As a result of last night’s Parliamentary vote in favour of the 2005 federal budget, including the proposed elimination of foreign content rules for Canadian investors, Fidelity Investments Canada Ltd. says it will immediately reduce MERs on the RSP versions of its mutual funds.

The fund management company will do so by absorbing operating expenses charged to the RSP versions of its mutual funds so that their MERs match the levels of the underlying foreign funds.

Fidelity says this decision is in anticipation of the eventual elimination of RSP funds. Fidelity will proceed to eliminate the funds as soon as the government’s proposed policy change comes into force. This, however, is expected to take several more months. In the meantime, Fidelity expects to continue managing the RSP funds without any significant changes to their structure or tax eligibility.

“This policy change is extremely positive news for Canadian investors and we want to provide them with reduced expenses immediately. However, it is also our job to protect our unitholders’ interests so we are taking a prudent approach to the funds themselves. As soon as it is 100% certain the legislation to eliminate the foreign property rule will come into force, we will proceed as quickly and efficiently as possible to eliminate the RSP funds altogether,” said Rob Strickland, Fidelity Canada president, in a release.

Fidelity currently offers retail investors the option of an automatic foreign content re-balancing service on their accounts to ensure they do not exceed the existing 30% limit. Because investors and their advisors have actively selected this option, Fidelity plans to keep the re-balancing service in place for those clients until the policy change comes into force. In the interim period, should investors wish to suspend re-balancing services on their account, they or their advisors are urged to contact Fidelity.

Fidelity says it will continue to apply automatic foreign content re-balancing services for Group Retirement Savings programs, until the policy changes come into force.