fidelity money market funds are not assessed operating expenses.
Implementation
The fee reductions will be implemented gradually as required. On some series of funds, Fidelity pays trailer fees to dealers from the management fees collected. On these series, the trailer fees may be reduced to contribute to the total fee reduction required. Fidelity and dealers will share in fee reductions that may be required.
Fidelity will not be changing the investment approach of these funds to seek higher yields. These funds continue to provide investors with a secure and liquid investment option.
Net annualized 7-day yield as at March 2, 2010
|
| ||||||
|---|---|---|---|---|---|---|
| A | B | C | D | F | I | |
| Fidelity Canadian Money Market Fund | 0.05% | 0.05% | 0.05% | 0.05% | 0.07% | n/a |
| Fidelity Canadian Short Term Income Class * | n/a | n/a | n/a | n/a | n/a | n/a |
| Fidelity Premium Money Market Private Pool | n/a | 0.05% | n/a | 0.05% | 0.12% | 0.05% |
| Fidelity U.S. Money Market Fund | 0.05% | 0.05% | n/a | n/a | n/a | n/a |
* Fidelity Canadian Short Term Income Class does not distribute regular income but may pay capital gains distributions; accordingly, no yield is reported. Fidelity Short Term Income Class has been closed to new investors since July 2007.
Management expense ratio before waivers
|
| ||||||
|---|---|---|---|---|---|---|
| A | B | C | D | F | I | |
| Fidelity Canadian Money Market Fund | 1.00% | 0.70% | 1.00% | 0.70% | 0.47% | n/a |
| Fidelity Canadian Short Term Income Class | 1.07% | 0.77% | n/a | n/a | 0.50% | n/a |
| Fidelity Premium Money Market Private Pool | n/a | 0.65% | n/a | 0.65% | n/a | 0.91% |
| Fidelity U.S. Money Market Fund | 1.00% | 0.70% | n/a | n/a | n/a | n/a |
Annualized management expense ratio after waivers for December 2009
|
| ||||||
|---|---|---|---|---|---|---|
| A | B | C | D | F | I | |
| Fidelity Canadian Money Market Fund | 0.36% | 0.36% | 0.36% | 0.36% | 0.36% | n/a |
| Fidelity Canadian Short Term Income Class | 0.36% | 0.36% | n/a | n/a | 0.36% | n/a |
| Fidelity Premium Money Market Private Pool | n/a | 0.36% | n/a | 0.38% | 0.37% | 0.33% |
| Fidelity U.S. Money Market Fund | 0.32% | 0.32% | n/a | n/a | n/a | n/a |
Trailer fee rates for trailer payment period - February 6, 2010 to March 5, 2010
|
| ||||||
|---|---|---|---|---|---|---|
| A | B | C | D | F | I | |
| Fidelity Canadian Money Market Fund | 0.00% | 0.12% | 0.00% | 0.12% | n/a | n/a |
| Fidelity Canadian Short Term Income Class | 0.00% | 0.08% | n/a | n/a | n/a | n/a |
| Fidelity Premium Money Market Private Pool | n/a | 0.14% | n/a | 0.14% | n/a | 0 - 0.14% |
| Fidelity U.S. Money Market Fund | 0.00% | 0.00% | n/a | n/a | n/a | n/a |
Returns (series/class B*) as at January 31, 2009
|
| ||||||
|---|---|---|---|---|---|---|
| 3M | 1Y | 3Y | 5Y | 10Y | LOF | |
| Fidelity Canadian Money Market Fund | 0.02% | 0.32% | 2.41% | 2.57% | 2.57% | 3.52% |
| Fidelity Canadian Short Term Income Class * | 0.02% | 0.30% | 2.34% | 2.48% | n/a | 2.00% |
| Fidelity Premium Money Market Private Pool | 0.02% | 0.34% | n/a | n/a | n/a | 0.63% |
| Fidelity U.S. Money Market Fund (US$) | 0.02% | 0.25% | 2.41% | 2.92% | 2.44% | 3.10% |
* Other series will have higher or lower returns as they are
subject to different management fees.
All returns are expressed in Canadian
dollar terms, except Fidelity U.S. Money Market, which is available for purchase
only under a U.S. dollar option.
Fund inception dates are as follows:
Fidelity Canadian Money Market Fund, January 15, 1991; Fidelity Canadian Short
Term Income Class, September 26, 2001; Fidelity Premium Money Market Private
Pool, November 26, 2008; Fidelity U.S. Money Market Fund, November 1, 1994.
Frequently asked questions
Q. Why is Fidelity taking this course of action?
A. With short-term interest rates at historical lows, we have made these changes to maintain a positive yield on our money market funds.
Our investment management team expects that rates will continue to fall to levels that will be lower than the fees we assess on some series of our money market funds.
Q. Will you do anything else to support yields in these funds?
A. Fidelity is not changing the investment approach employed in the management of these funds in order to support higher yields. The primary goal of our investment management activities is to provide investors with a secure and liquid investment option.
Q. What does this mean for investors?
A. With historically low short-term interest rates, money market fund investors' returns are near zero. We are temporarily reducing the management fees we charge to our money market funds on a series-by-series basis in order to maintain a positive yield.
Q. What does this mean for Fidelity Group Retirement plan members?
A. Fidelity Group Retirement plan members may invest only in series A of the Fidelity Canadian Money Market Fund. The goal of these changes is to maintain a positive yield for investors and as a result, the total cost to plan participants will remain the same or reduce slightly.
Q. What does this mean for an advisor? Can you explain how the trailer fee adjustment process will work?
A. Fidelity is reducing trailer fees and sharing required fee reductions with advisors.
For each trailer fee payment period we will review the maturity profile of the funds' portfolios and expected reinvestment rates and will recalibrate and set the trailer fees that will be paid over the next period. Advisors and investors will be able to see the trailer fees payable for the current trailer payment period on this page of our website.
The fee reductions will be implemented gradually, as required.
These policies are subject to change depending upon changes in market conditions.
Q. Are changes being made to Fidelity Premium Money Market Private Pool?
A. Yes. In addition to potentially lowering management fees, for Series I of Fidelity Premium Money Market Private Pool, Fidelity is temporarily capping the maximum trailer payable at 0.25%.
Q. Are changes being made to Fidelity Canadian Short Term Income Class?
A. Yes. In addition to the fee waivers described above, Fidelity may also waive a portion or all of the operating expenses normally charged to series of this fund.
Q. Are these changes permanent or temporary?
A. These changes are temporary. Fidelity will continue to monitor the situation and will make changes as necessary.
Q. Does this mean investments in the fund are still safe? Can investors lose money in these funds?
A. The primary goal of our investment management activities is to provide investors with a secure and liquid investment option.
We can state unequivocally that Fidelity's money market funds continue to provide security and safety for our customers' cash investments. Our funds continue to invest in money market securities of high quality, and our customers continue to have full access to their investments any time they wish. Protecting the $10.00 net asset value (NAV) has always been our #1 objective in managing these funds.
Q. What type of investments do these funds invest in?
A. Fidelity's money market funds continue to invest in money market securities of high quality. We are very confident in the safety and liquidity that our funds provide. Please read your Fund's Simplified Prospectus for more information.
