SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-52322)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 51 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. ____ [ ]
Fidelity Commonwealth Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices) (Zip Code)
617-570-7000
(Registrant's Telephone Number, Including Area Code)
Arthur S. Loring, Esq., 82 Devonshire St., Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
( ) Immediately upon filing pursuant to paragraph (b) of Rule 485
(x) On June 18, 1994 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule before June 30, 1994.
FIDELITY COMMONWEALTH TRUST
FIDELITY INTERMEDIATE BOND FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Fund at a Glance;
Who May Want to Invest
3 a, b .............................. Financial Highlights
c .............................. Performance
4 a i............................. Charter
ii........................... The Fund at a Glance; Investment
Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment
Principles and Risks
5 a .............................. Charter
b i............................. Doing Business with Fidelity;
Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c, d .............................. Charter; Breakdown of Expenses;
Cover Page; FMR and Its Affiliates
e .............................. FMR and its Affiliates
f .............................. Expenses
g i............................. FMR and its Affiliates
.
ii............................ *
..
5 A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell
Shares; Transaction Details;
Exchange Restrictions
iii.......................... *
b ............................. *
c .............................. Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How
to Buy Shares; How to Sell Shares;
Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction
Details
c .............................. *
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor
Services; Transaction Details;
Exchange Restrictions
9 .............................. *
</TABLE>
Not applicable
FIDELITY COMMONWEALTH TRUST
FIDLEITY INTERMEDIATE BOND FUND
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ *
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contract
b ............................ Management Contract
c, d ............................ Contracts with Companies Affiliated
with FMR
e ............................ *
f ............................ Distribution and Service Plan
g ............................ *
h ............................ Description of the Trust
i ............................ Contracts with Companies Affiliated
with FMR
17 a ............................ Portfolio Transactions
b ............................ *
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trust
b ............................ *
19 a ............................ Additional Purchase and Redemption
Information
b ............................ Additional Purchase and Redemption
Information; Valuation of Portfolio
Securities
c ............................ *
20 ............................ Distributions and Taxes
21 a, b ............................ Contracts with Companies Affiliated
with FMR
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated June 18, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
Intermediate Bond seeks high current income by investing mainly in
investment-grade debt securities while maintaining an average maturity of
three to 10 years.
FIDELITY
INTERMEDIATE BOND
FUND
PROSPECTUS
(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109JUNE 18, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
IBF-pro-694
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
PERFORMANCE How the fund has
done over time.
THE FUND IN DETAIL CHARTER How the fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
The fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: High current income. As with any mutual fund, there is no assurance
that the fund will achieve its goal.
STRATEGY: Invests mainly in investment-grade debt securities while
maintaining an average maturity of three to 10 years.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
SIZE: As of April 30, 1994, the fund had over $1 billion in assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors who want high current income from
a portfolio of investment-grade debt securities. A fund's level of risk,
and potential reward, depend on the quality and maturity of its
investments. With its focus on medium- to high-quality investments and
intermediate maturity, the fund has a moderate risk level and yield
potential.
The fund is not in itself a balanced investment plan. The value of the
fund's investments and the income they generate will vary from day to day,
generally reflecting changes in interest rates, market conditions, and
other political and economic news. When you sell your shares, they may be
worth more or less than what you paid for them.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Intermediate Bond is in the
INCOME category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. It also incurs other expenses for services
such as maintaining shareholder records and furnishing shareholder
statements and financial reports. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
Management fee .31%
12b-1 f ee None
Other expenses .33%
Total fund operating expenses .64%
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $7
After 3 y ears $20
After 5 years $36
After 10 years $80
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows is included in the fund's Annual Report and has
been audited by Coopers & Lybrand , independent accountants.
Their report on the financial statements and financial highlights is
included in the Annual Report. The financial statements and financial
highlights are incorporated by reference into (are legally a part of) the
fund's Statement of Additional Information.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Selected
Per-Share Data
2.Years e nded April
1985 A 1986 A 1987 A 1988 A 1989 B 1990 1991 1992 1993 1994
30
3.Net asset value,
$ 9.83 $ 11.0 $ 11.5 $ 10.0 $ 9.87 $ 9.85 $ 9.69 $ 10.0 $ 10.2 $ 10.7
beginning
0 10 50 40 0 0 0 70 70 00
of period
4.Income from
1.085 .922 1.001 .874 .299 .866 .800 .764 .784 .7 05
Investment Operations
Net investment
income D
5. Net realized and
.837 .498 (.800) (.170) (.020) (.160) .380 .197 .496 (. 381 )
unrealized
gain (loss) on
investments
6. Total from
1.922 1.420 .201 .704 .279 .706 1.180 .961 1.280 .324
investment operations
7.Less Distributions
(.742) (.660) (1.61 (.874) (.299) (.866) (.800) (.761) (.790) (.704)
From net investment 1)
income
8. From net realized
- -- (.220) (.100) -- -- -- -- -- (.060) --
gain
on investments
9. In excess of net
-- -- -- -- -- -- -- -- -- (.090)
realized gain
10. Total
(.742) (.880) (1.71 (.874) (.299) (.866) (.800) (.761) (.850) (.794)
distributions 1)
11.Net asset value,
$ 11.0 $ 11.5 $ 10.0 $ 9.87 $ 9.85 $ 9.69 $ 10.0 $ 10.2 $ 10.7 $ 10.2
end of period
10 50 40 0 0 0 70 70 00 30
12.Total return F
20.56 13.28 2.00 7.22 2.86 7.24 12.61 9.82 12.90 2.93
% % % % % % % % % %
13.RATIOS AND SUPPLEMENTAL DATA
14.Net assets, end
$ 244 $ 368 $ 371 $ 504 $ 528 $ 661 $ 878 $ 1,23 $ 1,63 $ 1,78
of period 5 9 2
(In millions)
15.Ratio of expenses
.79% .75% .86% .87% .62% .72% .66% .63% .61% .64%
to average G
net assets C,E
16.Ratio of expenses
.79% .75% .86% .87% .62% .72% .66% .65% .66% .64%
to average net assets
G
before expense
reductions
17.Ratio of net
10.73 9.27 9.17 8.76 9.35 8.57 8.05 7.45 7.44 6.88
investment income to
% % % % % G % % % % %
average net assets
18.Portfolio turnover
68% 101% 67% 59% 101% 82% 73% 80% 51% 81%
rate H
G
</TABLE>
A FOR THE FISCAL YEARS ENDED DECEMBER 31.
B ON APRIL 20, 1989, THE TRUSTEES APPROVED A CHANGE IN THE FUND'S FISCAL
YEAR-END TO APRIL 30. THE FINANCIAL HIGHLIGHTS ARE FOR THE FOUR MONTHS
ENDED APRIL 30.
C DURING THE YEAR ENDED DECEMBER 31, 1988, AND DURING THE 4-MONTH PERIOD
ENDED APRIL 30, 1989, THE FUND'S TRANSFER AGENT VOLUNTARILY WAIVED FEES OF
$.011 AND $.010, RESPECTIVELY PER SHARE. IF THIS REIMBURSEMENT WAS NOT IN
EFFECT, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS FOR THE YEAR ENDED
DECEMBER 31, 1988 AND THE FOUR MONTHS ENDED APRIL 30, 1989 WOULD HAVE BEEN
.98% AND .95% (ANNUALIZED), RESPECTIVELY.
D FROM JULY 1, 1977 THROUGH AUGUST 31, 1985, DIVIDENDS TO SHAREHOLDERS
FROM NET INTEREST INCOME WERE DECLARED DAILY AND PAID MONTHLY. FOR THE
PERIOD SEPTEMBER 1, 1985 THROUGH AUGUST 31, 1987, DIVIDENDS FROM NET
INTEREST INCOME WERE DECLARED AND PAID ANNUALLY. EFFECTIVE SEPTEMBER 1,
1987, DIVIDENDS FROM NET INTEREST INCOME ARE DECLARED DAILY AND PAID
MONTHLY.
E EFFECTIVE FEBRUARY 1, 1992, FMR VOLUNTARILY AGREED TO REIMBURSE THE
FUND'S MANAGEMENT FEE AT AN ANNUAL RATE OF .07% OF THE FUND'S AVERAGE NET
ASSETS THROUGH DECEMBER 31, 1992. FOR THE PERIODS ENDED APRIL 30, 1993 AND
1992, THE REIMBURSEMENT AMOUNTED TO $643,372 ($.005 PER SHARE) AND $254,852
($.002 PER SHARE), RESPECTIVELY.
F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
G ANNUALIZED
H IN 1985, THE SECURITIES AND EXCHANGE COMMISSION ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF A PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATIONS.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of taxes.
The fund's fiscal year runs from May 1 through April 30. The tables below
show the fund's performance over past fiscal years compared to a measure of
inflation. The chart on page helps you compare the yields of this fund to
those of its competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1994 year years years
Intermediate Bond 2 .93% 9.03% 10.39%
Consumer Price
Index 2 . 36% 3.67% 3.64%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1994 year years years
Intermediate Bond 2. 9 3% 54.09% 168.73%
Consumer Price
Index 2. 3 6% 19.74% 42.97%
UNDERSTANDING
PERFORMANCE
Because this fund invests in
fixed-income securities, its
performance is related to
changes in interest rates.
Funds that hold short-term
bonds are usually less
affected by changes in
interest rates than long-term
bond funds. For that reason,
long-term bond funds typically
offer higher yields and carry
more risk than short-term
bond funds.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Intermediate Investment Grade
Debt Funds Average, which currently reflects the performance of over
110 mutual funds with similar objectives. This average, which
assumes reinvestment of distributions, is published by Lipper Analytical
Services, Inc.
30-DAY YIELDS
Percentage (%)
Row: 1, Col: 1, Value: 6.26
Row: 1, Col: 2, Value: 6.33
Row: 2, Col: 1, Value: 6.45
Row: 2, Col: 2, Value: 6.4
Row: 3, Col: 1, Value: 6.72
Row: 3, Col: 2, Value: 6.56
Row: 4, Col: 1, Value: 6.609999999999999
Row: 4, Col: 2, Value: 6.52
Row: 5, Col: 1, Value: 6.49
Row: 5, Col: 2, Value: 6.44
Row: 6, Col: 1, Value: 6.37
Row: 6, Col: 2, Value: 6.25
Row: 7, Col: 1, Value: 5.970000000000001
Row: 7, Col: 2, Value: 5.74
Row: 8, Col: 1, Value: 6.08
Row: 8, Col: 2, Value: 5.68
Row: 9, Col: 1, Value: 5.63
Row: 9, Col: 2, Value: 5.54
Row: 10, Col: 1, Value: 5.77
Row: 10, Col: 2, Value: 5.55
Row: 11, Col: 1, Value: 6.69
Row: 11, Col: 2, Value: 5.85
Row: 12, Col: 1, Value: 7.01
Row: 12, Col: 2, Value: 5.930000000000001
Row: 13, Col: 1, Value: 6.8
Row: 13, Col: 2, Value: 5.74
Row: 14, Col: 1, Value: 6.49
Row: 14, Col: 2, Value: 5.45
Row: 15, Col: 1, Value: 6.430000000000001
Row: 15, Col: 2, Value: 5.29
Row: 16, Col: 1, Value: 6.23
Row: 16, Col: 2, Value: 5.159999999999999
Row: 17, Col: 1, Value: 6.29
Row: 17, Col: 2, Value: 5.04
Row: 18, Col: 1, Value: 6.19
Row: 18, Col: 2, Value: 5.01
Row: 19, Col: 1, Value: 6.0
Row: 19, Col: 2, Value: 4.930000000000001
Row: 20, Col: 1, Value: 5.81
Row: 20, Col: 2, Value: 4.84
Row: 21, Col: 1, Value: 5.71
Row: 21, Col: 2, Value: 4.659999999999999
Row: 22, Col: 1, Value: 5.09
Row: 22, Col: 2, Value: 4.649999999999999
Row: 23, Col: 1, Value: 5.109999999999999
Row: 23, Col: 2, Value: 4.819999999999999
Row: 24, Col: 1, Value: 5.28
Row: 24, Col: 2, Value: 4.89
Row: 25, Col: 1, Value: 5.13
Row: 25, Col: 2, Value: 4.8
Row: 26, Col: 1, Value: 5.41
Row: 26, Col: 2, Value: 4.95
Row: 27, Col: 1, Value: 5.859999999999999
Row: 27, Col: 2, Value: 5.33
Intermediate
Bond
Competitive
funds average
1992
1993
1994
THE CHART SHOWS THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST DAY OF EACH MONTH FROM
JANUARY 1992 THROUGH MARCH 1994.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUND IN DETAIL</r>
CHARTER
INTERMEDIATE BOND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. In technical terms, the fund
is currently a diversified fund of Fidelity Commonwealth Trust, an open-end
management investment company organized as a Massachusetts business trust
on November 8, 1974.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. You are entitled to one vote for each
share you own.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.), in London, England, and Fidelity Management &
Research (Far East), Inc. (FMR Far East), in Tokyo, Japan,
assist FMR with foreign investments.
Michael Gray is manager and vice president of Intermediate Bond, which he
has managed since September 1987. Mr. Gray also manages Advisor Limited
Term Bond, Fidelity Investment Grade Bond, and Spartan Investment Grade
Bond. Mr. Gray joined Fidelity in 1982.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services. Fidelity Service Co. (FSC) performs transfer
agent servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
THE FUND SEEKS HIGH CURRENT INCOME by investing primarily in fixed-income
obligations of all types. The fund invests in domestic and foreign
investment-grade securities and normally maintains a dollar-weighted
average maturity of three to 10 years.
The fund's yield and share price will change based on changes in interest
rates, market conditions, and other political and economic news. In
general, bond prices rise when interest rates fall, and vice versa. FMR may
use various investment techniques to hedge the fund's risks, but there is
no guarantee that these strategies will work as intended. When you sell
your shares, they may be worth more or less than what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. The Fund also reserves the right to invest without limitation
in investment-grade money market or short-term debt instruments for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more
sensitive to economic changes and changes in the financial condition of
issuers.
RESTRICTIONS: The fund does not currently intend to invest in securities
rated below Baa by Moody's Investor s Service, Inc. or BBB by
Standard & Poor's Corporation, or in unrated securities judged by FMR
to be of equivalent quality.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ASSET-BACKED AND MORTGAGE SECURITIES may include pools of consumer loans or
mortgages, such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. These securities may also be subject to prepayment risk.
MONEY MARKET INSTRUMENTS are high-quality instruments that present minimal
credit risk. They may include U.S. government obligations, commercial paper
and other short-term corporate obligations, and certificates of deposit,
bankers' acceptances, bank deposits, and other financial institution
obligations. These instruments may carry fixed or variable interest rates.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the fund's yield.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities , including illiquid securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include convertible securities and preferred
stock s .
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks a high level of current income by investing primarily in
investment-grade, fixed-income obligations. With respect to 75% of total
assets, the fund may not invest more than 5% of its total assets in any one
issuer. The fund may not invest more than 25% of its total assets in any
one industry. The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets. Loans, in the
aggregate, may not exceed 33% of the fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn may pay fees to affiliates who provide
assistance with these services. The fund also pays OTHER EXPENSES, which
are explained on the right .
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For April 1994, the group fee rate was .1604 %. The individual fund
fee rate is .15%. The total management fee rate for fiscal 1994 was
.31 %.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund contracts with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing the fund's investments, and handling securities loans. In fiscal
1994, the fund paid FSC fees equal to .29 % of its average net
assets.
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1994 was 81 %. This
rate varies from year to year.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 16 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Intermediate Bond
"Fidelity Intermediate Fund." Indicate your
Bond Fund." Mail to the fund account number
address indicated on on your check and mail
the application. to the address printed
on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Fidelity
Bank Routing Intermediate Bond
#021001033, Fund" and include your
Account #00163053. account number and
Specify "Fidelity your name.
Intermediate Bond
Fund" and include your
new account number
and your name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
except retirement $100,000.
(bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
except retirement (bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when the fund is priced on
the following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY INTERMEDIATE BOND FUND
A FUND OF FIDELITY COMMONWEALTH TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 18, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated June 18, 1994). Please retain this
document for future reference. The fund's financial statements and
financial highlights, included in the Annual Report for the fiscal year
ended April 30, 1994 , are incorporated herein by reference. To
obtain an additional copy of the Prospectus or the Annual Report, please
call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
IBF-ptB-694
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) act as underwriter (except as it may be deemed such in a sale of
restricted securities);
(5) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States or any agency or instrumentality thereof) if, as a result thereof,
more than 25% of the fund's total assets (taken at current value) would be
invested in the obligations of one or more issuers having their principal
business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of the fund's total assets would be lent to other parties, except, (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and limitations or (ii)
by engaging in repurchase agreements with respect to portfolio securities;
(9) purchase the securities of a company if such purchase at the time
thereof, would cause more than 5% of the value of the fund's total assets
to be invested in securities of companies which, including predecessors,
have a record of less than three years' continuous operation; or
(10) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by lending money (up to 7.5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers . (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The fund may receive fees for entering
into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If the fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, non-government stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR may
determine some restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments,
emerging market securities and swap agreements to be illiquid. However,
with respect to over-the-counter options the fund writes, all or a portion
of the value of the underlying instrument may be illiquid depending on the
assets held to cover the option and the nature and terms of any agreement
the fund may have to close out the option before expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If through a change in values, net assets, or other
circumstances, the fund were in a position where more than 10% of its net
assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time i t may be
permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the
fund might obtain a less favorable price than prevailed when it decided to
seek registration of the security.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
The fund may engage in repurchase agreements with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to the fund in connection with bankruptcy
proceedings), it is the fund's current policy to limit repurchase agreement
transactions to those parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness is deemed satisfactory by FMR. Such transactions
may increase fluctuations in the market value of the fund's assets and may
be viewed as a form of leverage.
MORTGAGE-BACKED SECURITIES. The fund may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed
security may be an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
fund may invest in them if FMR determines they are consistent with the
fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
ZERO COUPON BONDS do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, the fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
A broker-dealer creates a derivative zero by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. Original issue zeros are zero coupon securities
originally issued by the U.S. government, a government agency, or a
corporation in zero coupon form.
SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowing normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The fund will lend through the program only when the returns
are higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. The fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing cost.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental, or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve a risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to the fund in the event or fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending
bank or other financial intermediary. Direct debt instruments may also
include standby financing commitments that obligate the fund to supply
additional cash to the borrower on demand.
SWAP AGREEMENTS . Swap Agreements can be individually
negotiated and structured to include exposure to a variety of different
types of investments or market factors. Depending on their structure, swap
agreements may increase or decrease the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift the fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the fund's
accrued obligations under the swap agreement over the accrued amount the
fund is entitled to receive under the agreement. If the fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to such transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject to
such restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs), are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in the U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency deposits
from time to time, and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may
be exchanged on a spot (i.e., cash) basis, or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
The fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
In connection with purchases and sales of securities denominated in foreign
currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the fund's exposure to a foreign currency, and that
currency's value declines, the fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the fund or that it will hedge at an appropriate time.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invest,
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular option or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the fund's assets could impede portfolio management or the fund's ability
to meet redemption requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. Commissions for foreign investments
traded on foreign exchanges will generally be higher than for U.S.
investments and may not be subject to negotiation.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
brokers-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc.
(FBSI), and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR
Corp., if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board of
Trustees has authorized FBSI to execute portfolio transactions on national
securities exchanges in accordance with approved procedures and applicable
SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal years ended April 30, 1994 and 1993, the fund's portfolio
turnover rates were 81% and 51%, respectively.
For Fiscal 1994, 1993, and 1992 the fund paid no brokerage
commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment whether
it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund or
account .
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable
f o r each fund. In some cases this system could have a
detrimental effect on the price or value of the security as far as the fund
is concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the fund outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
Securities and other assets for which market quotations are readily
available are valued at market values determined by their most recent bid
prices (sales prices if the principal market is an exchange) in the
principal market in which such securities normally are traded. Securities
and other assets for which market quotations are not readily available
(including restricted securities, if any) are appraised at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluations
based on expert analysis of market data and other factors if such
valuations are believed to reflect more accurately the fair value of such
securities. Use of a pricing service has been approved by the Board of
Trustees. There are a number of pricing services available, and the
Trustees, or officers acting on behalf of the Trustees, on the basis of
ongoing evaluation of these pricing services, may use other pricing
services or may discontinue the use of any pricing service in whole or in
part.
Securities not valued by the pricing service, and for which quotations are
readily available, are valued at market values determined on the basis of
their latest available bid prices as furnished by recognized dealers in
such securities. Futures contracts and options are valued on the basis of
market quotations, if available.
PERFORMANCE
The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for the fund used in advertising are computed
by dividing the fund's interest and dividend income for a given 30-day or
one-month period, net of expenses, by the average number of shares entitled
to receive distributions during the period, dividing this figure by the
fund's net asset value per share (NAV) at the end of the period, and
annualizing the result (assuming compounding of income) in order to arrive
at an annual percentage rate. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all stock
and bond funds. In general, interest income is reduced with respect to
bonds trading at a premium over their par value by subtracting a portion of
the premium from income on a daily basis, and is increased with respect to
bonds trading at a discount by adding a portion of the discount to daily
income. Capital gains and losses generally are excluded from the
calculation.
Income calculated for purposes of determining the fund's yield differs from
income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, the yield quoted for the fund may not equal
its distribution rate, the income paid to your account, or the income
reported in the fund's financial statements.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over the
period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in the fund over a
stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return of
7.18%, which is the steady annual return that would equal 100% growth on a
compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that the fund's performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the fund.
In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns, reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows the fund's 30-day yield
and total returns for the one-, five-, and ten-year periods ended April 30,
1994.
AVERAGE ANNUAL RETURNS CUMULATIVE RETURNS
30-DAY ONE FIVE TEN ONE FIVE TEN
YIELD YEAR YEARS YEARS YEAR YEARS YEARS
6.03 % 2.93 % 9.03 % 10.39 % 2.93 %
54.09 % 168.73 %
The table on page shows the income and capital elements of the
fund's cumulative total return over a ten-year period. The table compares
the fund's return to the record of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the Dow Jones Industrial Average (DJIA),
and the cost of living (measured by the Consumer Price Index or CPI) over
the same period. The S&P 500 and DJIA comparisons are provided to show
how the fund's total return compared to the return of a broad average of
common stock prices and a narrower set of stocks of major industrial
companies, respectively, over the same period. Common stocks represent a
different type of investment from the fund, which generally will invest in
fixed-income securities. Fixed-income securities are not included in the
indices. Generally, common stocks offer greater potential growth than the
fund, but are more volatile in value and may offer greater potential for
loss. In addition, common stocks generally provide lower income than a
bond investment such as the fund. Figures for the S&P 500 and DJIA are
based on the prices of unmanaged groups of stocks and, unlike the fund's
returns, their returns do not include the effect of paying brokerage
commissions and other costs of investing.
During the period April 30, 1984 through April 30, 1994, a hypothetical
$10,000 investment in Fidelity Intermediate Bond Fund would have grown to
$ 26,873 , assuming all distributions were reinvested. This was a
period of widely fluctuating interest rates and bond prices and should not
be considered representative of the dividend income or capital gain or loss
that could be realized from an investment in the fund today.
As of April 30, 1994, Fidelity managed over $100 billion in fixed-income
assets.
FIDELITY INTERMEDIATE BOND FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE OF VALUE OF VALUE OF
YEAR INITIAL REINVESTED REINVESTED
ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
APRIL 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P DJIA CPI
500
1985 $10,523 $1,301 $0 $11,824 $11,767 $11,286 $10,369
1986 12,593 2,073 0 14,667 16,034 16,670 10,533
1987 11,451 3,447 407 15,306 20,286 22,097 10,931
1988 10,736 5,184 382 16,302 18,973 20,297 11,358
1989 10,512 6,553 374 17,439 23,320 25,046 11,940
1990 10,342 7,992 368 18,701 25,782 28,564 12,502
1991 10,747 9,930 382 21,059 30,321 32,248 13,113
1992 10,961 11,776 390 23,126 34,581 38,685 13,531
1993 11,419 14,138 551 26,109 37,781 40,665 13,967
1994 10,918 15,213 742 26,873 39,792 44,919 14,297
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on April 30,
1984, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 26,032 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments for the period would have amounted to $ 9,446 for
income dividends and $ 502 for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, the fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
The fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, the fund may offer greater
liquidity or higher potential returns than CDs, and the fund does not
guarantee your principal or your return and fund shares are not FDIC
insured .
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered trademark),
covers over 340 Taxable money market funds. The Bond Fund Report
AverageS(trademark)/All Taxable, which is reported in the BOND FUND
REPORT(trademark), covers over 350 taxable bond funds. When
evaluating comparisons to money market funds, investors should consider the
relevant differences in investment objectives and policies. Specifically,
money market funds invest in short-term, high-quality instruments and seek
to maintain a stable $1.00 share price. The fund, however, invests in
longer-term instruments and its share price changes daily in response to a
variety of factors. In advertising, the fund may discuss or illustrate
examples of interest rate sensitivity.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
The fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
The fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
The fund may also quote the following unmanaged indices of bond prices and
yields in advertising. The fund may compare the price volatility of these
indices to the price volatility of the S&P 500.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is comprised of all public
obligations of the U.S. Treasury, U.S. government agencies, quasi-federal
corporations, and of corporate debt guaranteed by the U.S. government. The
index excludes flower bonds, foreign targeted issues, and mortgage-backed
securities.
LEHMAN BROTHERS CORPORATE BOND INDEX is comprised of all public,
fixed-rate, non-convertible, investment-grade domestic corporate debt.
Issues included in this index are rated at least Baa by Moody's Investors
Service (Moody's) or BBB by Standard & Poor's Corporation (S&P) or,
in the case of non-rated bonds, BBB by Fitch Investors Service (Fitch).
Collateralized mortgage obligations are not included in the Corporate Bond
Index.
The Government Bond Index and the Corporate Bond Index are combined to form
the Government/Corporate Bond Index.
LEHMAN BROTHERS INTERMEDIATE CORPORATE BOND INDEX is comprised of all
public, fixed-rate, non-convertible, investment-grade domestic corporate
debt. Issues included in this index have remaining maturities of one to
ten years and are rated at least Baa by Moody's or BBB by S&P or, in
the case of non-rated bonds, BBB by Fitch.
LEHMAN BROTHERS LONG-TERM CORPORATE BOND INDEX is comprised of all public,
fixed-rate, non-convertible, investment-grade domestic corporate debt.
Issues included in this index have remaining maturities greater than ten
years and are rated at least Baa by Moody's or BBB by S&P or, in the
case of non-rated bonds, BBB by Fitch.
MERRILL LYNCH HIGH AND MEDIUM QUALITY INTERMEDIATE-TERM CORPORATE INDEX is
comprised of all public, fixed-rate, non-convertible corporate debt.
Issues included in this index have remaining maturities of between 1 and
9.99 years. Issues included in the index are rated at least Baa3 by
Moody's and BBB- by S&P.
MERRILL LYNCH HIGH AND MEDIUM QUALITY LONG-TERM CORPORATE BOND INDEX is
comprised of all public, fixed-rate, non-convertible domestic corporate
debt. Issues included in this index have remaining maturities of greater
than 15 years and are rated at least Baa3 by Moody's and BBB- by S&P.
MERRILL LYNCH MEDIUM QUALITY SHORT-TERM CORPORATE INDEX is comprised of all
public, fixed-rate, non-convertible corporate debt. Issues included in
this index have remaining maturities of 1 to 2.99 years. Issues included
in this index are rated at least Baa3 by Moody's and BBB- by S&P, and
below Aa3 by Moody's and AA- by S&P.
MERRILL LYNCH HIGH AND MEDIUM QUALITY SHORT-TERM CORPORATE INDEX is
comprised of all public, fixed rate, non-convertible corporate debt.
Issues included in this index have remaining maturities of 1 to 2.99 years.
Issues included in this index are rated at least Baa3 by Moody's and BBB-
by S&P.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day
(observed) , Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day (observed). Although FMR expects the same holiday schedule,
with the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares. In addition,
trading in some of the fund's portfolio securities may not occur on days
when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), the fund is required to give shareholders at least 60 days'
notice prior to terminating or modifying its exchange privilege. Under the
Rule, the 60-day notification requirement may be waived if (i) the only
effect of a modification would be to reduce or eliminate an administrative
fee, redemption fee, or deferred sales charge ordinarily payable at the
time of an exchange, or (ii) the fund suspends the redemption of the shares
to be exchanged as permitted under the 1940 Act or the rules and
regulations thereunder, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because the fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the dividends
received deduction available to corporations. A portion of the fund's
dividends derived from certain U.S. government obligations may be exempt
from state and local taxation. Gains (losses) attributable to foreign
currency fluctuations are generally taxable as ordinary income and
therefore with increase (decrease) dividend distributions. The fund will
send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time the
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends
received-deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does
not currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes, so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, the fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The fund intends to comply with other
tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some forward currency contracts, future contracts,
and options are included in this 30% calculation, which may limit the
fund's investments in such instruments.
If the fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain in the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains. The fund is treated as a
separate entity from the other fund of Fidelity Commonwealth Trust for tax
purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions. Investors should consult their tax
advisers to determine whether the fund is suitable to their particular tax
situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the Investment Company Act of 1940) by virtue of their affiliation with
either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous
waste, 1993) and CH2M Hill Companies (engineering). In addition, he served
on the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensellaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
MICHAEL GRAY, Vice President, is also Vice President of other funds
advised by FMR and is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of April 30, 1994, the Trustees and Officers of the fund owned, in
the aggregate, less than 1% of the total outstanding shares of the
fund.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, the fund pays all of its expenses, without limitation, that are not
assumed by those parties. The fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, the trust has entered into a
revised transfer agent agreement with FSC, pursuant to which FSC bears the
cost of providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. The fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which the fund may be a
party and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated September
1, 1992, which was approved by shareholders on August 5, 1992. For the
services of FMR under the contract, the fund pays FMR a monthly management
fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
shows the results of cumulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ 250
billion of group net assets - their approximate level for April 1994 - was
. 1604 %, which is the weighted average of the respective fee rates
for each level of group net assets up to $ 250 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
* Prior to January 1, 1992, the group fee rate was based on a schedule with
breakpoints ending at .1500% for average group assets in excess of $84
billion. The group fee breakpoints shown for average group assets between
$84 billion and $228 billion were adopted voluntarily by FMR on January 1,
1992. The fund's management contract dated September 1, 1992 includes these
group fee rate breakpoints. Additional breakpoints for average group assets
in excess of $228 billion were voluntarily added to the group fee rate
schedule by FMR on November 1, 1993, pending shareholder approval of a new
management contract reflecting the extended schedule. The extended schedule
provides for lower management fees as FMR's total assets under management
increase.
The individual fund fee rate is .15%. Based on the average net assets of
funds advised by FMR for April 1994, the annual management fee would be
calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE MANAGEMENT FEE RATE
. 1604 % + .15% = . 3104 %
One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
During the fiscal years ended April 30, 1994, 1993, and 1992, FMR received
$ 5,579,000 , $4,58 9,000 , and $3,44 7,000 , respectively,
for its services as investment adviser to the fund. These fees were
equivalent to .31 %, .32%, and .33%, respectively, of the average net
assets of the fund for each year. FMR may, from time to time, voluntarily
reimburse all or a portion of the fund's operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses).
Effective February 1, 1992, FMR voluntarily agreed to reimburse the fund's
management fee at an annual rate of .07% of the fund's average net assets
through December 31, 1992. In fiscal 1993, reimbursement amounted to
$643, 000 . The fees for fiscal 199 4, 1993, and 1992 also
reflect FMR's voluntary implementation of the exten sions to the
g roup fee rate s chedule . If voluntary implementation had not
been in effect, fees for fiscal 1994, 1993, and 1992 would
have been higher.
To comply with the California Code of Regulations, FMR will reimburse the
fund if, and to the extent that, the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East. Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services outside the United States from the
sub-advisers.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR
Far East. For providing non-discretionary investment advice and research
services, the sub-advisers are compensated as follows: FMR pays FMR U.K.
and FMR Far East fees equal to 110% and 105%, respectively, of FMR U.K.'s
and FMR Far East's costs incurred in connection with providing investment
advice and research services.
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan) under Rule
12b-1 of the Investment Company Act of 1940 (the Rule). The Rule provides
in substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the
Rule. The Board of Trustees has adopted the plan to allow the fund and FMR
to incur certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses. Under the plan, if the
payment by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling shares of the fund, or to third parties, including banks, that
render shareholder support services. As of April 30, 199 4 , no such
payments had been made to third parties by FMR.
The fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the plan prior to its approval, and have determined
that there is a reasonable likelihood that the plan will benefit the fund
and its shareholders. In particular, the Trustees noted that the Plan does
not authorize payments by the fund other than those made to FMR under its
management contract with the fund. To the extent that the plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of the fund, additional sales of the fund's shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plan by local entities with whom shareholders have
other relationships. The plan was approved by the fund's shareholders on
November 19, 1986.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plan. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the fund. Under the trust's contract with FSC, the fund pays an annual fee
of $26.03 per basic retail account with a balance of $5,000 or more, $15.31
per basic retail account with a balance of less than $5,000, and a
supplemental activity charge of $2.25 for standing order transactions and
$6.11 for other monetary transactions. These fees and charges are subject
to annual cost escalation based on postal rate changes and changes in wage
and price levels as measured by the National Consumer Price Index for Urban
Areas. With respect to certain institutional client master accounts, the
fund pays FSC a per-account fee of $95, and monetary transaction charges of
$20 or $17.50, depending on the nature of services provided. With respect
to certain broker-dealer master accounts, the fund pays FSC a per-account
fee of $30, and a charge of $6 for monetary transactions. Fees for certain
institutional retirement plan accounts are based on the net assets of all
such accounts in the fund.
Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements. Transfer agent fees,
including reimbursement for out-of-pocket expenses, paid to FSC for the
fiscal years ended April 30, 1994, 1993, and 1992 were $ 4,699,000 ,
$3,818, 000 , and $2,82 4,000 , respectively.
The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the fund's net asset value per share
and dividends, and maintain the fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to the fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on e ach fund's average
net assets, specifically, .04% for the first $500 million of average net
assets and .02% for average net assets in excess of $500 million. The fee
is limited to a minimum of $45,000 and a maximum of $750,000 per year.
Pricing and bookkeeping fees, including related out-of-pocket expenses,
paid to FSC for fiscal 1994, 1993, and 1992 were $ 466,000 ,
$41 5,000 , and $30 8,000, respectively .
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to use
all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at net
asset value. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Intermediate Bond Fund is a fund of Fidelity
Commonwealth Trust, an open-end management investment company organized as
a Massachusetts business trust on November 8, 1974. On April 11, 1975 the
trust's name changed from Fidelity Investors Trust to Fidelity Thrift
Trust. On August 31, 1987, the trust's name was changed to Fidelity
Intermediate Bond Fund, and on February 16, 1990, the trust's name was
changed to Fidelity Commonwealth Trust. Currently, there are three funds of
the trust: Fidelity Intermediate Bond Fund, Fidelity Market Index Fund, and
Fidelity Small Cap Stock Fund. The Declaration of Trust permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a fund
for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees. The trust or any fund may be
terminated upon the sale of its assets to another open-end management
investment company, or upon liquidation and distribution of its assets, if
approved by vote of the holders of a majority of the outstanding shares of
the trust or the fund. If not so terminated, the trust and its funds will
continue indefinitely.
CUSTODIAN. The Bank of New York, 110 Washington Street, New York, New
York, is custodian of the assets of the fund. The custodian is responsible
for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining investment policies of the fund or in deciding which securities
are purchased or sold by the fund. The fund may, however, invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees, may from time to time have transactions with various banks,
including the banks serving as custodians for certain of the funds advised
by FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The auditor
examines financial statements for the fund and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the
fiscal year ended April 30, 1994 are included in the fund's Annual
Report supplied with this Statement of Additional Information . The
fund's financial statements and financial highlights are incorporated
herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities, such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated by
assuming a constant prepayment rate for the life of the mortgage. The
weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
FIDELITY MARKET INDEX FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1............................................... Cover Page
2 a............................................ Expenses
b,c.......................................... Contents; The Fund at a Glance; Who May Want To Invest
3 Financial Highlights
a,b............................................
c........................................... Performance
d........................................... *
</TABLE>
4 a(i)......................................... Charter
<TABLE>
<CAPTION>
<S> <C>
a(ii)....................................... The Fund at a Glance; Investment Principles and Risks
b............................................ Investment Principles and Risks
c............................................. Who May Want to Invest; Investment Principles and Risks
5 a............................................ Charter
b(i)........................................ Cover Page; The Fund at a Glance; Charter; Doing
Business with Fidelity
b(ii)....................................... Charter
b(iii)...................................... Expenses; Breakdown of Expenses
c........................................ *
d............................................ Charter; Breakdown of Expenses
e............................................ Cover Page; Charter
f............................................. Expenses
Charter
g(i)............................................
g(ii)......................................... *
5 A............................................ Performance
6 a(i)........................................ Charter
a(ii)....................................... How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions
a(iii)..................................... *
b............................................ *
c........................................... Transaction Details; Exchange Restrictions
d........................................... *
e........................................... Doing Business with Fidelity; How to Buy Shares; How to
Sell Shares; Investor Services
f,g......................................... Dividends; Capital Gains, and Taxes
7 a........................................... Cover Page;,Charter
b........................................... Expenses; How to Buy Shares; Transaction Details
c........................................... *
d........................................... How to Buy Shares
e........................................... *
f............................................ Breakdown of Expenses
8 .............................................. How to Sell Shares; Investor Services; Transaction Details;
Exchange Restrictions
9 .............................................. *
* Not Applicable
</TABLE>
FIDELITY MARKET INDEX FUND
CROSS REFERENCE SHEET
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Part B: Statement of Additional
Information
Form N-1A Item Number SAI Caption
10,11......................................... Cover Page
12.............................................. Description of the Trust
13 a,b,c.................................... Investment Policies and Limitations
d........................................... *
14 a,b........................................ Trustees and Officers
c........................................... *
15 a,b..................................... *
15 Trustees and Officers
c..............................................
16 a(i)....................................... FMR; Portfolio Transactions
a(ii)....................................... Trustees and Officers
a(iii),b................................... Management Contract
c,d...................................... Contracts with Companies Affiliated with FMR
*
e...........................................
Distribution and Service Plan
f............................................
*
g...........................................
Description of the Trust
h...........................................
Contracts with Companies Affiliated with FMR
i............................................
17 Portfolio Transactions
a,b,c.......................................
d,e..................................... *
18 a........................................ Description of the Trust
*
b...........................................
19 a....................................... Additional Purchase and Redemption Information
Valuation of Portfolio Securities; Additional Purchase and
b........................................... Redemption Information
*
c...........................................
20.............................................. Distributions and Taxes
21 a,b................................. Contracts with Companies Affiliated with FMR
c................................ *
22.............................................. Performance
23.............................................. Financial Statements
</TABLE>
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated June 18, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any agency, and are subject to investment risk, including
the possible loss of principal.
Market Index seeks a total return which corresponds to that of the Standard
& Poor's 500 Composite Stock Price Index.
FIDELITY
MARKET INDEX
FUND
PROSPECTUS
JUNE 18, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
FMI-pro-694
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
PERFORMANCE How the fund has
done over time.
THE FUND IN DETAIL CHARTER How the fund is
organized.
9 INVESTMENT PRINCIPLES AND RISKS
The fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
APPENDIX
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: Total return that corresponds to that of the Standard & Poor's
500 Composite Stock Price Index (the S&P 500(registered trademark)). As
with any mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Invests in equity securities of companies that compose the
S&P 500 and in other instruments that are based on the value of the
index.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
SIZE: As of April 30, 1994, the fund had over $ 282 million in
assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns. The
fund is designed for those who want to keep expenses low while pursuing
growth of capital and income through a portfolio of securities that broadly
represents the U.S. stock market, as measured by the S&P 500. The fund
in itself is not a balanced investment plan.
Because the fund seeks to track, rather than beat, the performance of the
S&P 500, it is not managed in the same manner as other mutual funds.
FMR generally does not judge the merits of any particular stock as
an investment. Therefore, you should not expect to achieve the potentially
greater results that could be obtained by a fund that aggressively seeks
growth.
Over time, stocks have shown greater growth potential than other types of
securities. In the shorter term, however, stock prices can fluctuate
dramatically in response to company, market, or economic news. The value of
the fund's investments and the income they generate will vary. When you
sell your shares, they may be worth more or less than what you paid for
them.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Redemption fee
(on shares held less than 180 days) .50%
Exchange fee None
Index account fee (per account per year) $10
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
T he following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
Management fee .45%
12b-1 fee None
Other expenses .00%
Total fund operating expenses .45%
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 15
After 3 years $ 44
After 5 years $ 75
After 10 years $157
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows is included in the fund's financial statements
and has been audited by Coopers & Lybrand, independent accountants.
Their report on the financial statements and financial highlights is
included in the Annual Report. The financial statements and
financial highlights are incorporated by reference into ( are
legally a part of) the Statement of Additional Information.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
19.Selected Per-Share Data
20.Years ended April 30 1990D 1991 1992 1993 1994
21.Net asset value, beginning of $ 25.00 $ 24.58 $ 28.06 $ 30.94 $ 32.84
period
22.Income from Investment
Operations
23. Net investment income .13 .76 .82 .81 .81
24. Net realized and unrealized (.57) 3.49 2.94 1.89 .81
gain (loss)
on investments
25. Total from investment (.44) 4.25 3.76 2.70 1.62
operations
26.Less Distributions
27. From net investment income -- (.85) (.83) (.81) (.80)
28. From net realized gain -- -- (.07) -- (.17)
29. In excess of net realized gain -- -- -- -- (.01)
30. Total distributions -- (.85) (.90) (.81) (.98)
31.Redemption fees added to paid .02 .08 .02 .01 .01
in capital
32.Net asset value, end of period $ 24.58 $ 28.06 $ 30.94 $ 32.84 $ 33.49
33.Total return B,C (1.68) 18.04 13.74 8.85 4.95
% % % % %
34.RATIOS AND SUPPLEMENTAL DATA
35.Net assets, end of period (000 $ 14,767 $ 111,931 $ 229,553 $ 304,899 $ 282,702
omitted)
36.Ratio of expenses to average net .28 .28 .35 .44 .45
assets %A % % % %
37.Ratio of expenses to average net .45 .45 .45 .45 .45
assets %A % % % %
before expense reductions
38.Ratio of net investment income 3.41 3.52 2.84 2.54 2.38
to %A % % % %
average net assets
39.Portfolio turnover rate 0 1 1 0 3
% % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING SOME OF THE PERIODS SHOWN.
D FROM MARCH 6, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1990
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes, the $10 index account fee, or the .50% redemption fee.
The fund's fiscal year runs from May 1 through April 30. The tables below
show the fund's performance over past fiscal years compared to two
measures: investing in a broad selection of stocks (S&P 500), and not
investing at all (inflation, or CPI). To help you compare this fund to
other funds, the chart on page displays calendar-year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
April 30, 1994 year fund A
Market Index 4.95 10.40
S&P 500 5.32 10.55
Consumer Price
Index 2.36 3.44
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
April 30, 1994 year fund A
Market Index 4.95 50.80
S&P 500 5.32 51.65
Consumer Price
Index 2.36 15.16
A FROM MARCH 6, 1990
EXAMPLE: Let's say, hypothetically, that an investor put $10,000 in the
fund on March 6, 1990. From that date through April 30, 1994, the fund's
total return was 50.80 %. That $10,000 would have grown to
$ 15,080 (the initial investment plus 50.80 % of $10,000).
$10,000 OVER LIFE OF FUND
Fiscal years 1990 1992
1994
Row: 1, Col: 1, Value: 10000.0
Row: 2, Col: 1, Value: 10080.0
Row: 3, Col: 1, Value: 9832.0
Row: 4, Col: 1, Value: 10828.0
Row: 5, Col: 1, Value: 10759.06
Row: 6, Col: 1, Value: 10726.82
Row: 7, Col: 1, Value: 9755.690000000001
Row: 8, Col: 1, Value: 9278.84
Row: 9, Col: 1, Value: 9246.33
Row: 10, Col: 1, Value: 9843.780000000001
Row: 11, Col: 1, Value: 10104.77
Row: 12, Col: 1, Value: 10552.32
Row: 13, Col: 1, Value: 11307.81
Row: 14, Col: 1, Value: 11576.41
Row: 15, Col: 1, Value: 11605.36
Row: 16, Col: 1, Value: 12101.67
Row: 17, Col: 1, Value: 11541.34
Row: 18, Col: 1, Value: 12083.38
Row: 19, Col: 1, Value: 12362.75
Row: 20, Col: 1, Value: 12158.51
Row: 21, Col: 1, Value: 12318.05
Row: 22, Col: 1, Value: 11818.44
Row: 23, Col: 1, Value: 13169.3
Row: 24, Col: 1, Value: 12923.46
Row: 25, Col: 1, Value: 13084.53
Row: 26, Col: 1, Value: 12824.5
Row: 27, Col: 1, Value: 13199.93
Row: 28, Col: 1, Value: 13259.66
Row: 29, Col: 1, Value: 13062.41
Row: 30, Col: 1, Value: 13590.57
Row: 31, Col: 1, Value: 13311.46
Row: 32, Col: 1, Value: 13465.08
Row: 33, Col: 1, Value: 13503.97
Row: 34, Col: 1, Value: 13957.7
Row: 35, Col: 1, Value: 14131.46
Row: 36, Col: 1, Value: 14240.2
Row: 37, Col: 1, Value: 14431.57
Row: 38, Col: 1, Value: 14731.94
Row: 39, Col: 1, Value: 14368.78
Row: 40, Col: 1, Value: 14749.44
Row: 41, Col: 1, Value: 14784.83
Row: 42, Col: 1, Value: 14718.45
Row: 43, Col: 1, Value: 15267.18
Row: 44, Col: 1, Value: 15147.3
Row: 45, Col: 1, Value: 15458.88
Row: 46, Col: 1, Value: 15307.54
Row: 47, Col: 1, Value: 15490.49
Row: 48, Col: 1, Value: 16009.82
Row: 49, Col: 1, Value: 15571.08
Row: 50, Col: 1, Value: 14886.65
Row: 51, Col: 1, Value: 15075.78
$
$15,080
UNDERSTANDING
PERFORMANCE
Because this fund invests in
stocks, its performance is
related to that of the overall
stock market. Historically,
stock market performance
has been characterized by
volatility in the short run and
growth in the long run. You
can see these two
characteristics reflected in the
fund's performance; the
year-by-year total returns on
page show that short-term
returns can vary widely, while
the returns at left show
growth over an extended
period.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE S&P 500(registered trademark) is the Standard & Poor's 500
Composite Stock Price Index, a widely recognized, unmanaged index of common
stock prices. The S&P 500 figures assume reinvestment of all dividends
paid by stocks included in the index. They do not, however, include any
allowance for the brokerage commissions or other fees you would pay if you
actually invested in those stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper General Growth and Income Funds
Average, which currently reflects the performance of over 368 mutual
funds with similar objectives. This average, which assumes reinvestment of
distributions, is published by Lipper Analytical Services, Inc.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1991 1992 1993
Market Index 30.33 % 7.31 % 9.62
%
Competitive funds average 29.44% 6.91
% 9.46 %
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: 30.33
Row: 8, Col: 2, Value: 29.44
Row: 9, Col: 1, Value: 7.31
Row: 9, Col: 2, Value: 6.91
Row: 10, Col: 1, Value: 9.619999999999999
Row: 10, Col: 2, Value: 9.460000000000001
Market Index
Competitive
funds
average
Other illustrations of fund performance may show moving averages over
specified periods.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUND IN DETAIL</r>
CHARTER
MARKET INDEX IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, the fund is
currently a diversified fund of Fidelity Commonwealth Trust, an open-end
management investment company organized as a Massachusetts business trust
on November 8, 1974.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. You are entitled to one vote for each
share you own.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs.
Fidelity Distributors Corporation ( FDC ) distributes and
markets Fidelity's funds and services. Fidelity Service Co. (FSC) performs
transfer agent servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by the fund to
reduce the fund's custodian or transfer agent fees. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
the fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
THE FUND SEEKS TO MATCH THE TOTAL RETURN OF THE S&P 500 while keeping
expenses low. FMR normally invests at least 80% of the fund's assets in
equity securities of companies that compose the S&P 500.
The S&P 500 is made up of 500 common stocks, most of which trade on the
New York Stock Exchange. Standard & Poor's Corporation is neither an
affiliate nor a sponsor of the fund, and inclusion of a stock in the index
does not imply that it is a good investment. When you sell your shares,
they may be worth more or less than what you paid for them.
It is generally acknowledged that the S&P 500 broadly represents the
performance of publicly traded common stocks in the U.S. In seeking a 98%
or better long-term correlation of the fund's total return to that of the
S&P 500, the fund utilizes a "passive" or "indexing" approach and tries
to allocate its assets similarly to those of the index. The fund's
composition may not always be identical to that of the S&P 500. FMR may
choose, if extraordinary circumstances warrant, to exclude a stock held in
the S&P 500 and include a similar stock in its place if doing
so will help the fund achieve its objective. FMR monitors the
correlation between the performance of the fund and the S&P 500 on a
regular basis. In the unlikely event that the fund cannot achieve a
long-term correlation of 98% or better, the t rustees will consider
alternative arrangements.
Although the fund focuses on common stocks, it may also invest in other
equity securities and in other types of instruments. The fund purchases
short-debt securities for cash management purposes and uses various
investment techniques, such as futures contracts, to adjust its exposure to
the S&P 500.
FMR normally invests the fund's assets according to its investment
strategy. When FMR considers it appropriate for defensive purposes,
however, it may temporarily invest substantially in high-quality,
short-term debt securities and money market instruments.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. This ownership interest
often gives the fund the right to vote on measures affecting the company's
organization and operations. Although common stocks have a history of
long-term growth in value, their prices tend to fluctuate in the shorter
term, particularly those of smaller companies.
RESTRICTIONS: With respect to 75% of total assets, the fund may not own
more than 10% of the outstanding voting securities of a single
issue r.
FOREIGN SECURITIES and foreign currencies may involve additional
risks. These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into swap agreements, and purchasing indexed
securities.
FMR can use these practices in its efforts to achieve the fund's objective
of tracking the return of the S&P 500. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss. These
techniques may increase the volatility of the fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. In
addition, these techniques could result in a loss if the counterparty to
the transaction does not perform as promised.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID SECURITIES. Some investments may be determined by FMR, under the
supervision of the Board of Trustees, to be illiquid, which means that they
may be difficult to sell promptly at an acceptable price. Difficulty in
selling securities may result in a loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks investment results that correspond to the total return
(i.e., the combination of capital changes and income) of common stocks
publicly traded in the United States, as represented by the S&P 500,
while keeping transaction costs and other expenses low. With respect to 75%
of total assets, the fund may not invest more than 5% of its total assets
in any one issuer and may not own more than 10% of the outstanding voting
securities of a single issuer. The fund may not invest more than 25% of its
total assets in any one industry. The fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 33% of its total assets.
Loans, in the aggregate, may not exceed 33% of the fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs .
FMR may, from time to time, agree to reimburse the fund for management fees
above a specified limit. FMR retains the ability to be repaid by the fund
if expenses fall below the specified limit prior to the end of the fiscal
year. Reimbursement arrangements, which may be terminated at any time
without notice, can decrease the fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fund pays
the fee at the annual rate of .45% of its average net assets.
FSC performs many transaction and accounting functions for the fund. These
services include processing shareholder transactions and calculating the
fund's share price. FMR, and not the fund, pays for these services.
To offset shareholder service costs, FSC also collects the fund's annual
index account fee of $10.00 per account. FSC deducts $2.50 from each
account at the time the quarterly dividend is credited to each account. If
the amount of the dividend is not sufficient to pay the fee, the account
fee will be deducted directly from your account balance. For fiscal
1994, this fee amounted to $ 132,100 .
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1994 was 3%. This rate
varies from year to year.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 20 0
(bullet) Assets in Fidelity mutual
funds: over $250 billion
(bullet) Number of shareholder
accounts: over 16 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4:00 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Market Index Fund."
"Fidelity Market Index Indicate your fund
Fund." Mail to the account number on
address indicated on your check and mail to
the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, (bullet) Specify "Fidelity Market
Bank Routing Index Fund" and
#021001033, include your account
Account #00163053. number and your
Specify "Fidelity Market name.
Index Fund" and
include your new
account number and
your name.
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
To enhance the fund's ability to track the S&P 500, shareholders are
urged to submit redemption requests before 2:00 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to
sign up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF THE FUND AFTER HOLDING THEM LESS THAN 180 DAYS, THE FUND WILL
DEDUCT A REDEMPTION FEE EQUAL TO .50% OF THE VALUE OF THOSE SHARES.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
except retirement $100,000.
(bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net income and capital gains
to shareholders each year. Normally, dividends are distributed in March,
June, September, and December. Capital gains are distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
7. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
8. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
When the fund deducts a distribution from its NAV, the reinvestment price
is the fund's NAV at the close of business that day. Cash distribution
checks will be mailed within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable
when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when the fund is priced on
the following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
THE REDEMPTION FEE, if applicable, will be deducted from the amount of your
redemption. This fee is paid to the fund rather than FMR, and it does not
apply to shares that were acquired through reinvestment of distributions.
If shares you are redeeming were not all held for the same length of time,
those shares you held longest will be redeemed first for purposes of
determining whether the fee applies.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
APPENDIX
S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to results to be obtained by
licensee, owners of the product, or any other person or entity from the use
of the S&P 500 Index or any data included therein. S&P makes no
express or implied warranties, and expressly disclaims all warranties or
merchantability or fitness for a particular purpose or use with respect to
the S&P 500 Index or any data included therein. Without limiting any of
the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost
profits), even if notified of the possibility of such damages.
The Product is not sponsored, endorsed, sold or promoted by Standard
& Poor's, a division of McGraw-Hill, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the
Product or any member of the public regarding the advisability of investing
in securities generally or in the Product particularly or the ability of
the S&P 500 Index to track general stock market performance. S&P's
only relationship to the Licensee is the licensing of certain trademarks
and trade names of S&P and of the S&P 500 Index which is
determined, composed and calculated by S&P without regard to the
Licensee or the Product. S&P has no obligation to take the needs of the
Licensee or the owners of the Product into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the timing of, prices
at, or quantities of the Product to be issued or in the determination or
calculation of the equation by which the Product is to be converted into
cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Product.
"Standard & Poor's(Registered trademark)," "S&P(Registered
trademark)," "S&P 500(Registered trademark)," "Standard & Poor's
500," and "500" are trademarks of McGraw-Hill, Inc. and have been licensed
for use by Fidelity Distributors Corporation.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY MARKET INDEX FUND
A FUND OF FIDELITY COMMONWEALTH TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 18, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated June 18, 1994). Please retain this
document for future reference. The fund's financial statements and
financial highlights, included in the Annual Report for the fiscal
year ended April 30, 1994, are incorporated herein by reference. To obtain
an additional copy of the Prospectus or the Annual Report, please
call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts with Companies Affiliated with FMR
Description of the Trust
Financial Statements
Appendix
Investment Adviser
Fidelity Management & Research Company (FMR)
Distributor
Fidelity Distributors Corporation (FDC)
Transfer Agent
Fidelity Service Co. (FSC)
FMI-ptb-694
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed by the United States government or its agencies or
instrumentalities) if, as a result thereof, (a) more than 25% of the value
of its total assets would be invested in the securities of a single issuer,
or (b) with respect to 75% of its total assets, more than 5% of the fund's
total assets (taken at current value) would be invested in the securities
of such issuer, or it would own more than 10% of the voting securities of
such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) sell securities short, unless it owns, or by virtue of its ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short;
(4) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that payment of initial and variation margin payments in
connection with transactions in futures contracts and options on futures
contracts shall not constitute purchasing securities on margin;
(5) borrow money, except for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of the value
of its total assets (including the amount borrowed) less liabilities (other
than borrowings). Any borrowings that come to exceed 33 1/3% of the value
of the fund's total assets by reason of a decline in net assets will be
reduced within 3 days (excluding Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(6) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(7) purchase any security if, as a result, more than 25% of its total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities in the same industry
(this limitation does not apply to securities issued or guaranteed by the
United States government or its agencies or instrumentalities);
(8) purchase or sell real estate unless acquired as a result of ownership
of securities (but this shall not prevent the fund from purchasing and
selling marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor
shall this prevent the fund from purchasing interests in pools of real
estate mortgage loans);
(9) purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this shall not prevent the fund from
purchasing and selling futures contracts); or
(10) make loans if, as a result, more than 33 1/3% of its total assets
(taken at current value) would be lent to other parties, except (a) through
the purchase of a portion of an issue of debt securities in accordance with
its investment objective, policies, and limitations, and (b) by engaging in
repurchase agreements with respect to portfolio securities.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(v) The fund does not currently intend to invest in physical commodities or
physical commodities contracts.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT DETAILS. The fund is not managed according to traditional
methods of "active" investment management, which involve the buying and
selling of securities based upon economic, financial, and market analyses
and investment judgment. Instead, the fund, utilizing a "passive" or
"indexing" investment approach, attempts to duplicate the performance of
the S&P 500. The fund may omit or remove an S&P 500 stock from its
portfolio if, following objective criteria, FMR judges the stock to be
insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions.
FMR may purchase stocks that are not included in the S&P 500 to
compensate for these differences if it believes that their prices will move
together with the prices of S&P 500 stocks omitted from the portfolio.
The ability of the fund to meet its objective depends in part on its cash
flow because investments and redemptions by shareholders generally will
require the fund to purchase or sell portfolio securities. A low level of
shareholder transactions will keep cash flow manageable and enhance the
fund's ability to track the S&P 500. FMR will make investment changes
to accommodate cash flow in an attempt to maintain the similarity of the
fund's portfolio to the composition of the S&P 500. In addition, the
fund will maintain a reasonable position in high-quality, short-term debt
securities and money market instruments to meet redemption requests.
S&P 500. The S&P 500 is a well-known stock market index that
includes common stocks of companies representing a significant portion of
the market value of all common stocks publicly traded in the United States.
Stocks in the S&P 500 are weighted according to their market
capitalization (i.e. the number of shares outstanding multiplied by the
stock's current price), with the 62 largest stocks currently
comp ri sed approximately 50% of the index's value. The composition
of the S&P 500 is determined by Standard & Poor's Corporation and
is based on such factors as the market capitalization and trading activity
of each stock and its adequacy as a representation of stocks in a
particular industry group. Standard and Poor's Corporation may change the
index's composition from time to time.
The performance of the S&P 500 is a hypothetical number which does not
take into account brokerage commissions and other costs of investing, which
the fund bears.
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that the fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against the fund and the risk of actual liability if the fund is involved
in litigation. No guarantee can be made, however, that litigation against
the fund will not be undertaken or liabilities incurred.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days and
over-the-counter options. Also, FMR may determine some swap agreements to
be illiquid. However, with respect to over-the-counter options the fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
The fund may engage in a repurchase agreement with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to the fund in connection with bankruptcy
proceedings), it is the fund's current policy to limit repurchase agreement
transactions to those parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. The fund will lend through
the program only when the returns are higher than those available at the
same time from other short-term investments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. The fund will not lend more
than 5% of its assets to other funds, and will not borrow through the
program if, after doing so, total outstanding borrowings would exceed 15%
of total assets. Loans may be called on one day's notice, and the fund may
have to borrow from a bank at a higher interest rate if an interfund loan
is called or not renewed. Any delay in repayment to a lending fund could
result in a lost investment opportunity or additional borrowing costs.
SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SWAP AGREEMENTS. Under a typical equity swap agreement, a counterparty such
as a bank or broker-dealer agrees to pay the fund a return equal to the
dividend payments and increase in value, if any, of an index or group of
stocks (such as the S&P 500), and the fund agrees in return to pay a
fixed or floating rate of interest, plus any declines in value of the
index. Swap agreements can also have features providing for maximum or
minimum exposure to the designated index. Swap agreements can take many
different forms and are known by a variety of names. The fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
In order to track the return of the designated index effectively, the fund
would generally have to own other assets returning approximately the same
amount as the interest rate payable by the fund under the swap agreement.
In addition, if the counterparty's creditworthiness declined, the swap
would be likely to decline in value relative to the designated index,
impairing the fund's correlation with the S&P 500. The fund expects to
be able to eliminate its exposure under swap agreements either by
assignment or other disposition of the swap agreement, or by entering into
an offsetting swap agreement with the same party or a similarly
creditworthy party.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its obligations under swap agreements. If the fund enters
into a swap agreement on a net basis, it will segregate assets with a daily
value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If the fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
INDEXED SECURITIES. Indexed securities include commercial paper,
certificates of deposit, and other fixed-income securities whose values at
maturity or coupon interest rates are determined by reference to the return
of the S&P 500 or a comparable stock index. Indexed securities can be
affected by changes in interest rates and the creditworthiness of their
issuers as well as stock prices, and may not track the S&P as
accurately as direct investments in S&P stocks.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
FMR also intends to follow certain other limitations on the fund's futures
and options activities. Under normal conditions, the fund will not enter
into any futures contract or option if, as a result, the sum of (i) the
current value of assets hedged in the case of strategies involving the sale
of securities, and (ii) the current value of the indices or other
instruments underlying the fund's other futures or options positions, would
exceed 35% of the fund's total assets. These limitations do not apply to
options attached to, or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
Options and futures prices can diverge from the prices of their underlying
instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the fund's assets could impede portfolio management or the fund's ability
to meet redemption requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to: the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and arrangements for payment of fund
expenses.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such information
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FSC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such re quirements , the
Board of Trustees has authorized FBSI to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal years ended April 30, 1994 and 1993, the fund's annual
portfolio turnover rates were 3% and 0 %, respectively.
For fiscal 1994, 1993, and 1992, the fund paid brokerage commissions
of $9,948, $12,824, and $38,865, respectively. During fiscal 1994, $812
or approximately 8% of these commissions were paid to brokerage firms
that provided research services, although the provision of such services
was not necessarily a factor in the placement of all of this business with
such firms. The fund pays both commissions and spreads in connection with
the placement of portfolio transactions; FBSI is paid on a commission
basis. During fiscal 1994, $184 or approximately 2% of these
commissions were paid to FBSI. During fiscal 1993 and 1992, no commissions
were paid to FBSI.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine, in the exercise of their business judgment
whether it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as the fund is concerned. In other cases,
however, the ability of the fund to participate in volume transactions will
produce better executions and prices for the fund. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to the fund outweighs any disadvantages that may be said
to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Equity securities for which the
primary market is the U.S. are valued at last sale price or, if no sale has
occurred, at the closing bid price. Equity securities for which the
primary market is outside the U.S. are valued using the official closing
price or the last sale price in the principal market where they are traded.
If the last sale price (on the local exchange) is unavailable, the last
evaluated quote or last bid price is normally used. Short-term securities
are valued either at amortized cost or at original cost plus accrued
interest, both of which approximate current value. Fixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. This twofold approach is believed
to more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
PERFORMANCE
The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for the fund used in advertising are computed
by dividing the fund's interest and dividend income for a given 30-day or
one month period, net of expenses, by the average number of shares entitled
to receive dividends during the period, dividing this figure by the fund's
net asset value per share at the end of the period, and annualizing the
result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. Dividends from equity investments are treated as if they were
accrued on a daily basis, solely for the purpose of yield calculations. In
general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. Capital
gains and losses generally are excluded from the calculation.
Income calculated for the purpose of determining the fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed
in yield calculations, the yields quoted for the fund may differ from the
rate of distributions the fund paid over the same period or the rate of
income reported in the fund's financial statements.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's net
asset value per share (NAV) over the period, but do not include the effect
of the $10.00 index account fee. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in the fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over
ten years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in
ten years. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the fund's
performance is not constant over time, but changes from year to year, and
that average annual returns represent averaged figures as opposed to the
actual year-to-year performance of the fund.
In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration and may omit or include the effect of the fund's $5.00 account
closeout fee (which was in effect through September 30, 1991), the .50%
redemption fee applicable to shares held less than 180 days, and the $10.00
index account fee. Omitting fees and charges will cause the fund's total
return figures to be higher.
NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. The fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On April 30, 1994, the 13-week and
39-week long-term moving averages were $ 34.02 and $ 34.04 ,
respectively.
HISTORICAL FUND RESULTS. The on page 10 shows the income and capital
elements of the fund's total return for the period March 6, 1990
(commencement of operations) through April 30, 1994. The table compares
the fund's return to the record of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) and the cost of living (measured by the
Consumer Price Index, or CPI) over the same period. The S&P 500
comparison is provided to show how the fund's total return compared to the
record of a broad average of common stock prices over the same period. The
fund has the ability to invest in securities not included in the S&P
500, and its investment portfolio may differ slightly from the composition
of the index. Figures for the S&P 500 are based on the prices of
unmanaged groups of stocks and, unlike the fund's returns, its returns do
not include the effect of paying brokerage commissions and other costs of
investing.
During the period March 6, 1990 through April 30, 1994, a hypothetical
$10,000 investment in Fidelity Market Index F und would have grown to
$ 15,080 , assuming all distributions were reinvested. This was a
period of widely fluctuating stock prices and should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in the fund today.
FIDELITY MARKET INDEX FUND INDICES
Value of Value of Value of
Year Initial Reinvested Reinvested Cost
Ended $10,000 Income Capital Gain Total of
April 30 Investment Distributions Distributions Value S&P 500
Living**
1994 $ 13,396 $ 1,570 $ 114 $ 15,080 $ 15,165
$ 11,516
1993 13,136 1,199 34 14,369 14,398 11,250
1992 12,376 792 32 13,200 13,179 10,898
1991 11,224 381 0 11,605 11,555 10,563
1990* 9,832 0 0 9,832 9,825 10,070
* From March 6, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March 6,
1990, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 11,503 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments for the period would have amounted to $ 1,316 for
income dividends and $ 100 for capital gain distributions. If FMR
had not reimbursed certain fund expenses, the fund's total returns would
have been lower. The figures in the table do not include the effect of the
fund's $5.00 account closeout fee (which was in effect through September
30, 1991), its .50% redemption fee applicable to shares held less than 180
days, or its annual $10.00 index account fee. Tax consequences of
different investments have not been factored into the above figures.
The yield of the S&P 500 for the fiscal year ended April 30, 1994 was
2.89 %, calculated by dividing the dollar value of dividends paid by
the S&P 500 stocks during the period by the average value of the
S&P 500 on April 30, 1994. The S&P 500 yield is calculated
differently from the fund's yield; among other things, the fund's yield
calculation treats dividends as accrued in anticipation of payment, rather
than recording them when paid.
The table below shows the record of the S&P for the ten years from
1984 through 1993 . Figures for the S&P 500 show the change in value
of the S&P 500 and assume reinvestment of all dividends paid by S&P
500 stocks. Tax consequences are not included in the illustration, nor are
brokerage or other fees calculated in the S&P 500 figures. The results
shown should not be considered representative of the income or capital gain
or loss which may be generated by the S&P 500 or the fund in the
future.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended 12/31 Year End Index Value Price Changes in Dividend Reinvestment Total Return
Index for Year
1993 466.45 7.06 % 3.02% 10.08 %
1992 435.71 4.46 3.16 7.62
1991 417.09 26.31 4.16 30.47
1990 330.22 -6.56 3.46 -3.10
1989 353.40 27.25 4.44 31.69
1988 277.72 12.40 4.21 16.61
1987 247.08 2.03 3.07 5.10
1986 242.17 14.62 3.94 18.56
1985 211.28 26.33 5.24 31.57
1984 167.24 1.40 4.70 6.10
</TABLE>
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
The fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, the fund may offer greater
liquidity or higher potential returns than CDs, and the fund does not
guarantee your principal or your return and fund shares are not FDIC
insured .
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
The fund may present its fund number, Quotron(Registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate the fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
The fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of April 30 , 1994, FMR managed approximately $ 145 billion
in equity fund assets as defined and tracked by Lipper. This figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. From time to time, the fund may use
any of the above information in its advertising and sales literature.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares. In
addition, trading in some of the fund's portfolio securities may not occur
on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of the fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the fund's income is derived from qualifying dividends.
Because the fund may earn other types of income, such as interest, income
from securities loans, non-qualifying dividends, and short-term capital
gains, the percentage of dividends from the fund that qualify for the
deduction generally will be less than 100%. The fund will notify corporate
shareholders annually of the percentage of fund dividends that qualify for
the dividends-received deduction. A portion of the fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. The fund will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax at the fund level on income and
capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, the fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The fund intends to comply with other
tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some futures contracts and options are included in
this 30% calculation, which may limit the fund's investments in such
instruments.
The fund is treated as a separate entity from the other portfolio of
Fidelity Commonwealth Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions. Investors should consult their tax
advisers to determine whether the fund is suitable to their particular tax
situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas Inc., a wholly owned subsidiary of
FMR formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The trust's Trustees and executive officers are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sani fill Corporation
(non-hazardous waste, 1993) and CH2M Hill Companies (engineering). In
addition, he served on the Board of Directors of the Norton Company
(manufacturer of industrial devices, 1983-1990) and continues to serve on
the Board of Directors of the Texas State Chamber of Commerce, and is a
member of advisory boards of Texas A&M University and the University of
Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
In addition, he serves as a Trustee of Corporate Property Investors, the
EPS Foundation at Trinity College, the Naples Philharmonic Center for the
Arts, and Rensselaer Polytechnic Institute, and he is a member of the
Advisory Boards of Butler Capital Corporation Funds and Warburg, Pincus
Partnership Funds.
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
On April 30, 1994, the Trustees and officers of the fund owned , in
the aggregate , less than 1 % of the fund's total outstanding
shares.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under FMR's management contract with the fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
FMR is responsible for the payment of all expenses of the fund with certain
exceptions. Specific expenses payable by FMR include, without limitation,
the fees and expenses of registering and qualifying the trust, the fund,
and its shares for distribution under federal and state securities laws;
expenses of typesetting for printing the Prospectus and Statement of
Additional Information; custodian charges; audit and legal expenses;
insurance expense; association membership dues; and the expenses of mailing
reports to shareholders, shareholder meetings, and proxy solicitations.
FMR also provides for transfer agent and dividend disbursing services and
portfolio and general accounting record maintenance through Fidelity
Service Co. (FSC).
FMR pays all other expenses of the fund with the following exceptions:
fees and expenses of all Trustees who are not "interested persons" of the
trust or of FMR (the non-interested Trustees); interest on borrowings;
taxes; brokerage commissions; and such nonrecurring expenses as may arise,
including costs of any litigation to which the fund may be a party, and any
obligation it may have to indemnify the officers and Trustees with respect
to litigation.
FMR is the fund's manager pursuant to a management contract dated February
15, 1990, which was approved by shareholders on September 19, 1990. For
the services of FMR under the contract, the fund pays FMR a monthly
management fee at the annual rate of .45% of the fund's average net assets
throughout the month. FMR reduces its fee by an amount equal to the fees
and expenses of the non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses). Expense limitations in effect
from May 1, 1991 through May 31, 1992 are indicated in the table below.
Also indicated below are the gross management fees incurred by the fund and
the amounts reimbursed by FMR during the fiscal years ended April 30, 1994,
1993, and 1992.
From To Expense Limitation
May 1, 1991 May 31, 1992 .35%
Fiscal Period Management Fee Amount of
Ended Before Reimbursement Reimbursement
1994 $1,35 1 , 033 N/A
1993 1,199,082 $ 26,921
1992 763,951 170,081
To defray shareholder service costs, FMR or its affiliates also collected
the fund's $5.00 exchange fee and the $5.00 account closeout fee (which
were in effect through September 30, 1991), and the $10.00 index account
fee. The following table outlines the fees collected by FMR or its
affiliates.
Period Ended Exchange Account Index
April 30 Fees Closeout Fees Account Fees
1994 N/A N/A $132,100
1993 N/A N/A 124,707
1992 $3,785 $135 67,348
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan) under Rule
12b-1 of the Investment Company Act of 1940 (the Rule). The Rule provides
in substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the
Rule. The Board of Trustees has adopted the plan to allow the fund and FMR
to incur certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses. Under the plan, if the
payment by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling shares of the fund or to third parties, including banks, that
render shareholder support services. The Trustees have not authorized such
payments to date.
The fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the plan prior to its approval, and have determined
that there is a reasonable likelihood that the plan will benefit the fund
and its shareholders. In particular, the Trustees noted that the plan does
not authorize payments by the fund other than those made to FMR under its
management contract with the fund. To the extent that the plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of the fund, additional sales of the fund's shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plan by local entities with whom shareholders have
other relationships. The plan was approved by the fund's shareholders on
September 19, 1990.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services and
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plan. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC performs transfer agency, dividend disbursing, and shareholder
servicing functions for the fund. The costs of these services are borne by
FMR pursuant to its management contract with the fund. FSC also calculates
the fund's net asset value per share and dividends, maintains the fund's
general accounting records, and administers the fund's securities lending
program. The costs of these services are also borne by FMR pursuant to its
management contract with the fund.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities and Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the fund, which are continuously offered
at net asset value. Promotional and administrative expenses in connection
with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Market Index Fund is a fund of Fidelity
Commonwealth Trust, an open-end management investment company organized as
a Massachusetts business trust on November 8, 1974. On September 1, 1987,
the trust's name was changed from Fidelity Thrift Trust to Fidelity
Intermediate Bond Fund. On February 16, 1990, the trust's name was changed
from Fidelity Intermediate Bond Fund to Fidelity Commonwealth Trust.
Currently, there are three funds of the trust: Fidelity Intermediate Bond
Fund, Fidelity Market Index Fund, and Fidelity Small Cap Stock Fund. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessible,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may,
as set forth in the Declaration of trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees. The trust or any fund may be
terminated upon the sale of its assets to another open-end management
investment company, or upon liquidation and distribution of its assets, if
approved by vote of the holders of a majority of the outstanding shares of
the trust or the fund. If not so terminated, the trust and its funds will
continue indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. The Boston branch of the fund's custodian bank leases its office
space from an affiliate of FMR at a lease payment which, when entered into,
was consistent with prevailing market rates. Transactions that have
occurred to date include mortgages and personal and general business loans.
In the judgment of FMR, the terms and conditions of those transactions were
not influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trust's independent accountant. The auditor
examines financial statements for the fund and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the fiscal
year ended April 30, 1994 are included in the fund's Annual Report, which
is a separate report supplied with this Statement of Additional
Information. The fund's financial statements and financial highlights are
incorporated herein by reference.
APPENDIX: ABOUT THE S&P 500 COMPOSITE STOCK PRICE INDEX
The S&P 500 Composite Stock Price Index (S&P 500) is a well-known
stock market index that includes common stocks of companies representing a
significant portion of the market value of all common stocks publicly
traded in the United States. FMR believes that the performance of the
S&P 500 is representative of the performance of publicly traded common
stocks in general. The composition of the S&P 500 is determined by
Standard & Poor's Corporation, and is based on such factors as the
market capitalization and trading activity of each stock and its adequacy
as representative of stocks in a particular industry group; Standard &
Poor's may change the composition of the Index from time to time. Stocks
in the S&P 500 Index are weighted according to their market
capitalization (i.e., the number of shares outstanding multiplied by the
stock's current price), with the 59 largest stocks currently composing 50%
of the S&P 500's value.
Although Standard & Poor's obtains information for inclusion in or for
use in the calculation of the S&P 500 from sources which considers
reliable, Standard & Poor's does not guarantee the accuracy or the
completeness of the S&P 500 or any data included therein. Standard
& Poor's makes no warranty, express or implied, as to results to be
obtained by the licensee, owners of the fund, or any other person or entity
from the use of the S&P 500 or any data included therein in connection
with the rights licensed hereunder or for any other use. Standard &
Poor's makes no express or implied warranties, and hereby expressly
disclaims all warranties of merchantability or fitness for a particular
purpose with respect to the S&P 500 any data included therein.
The following is a list of the 500 stocks comprising the S&P 500 as of
April 30, 1994.
A bbott Labs
Advanced Micro Devices
Aetna Life & Casualty
Ahmanson (H.F.) & Co.
Air Products & Chemicals
AirTouch Communications
Alberto-Culver
Albertson's
Alcan Aluminum Ltd.
Alco Standard
Alexander & Alexander
Allergan, Inc.
AlliedSignal
Aluminum Co. of America
ALZA Corp. CI.A
Amdahl Corp.
Amerada Hess
American Barrick Res.
American Brands Inc.
American Cyanamid
American Electric Power
American Express
American General
American Greetings CI A
American Home Products
American Int'l. Group
American Stores
Ameritech
Amgen
Amoco
AMP Inc.
AMR Corp.
Andrew Corp.
Anheuser-Busch
Apple Computer
Archer-Daniels-Midland
Arkla Inc.
Armco Inc.
Armstrong World
ASARCO Inc.
Ashland Oil
AT & T Corp.
Atlantic Richfield
Autodesk, Inc.
Automatic Data Processing Inc.
Avery Dennison Corp.
Avon Products
Baker Hughes
Ball Corp.
Bally Manufacturing Corp.
Baltimore Gas & Electric
Banc One Corp.
Bank of Boston
BankAmerica Corp.
Bankers Trust N.Y.
Bard (C.R.) Inc.
Barnett Banks Inc.
Bassett Furniture
Bausch & Lomb
Baxter International Inc.
Becton, Dickinson
Bell Atlantic
BellSouth
Bemis Company
Beneficial Corp.
Bethlehem Steel
Beverly Enterprises
Biomet, Inc.
Black & Decker Corp.
Block H&R
Blockbuster Entertainment
Boatmen's Bancshares
Boeing Company
Boise Cascade
Borden, Inc.
Briggs & Stratton
Bristol-Myers Squibb
Brown Group
Browning-Ferris Ind.
Brown-Forman Corp.
Bruno's Inc.
Brunswick Corp.
Burlington Northern
Burlington Resources
Campbell Soup
Capital Cities/ABC
Capital Holding
Carolina Power & Light
Caterpillar Inc.
CBS Inc.
Centex Corp.
Central & South West
Ceridian Corp.
Champion International
Charming Shoppes
Chase Manhattan
Chemical Banking Corp.
Chevron Corp.
Chrysler Corp.
Chubb Corp.
CIGNA Corp.
Cincinnati Milacron
Circuity City Stores
cicso Systems
Citicorp
Clark Equipment
Clorox Co.
Coastal Corp.
Coca Cola Co.
Colgate-Palmolive
Columbia Gas System
Columbia/HCA Healthcare Corp.
Comcast Class A Special
Commonwealth Edison
Community Psych Centers
COMPAQ Computer
Computer Associates Intl.
Computer Sciences Corp.
ConAgra Inc.
Consolidated Edison
Consolidated Freightways
Consolidated Natural Gas
Consolidated Rail
Continental Corp.
Cooper Industries
Cooper Tire & Rubber
Coors (Adolph)
CoreStates Financial
Corning Inc.
CPC International
Crane Company
Cray Research
Crown Cork & Seal
CSX Corp.
Cummins Engine Co., Inc.
Cyprus Amax Minerals Co.
Dana Corp.
Data General
Dayton Hudson
Dean Witter, Discover & Co.
Deere & Co.
Delta Air Lines
Deluxe Corp.
Detroit Edison
Dial Corp.
Digital Equipment
Dillard Department Stores
Dominion Resources
Donnelley (R.R.) & Sons
Dover Corp.
Dow Chemical
Dow Jones & Co.
Dresser Industries
DSC Communications
Du Pont (E.I.)
Duke Power
Dun & Bradstreet
E G & G Inc.
Eastern Enterprises
Eastman Chemical
Eastman Kodak
Eaton Corp.
Echlin Inc.
Echo Bay Mines Ltd.
Ecolab Inc.
Emerson Electric
Engelhard Corp.
Enron Corp.
ENSERCH Corp.
Entergy Corp.
Exxon Corp.
E-Systems
Federal Express
Federal Home Loan Mtg.
Federal Natl. Mtge.
Federal Paper Board
First Chicago Corp.
First Fidelity Bancorp
First Interstate Bancorp
First Mississippi Corp.
First Union Corp.
Fleet Financial Group
Fleetwood Enterprises
Fleming Cos. Inc.
Fluor Corp.
FMC Corp.
Ford Motor
Foster Wheeler
FPL Group
Gannett Co.
Gap (The)
General Dynamics
General Electric
General Mills
General Motors
General Re Corp.
General Signal
Genesco Inc.
Genuine Parts
Georgia-Pacific
Gerber Products
Giant Food CI. A
Giddings & Lewis
Gillette Co.
Golden West Financial
Goodrich (B.F.)
Goodyear Tire & Rubber
Grace (W.R.) & Co.
Grainger (W.W.) Inc.
Great A & P
Great Lakes Chemical
Great Western Financial
GTE Corp.
Halliburton Co.
Handleman Co.
Harcourt General Inc.
Harland (J.H.)
Harnischfeger Indus.
Harris Corp.
Hartmarx Corp.
Hasbro Inc.
Heinz (H.J.)
Helmerich & Payne
Hercules, Inc.
Hershey Foods
Hewlett-Packard
Hilton Hotels
Home Depot
Homestake Mining
Honeywell
Household International
Houston Industries
Illinois Tool Works
Inco, Ltd.
Ingersoll-Rand
Inland Steel Ind. Inc.
Intel Corp.
Interpublic Group
Intergraph Corp.
International Bus. Machines
International Flav/Frag
International Paper
ITT Corp.
James River
Jefferson-Pilot
Johnson Controls
Johnson & Johnson
Jostens Inc.
K Mart
Kaufman & Broad Home Corp.
Kellogg Co.
Kerr-McGee
KeyCorp
Kimberly-Clark
King World Productions
Knight-Ridder Inc.
Kroger Co.
Lilly (Eli) & Co.
Limited, The
Lincoln National
Liz Claiborne, Inc.
Lockheed Corp.
Longs Drug Stores
Loral Corp.
Lotus Development
Louisiana Land & Exploration
Louisiana Pacific
Lowe's Cos.
Luby's Cafeterias
Maillinckrodt Group Inc.
Manor Care
Marriott Int'l
Marsh & McLennan
Martin Marietta
Masco Corp.
Mattel, Inc.
Maxus Energy
May Dept. Stores
Maytag Corp.
MBNA Corp.
McCaw Cellular Comm.
McDermott International
McDonald's Corp.
McDonnell Douglas
McGraw-Hill
MCI Communications
McKesson Corp.
Mead Corp.
Medtronic Inc.
Mellon Bank Corp.
Melville Corp.
Mercantile Stores
Merck & Co.
Meredith Corp.
Merrill Lynch
Millipore Corp.
Minn. Mining & Mfg.
Mobil Corp.
Monsanto Company
Moore Corp. Ltd.
Morgan (J.P.) & Co.
Morrison Knudsen
Morton International
Motorola Inc.
M/A-Com, Inc.
NACCO Ind. CI. A
Nalco Chemical
National Education
National Intergroup
National Medical Enterprise
National Semiconductor
National Service Ind.
NationsBank
Navistar International Corp.
NBD Bancorp Inc.
New York Times CI. A
Newell Co.
Newmont Mining
Niagara Mohawk Power
NICOR Inc.
NIKE Inc.
Nordstrom
Norfolk Southern Corp.
Northern States Power
Northern Telecom
Northrop Corp.
Norwest Corp.
Novell Inc.
Nucor Corp.
Nynex
Occidental Petroleum
Ogden Corp.
Ohio Edison
ONEOK Inc.
Oracle Systems
Oryx Energy
Oshkosh B'Gosh
Outboard Marine
Owens-Corning Fiberglas
PACCAR Inc.
Pacific Enterprises
Pacific Gas & Electric
Pacific Telesis
PacifiCorp
Pall Corp.
Panhandle Eastern
Parker-Hannifin
Penney (J.C.)
Pennzoil Co.
Peoples Energy
Pep Boys
PepsiCo Inc.
Perkin-Elmer
Pet Inc.
Pfizer, Inc.
Phelps Dodge
PECO Energy Co.
Philip Morris
Phillips Petroleum
Pioneer Hi-Bred Int'l
Pitney-Bowes
Pittston Services Group
Placer Dome Inc.
PNC Bank Corp.
Polaroid Corp.
Potlatch Corp.
PPG Industries
Praxair, Inc.
Premark International
Price/Costco Inc.
Procter & Gamble
Promus Inc.
PSI Resources Inc.
Public Serv. Enterprise Inc.
Pulte Corp.
Quaker Oats
Ralston-Ralston Purina Gp
Raychem Corp.
Raytheon Co.
Reebok International
Reynolds Metals
Rite Aid
Roadway Service
Rockwell International
Rohm & Haas
Rollins Environmental
Rowan Cos.
Royal Dutch Petroleum
Rubbermaid Inc.
Russell Corp.
Ryan's Family Steak Hse
Ryder System
SAFECO Corp.
Safety-Kleen
Salomon Inc.
Santa Fe Energy Resources
Santa Fe Pacific Corp.
Sara Lee Corp.
SCE Corp.
Schering-Plough
Schlumberger Ltd.
Scientific-Atlanta
Scott Paper
Seagram Co. Ltd.
Sears, Roebuck & Co.
Service Corp. International
Shared Medical Systems
Shawmut National
Sherwin-Williams
Shoney's Inc.
Skyline Corp.
Snap-On Tools
Sonat Inc.
Southern Co.
Southwestern Bell Corp.
Springs Industries Inc.
Sprint Corp.
SPX Corp.
Stanley Works
Stone Container
Stride Rite
St. Jude Medical
St. Paul Cos.
Sun Co., Inc.
Sun Microsystems
SunTrust Banks
Supervalu Inc.
Syntex Corp.
Sysco Corp.
Tandem Computers Inc.
Tandy Corp.
Tektronix Inc.
Teledyne Inc.
Tele-Communications
Temple-Inland
Tenneco Inc.
Texaco Inc.
Texas Instruments
Texas Utilities
Textron Inc.
Thomas & Betts
Time Warner Inc.
Times Mirror
Timken Co.
TJX Companies Inc.
Torchmark Corp.
Toys R Us
Transamerica Corp.
Transco Energy
Travelers Inc.
Tribune Co.
Trinova Corp.
TRW Inc.
Tyco International
UAL Corp.
Unilever N.V.
Union Camp
Union Carbide
Union Electric Co.
Union Pacific
Unisys Corp.
United Technologies
Unocal Corp.
UNUM Corp.
Upjohn Co.
US West Inc.
USAir Group
USF&G Corp.
USLIFE Corp.
UST Inc.
USX-Marathon Group
USX-U.S. Steel Group
U.S. Bancorp
U.S. Healthcare Inc.
U.S. Surgical
Varity Corp.
V.F. Corp.
Wachovia Corp.
Walgreen Co.
Walt Disney Co.
Wal-Mart Stores
Warner-Lambert
WMX Technologies
Wells Fargo & Co.
Wendy's International
Western Atlas
Westinghouse Electric
Westvaco Corp.
Weyerhaeuser Corp.
Whirlpool Corp.
Whitman Corp.
Williams Cos.
Winn-Dixie
Woolworth Corp.
Worthington Ind.
Wrigley (Wm) Jr.
Xerox Corp.
Yellow Corp.
Zenith Electronics
Zurn Industries
FIDELITY COMMONWEALTH TRUST:
FIDELITY SMALL CAP STOCK FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1................................... Cover Page
...
2a.................................. Expenses
..
b, Contents; The Fund at a Glance; Who May Want to
c................................ Invest
3 a............................... Financial Highlights
b................................ *
c, Performance
d................................
4a Charter
i.................................
The Fund at a Glance; Investment Principles and
ii............................... Risks
b................................... Investment Princliples and Risks
..
Who May Want to Invest; Investment Principles and
c.................................... Risks
5a.................................. Charter
..
b(i)................................ Cover Page, The Fund at a Glance, Doing Business
with Fidelity; Charter
Charter
(ii)..............................
(iii)........................... Expenses; Breakdown of Expenses
c, Charter; Breakdown of Expenses, Cover page
d................................
Cover Page; Charter
e....................................
Expenses
f....................................
g(i)................................ Charter
..
(ii)................................. *
..
5A................................. Performance
.
6a Charter
i.................................
How to Buy Shares; How to Sell Shares; Transaction
ii................................ Details; Exchange Restrictions
Charter
iii...............................
Charter
b...................................
.
Transaction Details; Exchange Restrictions
c....................................
*
d...................................
.
Doing Business with Fidelity; How to Buy Shares;
e.................................... How to Sell Shares; Investor Services
f,g................................. Dividends, Capital Gains, and Taxes
..
7a.................................. Cover Page; Charter
..
Expenses; How to Buy Shares; Transaction Details
b...................................
.
Sales Charge Reductions and Waivers
c....................................
How to Buy Shares
d...................................
.
*
e....................................
f ................................ Breakdown of Expenses
8................................... How to Sell Shares; Investor Services; Transaction
... Details; Exchange Restrictions
9................................... *
...
</TABLE>
* Not Applicable
FIDELITY COMMONWEALTH TRUST:
FIDELITY SMALL CAP STOCK FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10, 11.......................... Cover Page
12.................................. Description of the Trust
..
13a - Investment Policies and Limitations
c............................
Portfolio Transactions
d..................................
14a - Trustees and Officers
c............................
15a, *
b..............................
Trustees and Officers
c..................................
16a FMR; Portfolio Transactions
i................................
Trustees and Officers
ii..............................
Management Contract
iii.............................
Management Contract
b.................................
c, Contracts with Companies Affiliated with FMR
d.............................
e - *
g...........................
Description of the Trust
h.................................
Contracts with Companies Affiliated with FMR
i.................................
17a - Portfolio Transactions
c............................
*
d,e..............................
18a................................ Description of the Trust
..
*
b.................................
19a................................ Additional Purchase and Redemption Information
..
Additional Purchase and Redemption Information;
b.................................. Valuation of Portfolio Securities
*
c..................................
20.................................. Distributions and Taxes
..
21a, Contracts with Companies Affiliated with FMR
b..............................
*
c.................................
22.................................. Performance
..
23.................................. Financial Statements
..
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated June 18, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depositary institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
Small Cap Stock is a growth fund. It seeks to increase the value of
your investment over the long term by investing mainly in equity securities
of companies with small market capitalizations.
FIDELITY
SMALL CAP STOCK
FUND
PROSPECTUS
JUNE 18, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SCS-pro-694
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's sales
charge (load) and its yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
PERFORMANCE How the fund has
done over time.
THE FUND IN DETAIL CHARTER How the fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
The fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND
WAIVERS
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: Capital appreciation (increase in the value of the fund's shares). As
with any mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Invests mainly in equity securities of companies with small
market capitalizations that the manager determines, through both
fundamental and technical analysis, to be undervalued compared to others in
their industries.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. Foreign affiliates of
FMR help choose investments for the fund.
SIZE: As of April 30, 1994, the fund had over $ 661 million in
assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns. The
fund is designed for those who want to focus on small capitalization stocks
in search of above average returns. A company's market capitalization is
the total market value of its outstanding common stock. These securities
may be more volatile than those of larger companies. The fund uses a
disciplined investment approach that combines computer-aided, quantitative
analysis with fundamental research. The fund does not invest for income,
and is not in itself a balanced investment plan.
Over time, stocks have shown greater growth potential than other types of
securities. In the shorter term, however, stock prices can fluctuate
dramatically in response to company, market, or economic news. When you
sell your fund shares, they may be worth more or less than what you paid
for them.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. Small
Cap Stock is in the GROWTH
category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(arrow) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See pages and - for an explanation of how and when these
charges apply. Lower sales charges may be available for accounts over
$250,000.
Maximum sales charge on purchases
(as a % of offering price) 3.00%
Maximum sales charge on
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee that varies based on its performance. It also incurs
other expenses for services such as maintaining shareholder records and
furnishing shareholder statements and financial reports. The fund's
expenses are factored into its share price or dividends and are not charged
directly to shareholder accounts (see page ).
The following are projections based on estimated expenses, and are
calculated as a percentage of average net assets.
Management fee . 68 %
12b-1 fee None
Other expenses . 50 %
Total fund operating expenses 1.18 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 42
After 3 years $66
After 5 years $93
After 10 years $169
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. As an
investor, you pay some of
these costs directly (for
example, the fund's 3% sales
charge). Others are paid from
the fund's assets; the effect
of these other expenses is
already factored into any
quoted share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows is included in the fund's Annual Report
and has been audited by Coopers & Lybrand, independent accountants.
Their report on the financial statements and financial highlights
is included in the Annual Report. The financial statements
and financial highlights are incorporated by reference into (are
legally a part of) the fund's Statement of Additional Information.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
40.Selected Per-Share Data
41.Year ended April 30 1994D
42.Net asset value, beginning of period $ 10.00
43.Income from Investment Operations
44. From net investment income .02
45. Net realized and unrealized gain (loss) on investments .65
46. Total from investment operations .67
47.Less Distributions
48. From net investment income --
49. In excess of net investment income (.02)
50. In excess of net realized gain (.04)
51. Total distributions (.06)
52.Net asset value, end of period $ 10.61
53.Total return B,C 6.70%
54.RATIOS AND SUPPLEMENTAL DATA
55.Net assets, end of period (000 omitted) $ 661,804
56.Ratio of expenses to average net assets 1.18%
A
57.Ratio of expenses to average net assets before expense reductions 1.20%
A
58.Ratio of net investment income to average net assets .03%
A
59.Portfolio turnover rate 210%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D FROM JUNE 28, 1993 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1994
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The
total returns that follow are based on historical fund results and do not
reflect the effect of taxes.
The fund's fiscal year runs from May 1, through April 30. The tables below
show the fund's performance over the past fiscal period compared to
two measures: investing in a broad selection of stocks (Russell 2000
Index), and not investing at all (inflation, or CPI).
AVERAGE ANNUAL TOTAL RETURNS
Fiscal period ended Life of
April 30, 1994 fundA
Small Cap Stock 8.02 %
Small Cap Stock
(load adj.B) 4.18 %
Russell 2000 Index 13.27 %
Consumer Price
Index 2.50%
CUMULATIVE TOTAL RETURNS
Fiscal period ended Life of
April 30, 1994 fundA
Small Cap Stock 6.70 %
Small Cap Stock
(load adj.B) 3.50 %
Russell 2000 Index 11.05 %
Consumer Price
Index 2.08%
A FROM JUNE 28, 1993
B LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING THE FUND'S 3% SALES
CHARGE.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering
periods of less than one year assume that performance will remain constant
for the rest of the year.
RUSSELL 2000 INDEX(registered trademark) is a broad index of small
capitalization stocks. The Russell 2000 figures assume reinvestment of all
dividends paid by stocks included in the index. They do not, however,
include any allowance for the brokerage commissions or other fees you would
pay if you actually invested in those stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
Other illustrations of fund performance may show moving averages over
specified periods.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
<r>THE FUND IN DETAIL</r>
CHARTER
Small Cap Stock is a mutual fund: an investment that pools shareholders'
money and invests it toward a specified goal. In technical terms, the fund
is currently a diversified fund of Fidelity Commonwealth Trust, an
open-end management investment company organized as a Massachusetts
business trust on November 8, 1974.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. You are entitled to one vote for
each share you own.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.) , in London, England, and Fidelity Management &
Research (Far East) Inc. (FMR Far East) , in Tokyo, Japan, assist FMR
with foreign investments.
Bradford Lewis is manager and vice president of Small Cap Stock, which he
has managed since June 1993. Mr. Lewis also manages Disciplined Equity and
Stock Selector as well as portfolios for Fidelity Investments Canada and
Fidelity International. Previously, He managed Select Air Transportation,
Select Defense and Aerospace, and Select Medical Delivery. Mr. Lewis joined
Fidelity in 1985.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by the fund to
reduce the fund's custodian or transfer agent fees. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
the fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
THE FUND SEEKS CAPITAL APPRECIATION by investing primarily in companies
that have small market capitalizations. FMR normally invests at least 65%
of the fund's total assets in common or preferred stocks of these
companies.
Small market capitalization companies are those with market capitalization
of $750 million or less at the time of the fund's investment. Companies
whose capitalization falls outside this range after purchase continue to be
considered small-capitalized for purposes of the 65% policy.
Investing in domestic and foreign small cap companies carries more risk
than investing in larger companies. Their reliance on limited product
lines, markets, financial resources, or other factors may make small cap
companies more susceptible to setbacks or downturns. As a result, their
stock prices may be particularly volatile.
The disciplined approach involves computer-aided, quantitative analysis
supported by fundamental research. FMR's computer model systematically
reviews thousands of stocks, using historical earnings, dividend yield,
earnings per share, and many other factors. Then, potential investments are
analyzed further using fundamental criteria, such as a company's growth
potential and estimates of current earnings.
While the fund focuses on small cap stocks, it may also invest in other
types of equity securities and debt instruments.
The fund spreads investment risk by limiting its holdings in any one
company or industry. FMR may use various investment techniques to hedge the
fund's risks, but there is no guarantee that these strategies will work as
FMR intends. When you sell your shares, they may be worth more or less than
what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. The fund also reserves the right to invest without limitation
in preferred stocks and investment-grade debt instruments for temporary
defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. This ownership interest
often gives the fund the right to vote on measures affecting the company's
organization and operations. Although common stocks have a history of
long-term growth in value, their prices tend to fluctuate in the shorter
term, particularly those of smaller companies.
RESTRICTIONS: With respect to 75% of total assets, the fund may not own
more than 10% of the outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
RESTRICTIONS: The fund does not currently intend to invest more than 5% of
its assets in lower-quality debt securities, sometimes called "junk bonds"
(those rated below Baa by Moody's Investors Service, Inc. or BBB by
Standard & Poor's Corporation, and unrated securities judged by FMR to
be of equivalent quality).
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities, including illiquid securities, may be subject
to legal restrictions. Difficulty in selling securities may result in a
loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks capital appreciation. With respect to 75% of total assets,
the fund may not invest more than 5% of its total assets in any one issuer
and may not own more than 10% of the outstanding voting securities of a
single issuer. The fund may not invest more than 25% of its total assets in
any one industry. The fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 33% of its total assets. Loans, in
the aggregate, may not exceed 33% of the fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. The fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The amount of
the fee is determined by taking a BASIC FEE and then applying a PERFORMANCE
ADJUSTMENT. The performance adjustment either increases or decreases the
management fee, depending on how well the fund has performed relative to
the Russell 2000 Index.
Manage = Ba +/- Performa
ment sic nce
fee fee adjustme
nt
THE BASIC FEE (calculated monthly) is calculated by adding a group fee rate
to an individual fund fee rate, and multiplying the result by the fund's
average net assets. The group fee rate is based on the average net assets
of all the mutual funds advised by FMR. This rate cannot rise above .52%,
and it drops as total assets under management increase.
For April 1994, the group fee rate was .3223 %. The individual fund
fee rate is .35%. The basic fee rate for fiscal 1994 was .6723 %.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing the
fund's performance to that of the Russell 2000 Index over the most recent
36-month period. The difference is translated into a dollar amount that is
added to or subtracted from the basic fee. The maximum annualized
performance adjustment rate is ".20%.
The total management fee for fiscal 199 4 was .68 %.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on issuers
based outside the United States. Under the sub-advisory agreements, FMR
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of the costs of providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K. and FMR Far East 50% of its management fee rate
with respect to the fund's investments that the sub-adviser manages on a
discretionary basis.
UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives
is designed to be responsive
to changes in FMR's total
assets under management.
Building this variable into the
fee calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
Another variable, the
performance adjustment,
rewards FMR when the fund
outperforms the Russell 2000
Index (an established index of
stock market performance)
and reduces FMR's fee when
the fund underperforms this
index.
(checkmark)
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund contracts with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing the fund's investments, and handling securities loans. In fiscal
1994, the fund paid FSC fees equal to .43 % of its average net
assets.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund's annualized portfolio turnover rate for fiscal 1994 was
210 %. This rate varies from year to year. High turnover rates
increase transaction costs and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 16 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
ONCE EACH BUSINESS DAY, TWO SHARE PRICES ARE CALCULATED FOR THE FUND: the
offering price and the net asset value (NAV). The offering price includes
the 3% sales charge, which you pay when you buy shares, unless you qualify
for a reduction or waiver as described on page . When you buy shares at the
offering price, Fidelity deducts 3% and invests the rest at the NAV.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
UNDERSTANDING
SHARE PRICE
Let's say you invest $2,500 at
an offering price of $10. Of
the $10 offering price, 3%
($.30) is the sales charge,
and 97% ($9.70) represents
the NAV. The value of your
initial investment will be
$2,425 (250 shares worth
$9.70 each), and you will
have paid a sales charge of
$75.
(checkmark)
Row: 1, Col: 1, Value: 25.0
Row: 1, Col: 2, Value: 75.0
Row: 1, Col: 3, Value: 75.0
Row: 1, Col: 4, Value: 75.0
Row: 1, Col: 5, Value: 75.0
Row: 1, Col: 6, Value: 75.0
Row: 1, Col: 7, Value: 75.0
Row: 1, Col: 8, Value: 75.0
Row: 1, Col: 9, Value: 75.0
Row: 1, Col: 10, Value: 75.0
Row: 1, Col: 11, Value: 75.0
Row: 1, Col: 12, Value: 75.0
Row: 1, Col: 13, Value: 75.0
Row: 1, Col: 14, Value: 75.0
Row: 1, Col: 15, Value: 75.0
Row: 1, Col: 16, Value: 75.0
Row: 1, Col: 17, Value: 75.0
Row: 1, Col: 18, Value: 75.0
Row: 1, Col: 19, Value: 75.0
Row: 1, Col: 20, Value: 75.0
Row: 1, Col: 21, Value: 75.0
Row: 1, Col: 22, Value: 75.0
Row: 1, Col: 23, Value: 75.0
Row: 1, Col: 24, Value: 75.0
Row: 1, Col: 25, Value: 75.0
Row: 1, Col: 26, Value: 75.0
Row: 1, Col: 27, Value: 75.0
Row: 1, Col: 28, Value: 75.0
Row: 1, Col: 29, Value: 75.0
Row: 1, Col: 30, Value: 75.0
Row: 1, Col: 31, Value: 75.0
Row: 1, Col: 32, Value: 75.0
Row: 1, Col: 33, Value: 75.0
Row: 1, Col: 34, Value: 75.0
$2,500 Investment
3% sales charge = $75
Value of Investment = $2,425
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Small Cap Stock Fund."
"Fidelity Small Cap Indicate your fund
Stock Fund." Mail to account number on
the address indicated your check and mail to
on the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Fidelity Small
Bank Routing Cap Stock Fund" and
#021001033, include your account
Account #00163053. number and your
Specify "Fidelity Small name.
Cap Stock Fund" and
include your new
account number and
your name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
except retirement $100,000.
(bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. The shares you exchange will
carry credit for any sales charge you previously paid in connection with
their purchase.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account. Because of the fund's sales charge, you may not want to set up a
systematic withdrawal plan during a period when you are buying shares on a
regular basis.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net income and capital gains
to shareholders each year. Normally, dividends and capital gains are
distributed in June and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
9. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
10. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
11. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
12. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
SHARES PURCHASED THROUGH REINVESTMENT of dividend and capital gain
distributions are not subject to the fund's 3% sales charge. Likewise, if
you direct distributions to a fund with a 3% sales charge, you will not pay
a sales charge on those purchases.
When the fund deducts a distribution from its NAV, the reinvestment price
is the fund's NAV at the close of business that day. Cash distribution
checks will be mailed within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's NAV and offering price as
of the close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE OFFERING PRICE (price to buy one share) is the fund's NAV plus a sales
charge. The sales charge is 3% of the offering price, or 3.09% of the net
amount invested. The REDEMPTION PRICE (price to sell one share) is the
fund's NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY SHARES OF THE FUND (AT THE OFFERING PRICE) OR SELL THEM THROUGH
A BROKER, who may charge you a fee for this service. If you invest through
a broker or other institution, read its program materials for any
additional service features or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when the fund is priced on
the following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC collects the proceeds from the fund's 3% sales charge and may pay a
portion of them to securities dealers who have sold the fund's shares, or
to others, including banks and other financial institutions (qualified
recipients), under special arrangements in connection with FDC's sales
activities. The sales charge paid to qualified recipients is 2.25% of the
fund's offering price.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. The fund's sales charge may be reduced if you invest directly
with Fidelity or through prototype or prototype-like retirement plans
sponsored by FMR or FMR Corp. The amount you invest, plus the value of your
account, must fall within the ranges shown below. However, purchases made
with assistance or intervention from a financial intermediary are not
eligible. Call Fidelity to see if your purchase qualifies.
Ranges Sales charge Net amount invested
$0 - 249,999 3% 3.09%
$250,000 - 499,999 2% 2.04%
$500,000 - 999,999 1% 1.01%
$1,000,000 or more none none
The sales charge will also be reduced by the percentage of any sales charge
you previously paid on investments in other Fidelity funds (not including
Fidelity's Foreign Currency Funds). Similarly, your shares carry credit for
any sales charge you would have paid if the reductions in the table above
had not existed. These sales charge credits only apply to purchases made in
one of the ways listed below, and only if you continuously owned Fidelity
fund shares or a Fidelity brokerage core account, or participated in The
CORPORATEplan for Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds of a transaction within a Fidelity brokerage core account,
including any free credit balance, core money market fund, or margin
availability, to the extent such proceeds were derived from redemption
proceeds from another Fidelity fund.
3. With redemption proceeds from one of Fidelity's Foreign Currency Funds,
if the Foreign Currency Fund shares were originally purchased with
redemption proceeds from a Fidelity fund.
4. Through the Directed Dividends Option (see page ).
5. By participants in The CORPORATEplan for Retirement Program when shares
are purchased through plan-qualified loan repayments, and for exchanges
into and out of the Managed Income Portfolio.
WAIVERS. The fund's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more than
200 eligible employees or a minimum of $3 million in plan assets invested
in Fidelity mutual funds. Plan sponsors are encouraged to notify Fidelity
when they first satisfy either of these requirements.
2. To shares in a Fidelity Rollover IRA account purchased with the proceeds
of a distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan that
both qualified for waiver (1) above and had at least some of its assets
invested in Fidelity-managed products.
3. If you are a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code) investing $100,000 or more.
4. If you purchase shares for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as defined
by Section 501(c)(3) of the Internal Revenue Code).
5. If you are an investor participating in the Fidelity Trust Portfolios
program.
6. To shares purchased through Portfolio Advisory Services.
7. If you are a current or former trustee or officer of a Fidelity fund or
a current or retired officer, director, or regular employee of FMR Corp. or
its direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity trustee or employee, a Fidelity trustee or employee
acting as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee.
8. If you are a bank trust officer, registered representative, or other
employee of a qualified recipient, as defined on page .
9. To contributions and exchanges to a prototype or prototype-like
retirement plan sponsored by FMR Corp. or FMR and which is marketed and
distributed directly to plan sponsors or participants without any
assistance or intervention from any intermediary distribution channel.
10. If you invest through a non-prototype pension on profit-sharing plan
that maintains all of its mutual fund assets in Fidelity mutual funds,
provided the plan executes a Fidelity non-prototype sales charge waiver
request form confirming its qualification.
11. If you are a registered investment adviser (RIA) purchasing for your
discretionary accounts, provided you execute a Fidelity RIA load waiver
agreement which specifies certain aggregate minimum and operating
provisions. Except for correspondents of National Financial Services
Corporation, t his waiver is available only for shares purchased
directly from Fidelity, and is unavailable if the RIA is part of an
organization principally engaged in the brokerage business.
12. If you are a trust institution or bank trust department purchasing for
your non-discretionary, non-retirement fiduciary accounts, provided you
execute a Fidelity Trust load waiver agreement which specifies certain
aggregate minimum and operating provisions. This waiver is available only
for shares purchased either directly from Fidelity or through a
bank-affiliated broker, and is unavailable if the trust department or
institution is part of an organization not principally engaged in banking
or trust activities.
These waivers must be qualified through FDC in advance. More detailed
information about waivers (1), (2), (5), and (9) is contained in the
Statement of Additional Information. A representative of your plan or
organization should call Fidelity for more information.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY SMALL CAP STOCK FUND
A FUND FIDELITY COMMONWEALTH TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 18, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated June 18, 1994). Please retain this
document for future reference. The fund's financial statements and
financial highlights, included in the Annual Report, for the fiscal period
ended April 30, 1994 are incorporated herein by reference. To
obtain an additional copy of the Prospectus or the Annual Report, please
call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
SCS-ptb-694
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that the fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against the fund and the risk of actual liability if the fund is involved
in litigation. No guarantee can be made, however, that litigation against
the fund will not be undertaken or liabilities incurred.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon price, which obligation is
in effect secured by the value (at least equal to the amount of the
agreed-upon resale price and marked to market daily) of the underlying
security. The fund may engage in a repurchase agreement with respect to
any security in which it is authorized to invest. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is the fund's current policy to
limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
LOWER-RATED DEBT SECURITIES. While the market for high-yield corporate debt
securities has been in existence for many years and has weathered previous
economic downturns, the 1980s brought a dramatic increase in the use of
such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
future performance of the high yield bond market, especially during periods
of economic recession. In fact, from 1989 to 1991, the percentage of
lower-rated debt securities that defaulted rose significantly above prior
levels, although the default rate decreased in 1992.
The market for lower-rated securities may be thinner and less active than
that for higher-rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the fund's ability to sell these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the fund. In considering investments for
the fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the fund's shareholders.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days,
over-the-counter options, non-government stripped fixed-rate
mortgage-backed securities, and restricted securities. Also, FMR may
determine some government-stripped fixed-rate mortgage backed securities,
loans and other direct debt instruments, and swap agreements to be
illiquid. However, with respect to over-the-counter options the fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental, or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve a risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to the fund in the event of fraud or misrepresentation.
In addition, loan participations involve a risk of insolvency of the
lending bank or other financial intermediary. Direct debt instruments may
also include standby financing commitments that obligate the fund to supply
additional cash to the borrower on demand.
INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift the fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the fund's investments and its share price.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the fund's
accrued obligations under the swap agreement over the accrued amount the
fund is entitled to receive under the agreement. If the fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the fund's accrued obligations under the
agreement.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency deposits
from time to time, and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may
be exchanged on a spot (i.e., cash) basis, or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an inter bank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
The fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
In connection with purchases and sales of securities denominated in foreign
currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a
forward contract to sell Deutschemarks or European Currency Units in return
for U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the fund's exposure to a foreign currency, and that
currency's value declines, the fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the fund or that it will hedge at an appropriate time.
SHORT SALES "AGAINST THE BOX." If the fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's assets
could impede portfolio management or the fund's ability to meet redemption
requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. Since FMR has granted investment management authority to
the sub-advisers (see the section entitled "Management Contract"), the
sub-advisers are authorized to place orders for the purchase and sale
of p ortfolio securities, and will do so i n accordance with
the policies described below. FMR is also responsible for the
placement of transaction orders for other investment companies and accounts
for which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, FMR will consider various relevant factors, including, but not
limited to : the size and type of the transaction; the nature and
character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; the reasonableness of any commissions; and
arrangements for payment of fund expenses. Commissions for foreign
investments traded on foreign exchanges generally will be higher than for
U.S. investments and may not be subject to negotiation.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with
execution considerations) in accordance with a ranking of broker-dealers
determined periodically by FMR's investment staff based upon the quality of
such research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FSC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements , the Board
of Trustees has authorized FBSI to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal period June 28, 1993 (commencement of operations) through
April 30, 1994, the fund's annualized portfolio turnover rate was
210 %.
For the fiscal period June 28, 1993 (commencement of operations) through
April 30, 1994, the fund paid brokerage commissions of $ 1,648,301.
$ 938,302 or approximately 57 % of these commissions were paid
to brokerage firms that provided research services, although the provision
of such services was not necessarily a factor in the placement of all of
this business with such firms. The fund pays both commissions and spreads
in connection with the placement of portfolio transaction s ; FBSI is
paid on a commission basis. During fiscal 1994 , the fund
paid FBSI brokerage commissions of $ 178,800 . During
fiscal 1994, this amounted to approximately 11% of the aggregate brokerage
commissions paid by the fund for transactions involving approximately 7.4%
of the aggregate dollar amount of transactions in which the fund paid
brokerage commissions. The difference in the percentage of brokerage
commissions paid to and the percentage of the dollar amount of transactions
effected through FBSI is a result of the low commission rates charged by
FBSI.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment whether
it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund or
account .
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable to each
fund. In some cases this system could have a detrimental effect on the
price or value of the security as far as the fund is concerned. In
other cases, however, the ability of the fund to participate in volume
transactions will produce better executions and prices for the fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Equity securities for which the
primary market is the U.S. are valued at last sale price or, if no sale has
occurred, at the closing bid price. E quity securities for which the
primary market is outside the U.S. are valued using the official closing
price or the last sale price in the principal market where they are traded.
If the last sale price (on the local exchange) is unavailable, the last
evaluated quote or last bid price is normally used. Short-term securities
valued either at amortized cost or at original cost plus accrued interest,
both of which approximate current value. F ixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporated both dealer-supplied valuations and
electronic data processing techniques. This twofold approach is believed
to more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the-counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by the fund are
determined as of such time for the purpose of computing the fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. FSC gathers all exchange rates daily at the close of the NYSE
using the last quoted price on the local currency and then translates the
value of foreign securities from their local currency into U.S. dollars.
Any changes in the value of forward contracts due to exchange rate
fluctuations and days to maturity are included in the calculation of net
asset value. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then the security will be valued
as determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of fund shares when redeemed may be more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's net
asset value per share (NAV) over the period. Average annual returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in the fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over
ten years would produce an average annual return of 7.18%, which is the
steady annual rate of return that would equal 100% growth on a compounded
basis in ten years. Average annual returns covering periods of less than
one year are calculated by determining the fund's total return for the
period, extending that return for a full year (assuming that performance
remains constant over the year), and quoting the result as an annual
return. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the fund's
performance is not constant over time, but changes from year to year, and
that average annual returns represent averaged figures as opposed to the
actual year-to-year performance of the fund.
In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns may be quoted on a before-tax
or after-tax basis, and may or may not take the fund's 3% sales charge into
account. Excluding the fund's sales charge from a total return calculation
produces a higher total return figure. Total returns and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. The fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On April 29 , 1994, the 13-week and
39-week moving averages were 10.89 and 10.66 , respectively.
HISTORICAL FUND RESULTS. The following table shows the income and capital
elements of the fund's cumulative total return for the period June 28, 1993
(commencement of operations) through April 30, 1994. The table compares the
fund's returns to the record of the Russell 2000 Index (Russell 2000),
Standard & Poor's 500 Composite Stock Price Index (S&P 500), Dow
Jones Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index, or CPI) over the same period. The S&P 500 and
DJIA comparisons would show how the fund's total return compared to the
record of a broad average of common stock prices and a narrower set of
stocks of major industrial companies, respectively, over the same period.
Small Cap Stock Fund's comparison to the Russell 2000 Index shows how the
fund's total returns compared to the record of a broad index of small
capitalization stocks. The fund has the ability to invest in securities
not included in any index, and its investment portfolio may or may
not be similar in composition to the indices. Figures for the Russell
2000, S&P 500, and DJIA are based on the prices of unmanaged groups of
stocks and, unlike the fund's returns, their returns do not include the
effect of paying brokerage commissions and other costs of investing.
During the period June 28, 199 3 (commencement of operations) through
April 30, 1994, a hypothetical $10,000 investment in Fidelity Small Cap
Stock Fund would have been worth $ 10,350 assuming all distributions
were reinvested. This was a period of widely fluctuating stock prices and
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in the fund today.
FIDELITY SMALL CAP STOCK FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Period Initial Reinvested Reinvested
Ended $10,000 Dividend Capital Gain Total Russell
April 30 Investment Distributions Distributions Value 2000 S&P DJIA CPI(dagger)
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994* $ 10,292 $ 20 $ 39 $ 10,350 $ 11,105 $ 10,297 $ 10,796 $ 10,208
</TABLE>
* From June 28, 1993 (commencement of operations).
(dagger) From month-end closest to initial investment.
Explanatory Notes: With an initial investment of $10,000 made on June 28,
1993, the net amount invested in fund shares was $9,700 (assuming th fund's
3% sales charge). The cost of the initial investment ($10,000), together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time they
were reinvested), amounted to $ 10,058 . If distributions had not
been reinvested, the cash payments for the period would have come to $19
for income dividends and $39 for capital gain distributions.
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in
advertising.
The fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, the fund may offer greater
liquidity or higher potential returns than CDs, and the fund does not
guarantee your principal or return , and fund shares are not FDIC
insured .
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index), and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund
shareholders .
The fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate the fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
The fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of April 30, 1994, FMR managed approximately $ 145 billion in
equity fund assets as defined and tracked by Lipper. This figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. From time to time, the fund may use
any of the above information in its advertising and sales literature.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
As provided for in Rule 22d-1 under the Investment Company Act of 1940 (the
1940 Act), FDC exercises its right to waive the fund's 3% sales charge on
shares acquired through reinvestment of dividends and capital gain
distributions or in connection with a fund's merger with or acquisition of
any investment company or trust.
In addition, the fund's sales charges will not apply (1) if you buy shares
as part of an employee benefit plan (including the Fidelity-sponsored
403(b) and corporate IRA programs but otherwise as defined in the Employee
Retirement Income Security Act) maintained by a U.S. employer and having
more than 200 eligible employees, or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary group
of corporations (within the meaning of Section 1563(a)(1) of the Internal
Revenue Code, with "50%" substituted for "80%") any member of which
maintains an employee benefit plan having more than 200 eligible employees,
or a minimum of $3,000,000 in plan assets invested in Fidelity mutual
funds, or as part of an employee benefit plan maintained by a non-U.S.
employer having 200 or more eligible employees, or a minimum of $3,000,000
in plan assets invested in Fidelity mutual funds, the assets of which are
held in a bona fide trust for the exclusive benefit of employees
participating therein; (2) to shares purchased by an insurance company
separate account used to fund annuity contracts purchased by employee
benefit plans (including 403(b) programs, but otherwise as defined in the
Employee Retirement Income Security Act), which, in the aggregate, have
either more than 200 eligible employees or a minimum of $3,000,000 in
assets invested in Fidelity funds; (3) to shares in a Fidelity IRA account
purchased (including purchases by exchange) with the proceeds of a
distribution from an employee benefit plan provided that: (i) at the time
of distribution, the employer, or an affiliate (as described in exemption
(1) above) of such employer, maintained at least one employee benefit plan
that qualified for exemption (1) and that had at least some portion of its
assets invested in one or more mutual funds advised by FMR, or in one or
more accounts or pools advised by Fidelity Management Trust Company; and
(ii) the distribution is transferred from the plan to a Fidelity Rollover
IRA account within 60 days from the date of the distribution; (4) if you
are a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more; (5) if you purchase
shares for a charitable remainder trust or life income pool established for
the benefit of a charitable organization (as defined by Section 501(c)(3)
of the Internal Revenue Code); (6) if you are an investor participating in
the Fidelity Trust Portfolios program (these investors must make initial
investments of $100,000 or more in Trust Portfolios funds and must, during
the initial six month period, reach and maintain an aggregate balance of at
least $500,000 in all accounts and subaccounts purchased through the Trust
Portfolios program); (7) to shares purchased through Portfolio Advisory
Services; (8) if you are a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity
Trustee or employee), the spouse of a Fidelity Trustee or employee, a
Fidelity Trustee or employee acting as custodian for a minor child, or a
person acting as trustee of a trust for the sole benefit of the minor child
of a Fidelity Trustee or employee; (9) if you are a bank trust officer,
registered representative, or other employee of a Qualified Recipient.
Qualified Recipients are securities dealers or other entities, including
banks and other financial institutions, who have sold the fund's shares
under special arrangements in connection with FDC's sales activities; or
(10) to shares purchased by contributions and exchanges to the following
prototype or prototype-like retirement plans sponsored by FMR Corp. or FMR
and that are marketed and distributed directly to plan sponsors or
participants without any intervention or assistance from any intermediary
distribution channel: The Fidelity IRA, The Fidelity Rollover IRA, The
Fidelity SEP-IRA and SARSEP, The Fidelity Retirement Plan, Fidelity Defined
Benefit Plan, The Fidelity Group IRA, The Fidelity 403(b) Program, The
Fidelity Investments 401(a) Prototype Plan for Tax-Exempt Employers, and
The CORPORATEplan for Retirement (Profit Sharing and Money Purchase
Plan) ; (11) if you are a registered investment adviser (RIA) purchasing
for your discretionary accounts, provided you execute a Fidelity RIA load
waiver agreement which specifies certain aggregate minimum and operating
provisions. This waiver is available only for shares purchased directly
from Fidelity, without a broker, unless purchased through a brokerage firm
which is a correspondent of National Financial Services Corporation (NFSC).
The waiver is unavailable, however if the RIA is part of an organization
principally engaged in the brokerage business, unless the brokerage firm in
the organization firm in the organization is an NFSC correspondent; (12) if
you are a trust institution or bank trust department purchasing for your
non-discretionary, non-retirement fiduciary accounts, provided you execute
a Fidelity Trust load waiver agreement which specifies certain aggregate
minimum and operating provisions. This waiver is available only for shares
purchased either directly from Fidelity or through a bank-affiliated
broker, and is unavailable if the trust department or institution is part
of an organization not principally engaged in banking or trust activities;
or (13) to shares purchased as part of a pension or profit-sharing plan as
defined in Section 401(a) of the Internal Revenue Code that maintains all
of its mutual fund assets in Fidelity mutual funds, provided the plan
executes a Fidelity non-prototype sales charge waiver request form
confirming its qualifications.
The fund's sales charge may be reduced to reflect sales charges previously
paid, or what would have been paid absent a reduction as noted in the
prospectus, in connection with investments in other Fidelity funds. This
includes reductions for investments in prototype or prototype-like
retirement plans sponsored by FMR or FMR Corp., which are listed above.
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day (observed) .
Although FMR expects the same holiday schedule, with the addition of New
Year's Day, to be observed in the future, the NYSE may modify its holiday
schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, the fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce
or eliminate an administration fee, redemption fee, or deferred sales
charge ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted under
the 1940 Act or the rules and regulations thereunder, or the fund to be
acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and
policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of the fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the fund's income is derived from qualifying dividends.
Because the fund may earn other types of income, such as interest, income
from securities loans, non-qualifying dividends, and short-term capital
gains, the percentage of dividends from the fund that qualifies for the
deduction generally will be less than 100%. The fund will notify corporate
shareholders annually of the percentage of fund dividends that qualifies
for the dividends-received deduction. A portion of the fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income, and therefore will
increase (decrease) dividend distributions. The fund will send each
shareholder a notice in January describing the tax status of dividends and
capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does
not currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
the fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. The fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit the fund's
investments in such instruments.
If the fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains.
The fund is treated as a separate entity from the other funds of Fidelity
Commonwealth Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on distributions received from the fund. Investors should
consult their tax advisers to determine whether the fund is suitable to
their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The trust's Trustees and executive officers are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous
waste, 1993) and CH2M Hill Companies (engineering). In addition, he
served on the Board of Directors of the Norton Company (manufacturer of
industrial devices, 1983-1990) and continues to serve on the Board of
Directors of the Texas State Chamber of Commerce, and is a member of
advisory boards of Texas A&M University and the University of Texas at
Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
In addition, he serves as a Trustee of Corporate Property Investors, the
EPS Foundation at Trinity College, the Naples Philharmonic Center for the
Arts, and Rensselaer Polytechnic Institute, and he is a member of the
Advisory Boards of Butler Capital Corporation Funds and Warburg, Pincus
Partnership Funds.
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President,
Fund Accounting - Fidelity Accounting & Custody Services Co.
(1990); and Senior Vice President, Chief Financial and Operations
Officer - Huntington Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of April 30, 1994, the Trustees and officers of the fund owned in the
aggregate , less than 1 % of the total outstanding
shares of the fund .
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, the fund pays all of its expenses, without limitation, that are not
assumed by those parties. The fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, pursuant to the trust's
transfer agent agreement with FSC, FSC bears the cost of providing these
services to existing shareholders. Other expenses paid by the fund include
interest, taxes, brokerage commissions, the fund's proportionate share of
insurance premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. The fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which the fund may be a party, and any obligation it may
have to indemnify the trust's officers and Trustees with respect to
litigation.
FMR is the fund's manager pursuant to a management contract dated June 17,
1993, which was approved by FMR, then the sole shareholder, on June 21,
1993, For the services of FMR under the contract, the fund pays FMR a
monthly management fee composed of the sum of two elements: a basic fee
and a performance adjustment based on a comparison of the fund's
performance to that of the Russell 2000 Index (Russell 2000). Effective
November 1, 1993, FMR agreed to voluntarily adopt the revised group fee
rate schedule shown on the next page for purposes of calculating the
group fee component of the management fee. The revised schedule provides
for lower management fees as total assets under management increase, and it
will be presented to shareholders for approval at the next shareholder
meeting.
COMPUTING THE BASIC FEE. The fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate. The group fee
rate is based on the monthly average net assets of all of the registered
investment companies with which FMR has management contracts and is
calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left on the following page . On the right, the
effective fee rate schedule shows the results of cumulati vely
applying the annualized rates at varying asset levels. For example, the
effective annual fee rate at $ 240 billion of group net assets -
their approximate level for April 1994 - was . 3223 %,
which is the weighted average of the respective fee rates for each level of
group net assets up to $ 250 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets * Rate Assets Fee Rate
0 - $ 3 billion .520% $ 0.5 billion .5200%
3 - 6 .490 25 .4238
6 - 9 .460 50 .3823
9 - 12 .430 75 .3626
12 - 15 .400 100 .3512
15 - 18 .385 125 .3430
18 - 21 .370 150 .3371
21 - 24 .360 175 .3325
24 - 30 .350 200 .3284
30 - 36 .345 225 .3253
36 - 42 .340 250 .3223
42 - 48 .335 275 .3198
48 - 66 .325 300 .3175
66 - 84 .320 325 .3153
84 - 102 .315 350 .3133
102 - 138 .310
138 - 174 .305
174 - 228 .300
228 - 282 .295
282 - 336 .290
Over 336 .285
*The rates shown for average group assets in excess of $ 174 billion
were adopted by FMR on a voluntary basis on November 1, 1993 pending
shareholder approval of a new management contract reflecting the extended
schedule. The extended schedule provides for lower management fees as total
assets under management increase.
The individual fund fee rate is . 35 %. Based on the average net
assets of funds advised by FMR for April 30, 1994, the annual basic fee
rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
.3223 % + .35% = .6723 %
One twelfth (1/12) of this annual basic fee rate is then applied to the
fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to upward
or downward adjustment, depending upon whether, and to what extent, the
fund's investment performance for the performance period exceeds, or is
exceeded by, the record of the Russell 2000 over the same period. The
performance period will commence with the first day of the first full month
of operation following the fund's commencement of operations. Starting
with the twelfth month, the performance adjustment will take effect. Each
month subsequent to the twelfth month, a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter, the performance period will consist of the most recent month
plus the previous 35 months. Each percentage point of difference (up to a
maximum difference of + 10) is multiplied by a performance adjustment rate
of .02%. Thus, the maximum annualized adjustment rate is + .20%. This
performance comparison is made at the end of each month. One twelfth
(1/12) of this rate is then applied to the fund's average net assets for
the entire performance period, giving a dollar amount which will be added
to (or subtracted from) the basic fee.
The fund's performance is calculated based on change in net asset value.
For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if reinvested in
fund shares at the net asset value as of the record date for payment. The
record of the Russell 2000 is based on change in value and is adjusted for
any cash distributions from the companies whose securities compose the
Russell 2000.
Because the adjustment to the basic fee is based on the fund's performance
compared to the investment record of the Russell 2000, the controlling
factor is not whether the fund's performance is up or down per se, but
whether it is up or down more or less than the record of the Russell 2000.
Moreover, the comparative investment performance of the fund is based
solely on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
To comply with the California Code of Regulations, FMR will reimburse the
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investments in foreign securities.
SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR
U.K. and FMR Far East. Pursuant to the sub-advisory agreements, FMR may
receive investment advice and research services outside the United States
from the sub-advisers. FMR may also grant FMR U.K. and FMR Far East
investment management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the fund.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe and Asia. FMR U.K.
and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR
Far East. For providing non-discretionary investment advice and research
services, the sub-advisers are compensated as follows:
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's costs incurred in connection
with providing investment advice and research services.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
FMR pays FMR U.K. and FMR Far East a fee equal to 50% of its monthly
management fee with respect to the fund's average net assets managed by the
sub-adviser on a discretionary basis.
For providing investment advice and research services, the fees paid to
the sub-advisers for the fiscal period ended April 30, 1994 were $12.50 and
$16.30 for FMR U.K. and FMR Far East, respectively.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholder servicing agent for
the fund. Under the trust's contract with FSC, the fund pays an annual fee
of $ 26.03 per basic retail account with a balance of $5,000 or more,
$15.31 per basic retail account with a balance of less than $5,000, a
supplemental activity charge of $2.25 for standing order transactions
and $ 6.11 for monetary transactions . These fees and
charges are subject to annual cost escalation based on postal rate changes
and changes in wage and price levels as measured by the National Consumer
Price Index for Urban Areas. With respect to certain institutional client
master accounts, the fund pays FSC a per account fee of $95.00 and monetary
transaction charges of $20.00 or $17.50, depending on the nature of
services provided. With respect to certain broker-dealer master accounts,
the fund pays FSC a per-account fee of $30.00, and a charge of $6.00 for
monetary transactions. Fees for certain institutional retirement plan
accounts are based on the net assets of all such accounts in the fund.
Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements. Transfer agent fees,
including reimbursement for out-of-pocket expenses, paid to FSC for the
fiscal period June 28, 1993 (commencement of operations) through April 30,
1994 was $ 1,812,306 .
The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the fund's net asset value per share
and dividends and maintain the fund's accounting records. The fee rates
are based on the fund's average net assets, specifically, .06% for the
first $500 million of average net assets and .03% for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year. Pricing and bookkeeping fees, including
related out-of-pocket expenses, paid to FSC for the fiscal period June 28,
1993 (commencement of operations) through April 30, 1994, were
$ 263,768 . FSC also receives fees for administering the fund's
securities lending program. Securities lending fees are based on the
number and duration of individual securities loans.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to
use all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer and
sale of shares are paid by FDC. Sales charge revenue paid to FDC for the
fiscal period June 28, 1993 (commencement of operations) through April 30,
1994 amounted to $2,299,056.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Small Cap Stock Fund is a fund of Fidelity
Commonwealth Trust, an open-end management investment company organized as
a Massachusetts business trust on November 8, 1974. On September 1, 1987
the trust's name was changed from Fidelity Thrift Trust to Fidelity
Intermediate Bond Fund. On February 16, 1990, the trust's name was changed
from Fidelity Intermediate Bond Fund to Fidelity Commonwealth Trust.
Currently there are three funds of the trust: Fidelity Intermediate Bond
Fund, Fidelity Market Index Fund, and Fidelity Small Cap Stock Fund. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessible,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may,
as set forth in the Declaration of Trust, call meetings of the trust or a
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees. The trust or any fund may be
terminated upon the sale of its assets to another open-end management
investment company, or upon liquidation and distribution of its assets, if
approved by vote of the holders of a majority of the outstanding shares of
the trust or the fund. If not so terminated, the trust and its funds will
continue indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the fund's custodian leases its office space
from an affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. Transactions that have occurred
to date include mortgages and personal and general business loans. In the
judgment of FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the
fiscal period ended April 30, 1994 are included in the fund's Annual
Report, which is a separate report supplied with this Statement of
Additional Information . The fund's financial statements and financial
highlights are incorporated herein by reference.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) 1. The Financial Statements for Fidelity Intermediate Bond Fund for
the fiscal year ended April 30, 1994 are incorporated herein by reference
to the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(1).
2. The Financial Statements for Fidelity Market Index Fund for the fiscal
year ended April 30, 1994 are incorporated herein by reference to the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(2).
3. The Financial Statements for Fidelity Small Cap Stock Fund for the
fiscal year ended April 30, 1994 are incorporated herein by reference to
the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(3).
(b) Exhibits
1 (a) Amended and Restated Declaration of Trust, dated June 16, 1994, is
filed herein as Exhibit 1(a).
2. (a) Bylaws of Registrant, as currently in effect, dated November 8,
1974, are incorporated herein by reference to Exhibit 2 to the initial
Registration Statement No. 2-52322.
(b) Supplement to Bylaws of Registrant, dated October 18, 1989, is
incorporated herein by reference to Exhibit 2(b) to Post-Effective
Amendment No. 39.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract between Fidelity Commonwealth Trust, on behalf
of Fidelity Intermediate Bond Fund, and Fidelity Management & Research
Company, dated September 1, 1992, is incorporated herein by reference to
Exhibit 5(a) to Post-Effective Amendment 46.
(b) Management Contract between Fidelity Commonwealth Trust, on behalf of
Spartan Market Index Fund, and Fidelity Management & Research Company,
dated February 15, 1990, is incorporated herein by reference to Exhibit
5(b) to Post-Effective Amendment No. 39.
(c) Management Contract between Fidelity Commonwealth Trust, on behalf of
Fidelity Small Cap Stock Fund, and Fidelity Management & Research
Company, dated June 17, 1993, is incorporated herein by reference to
Exhibit 5(c) to Post-Effective Amendment No. 50.
(d) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc., on behalf of
Fidelity Intermediate Bond Fund, dated November 1, 1989, is incorporated
herein by reference to Exhibit 5(c) to Post-Effective Amendment No. 39.
(e) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Intermediate Bond Fund, dated November 1, 1989, is incorporated
herein by reference to Exhibit 5(d) to Post-Effective Amendment No. 39.
(f) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc. on behalf of
Fidelity Small Cap Stock Fund, dated June 17, 1993, is incorporated herein
by reference to Exhibit 5(f) to Post-Effective Amendment No. 50.
(g) Sub-Advisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc. on behalf of
Fidelity Small Cap Stock Fund, dated June 17, 1993, is incorporated herein
by reference to Exhibit 5(g) to Post-Effective Amendment No. 50.
6. (a) General Distribution Agreement between Fidelity Intermediate Bond
Fund and Fidelity Distributors Corporation, dated April 1, 1987, is
incorporated herein by reference to Exhibit 6 to Post-Effective Amendment
No. 33.
(b) Amendment to General Distribution Agreement between Registrant and
Fidelity Distributors Corporation, dated January 1, 1988, is incorporated
herein by reference to Exhibit 6(b) to Post-Effective Amendment No. 34.
(c) General Distribution Agreement between Spartan Market Index Fund and
Fidelity Distributors Corporation, dated February 15, 1990, is incorporated
herein by reference to Exhibit 6(c) to Post-Effective Amendment No. 41.
(d) General Distribution Agreement between Fidelity Small Cap Stock Fund
and Fidelity Distributors Corporation, dated June 17, 1993, is incorporated
herein by reference to Exhibit 6(d) to Post-Effective Amendment No. 50.
7. Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 43.
8. (a) Custodian Agreement between Fidelity Commonwealth Trust and Brown
Brothers & Co., on behalf of Spartan Market Index Fund, dated February
14, 1990, is incorporated herein by reference to Exhibit 8(c) to
Post-Effective Amendment No. 41.
(b) Custodian Agreement between Fidelity Commonwealth Trust and the Bank
of New York, on behalf of Fidelity Intermediate Bond Fund, dated July 18,
1991, is incorporated herein by reference to Exhibit 8(d) to Post-Effective
Amendment No. 43.
(c) Form of Appendix A to the Custodian Agreement between Fidelity
Commonwealth Trust and Brown Brothers Harriman & Co., on behalf of
Fidelity Small Cap Stock Fund, was filed as Exhibit 8(c) to Post-Effective
Amendment No. 47.
9. (a) Amended Service Agreement between Registrant, FMR Corp., and
Fidelity Service Co., dated June 1, 1989, is incorporated herein by
reference to Exhibit 9(b) to Post-Effective Amendment No. 38.
(b) Schedules A (transfer, dividend disbursing and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions), dated June 1, 1989, pertaining to Fidelity Intermediate Bond
Fund are incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 38.
(c) Schedules A (transfer, dividend disbursing and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions, dated February 15, 1990, pertaining to Spartan Market Index
Fund are incorporated herein by reference to Exhibit 9(d) to Post-Effective
Amendment No. 40.
(d) Form of Schedules A (transfer, dividend disbursing and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions, pertaining to Fidelity Small Cap Stock Fund were filed as
Exhibit 9(d) to Post-Effective Amendment No. 47.
10. Not applicable.
11. Consent of Coopers & Lybrand is filed herein asExhibit 11.
12. Not applicable.
13. Not applicable.
14. (a) Individual Retirement Account Custodial Agreement and Disclosure
Statement, as currently in effect, is incorporated herein by reference to
Exhibit 14(a) to Post-Effective Amendment No. 41.
(b) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(b)
to Post-Effective Amendment No. 41.
(c) Defined Benefit Pension Plan and Trust, as currently in effect, is
incorporated herein by reference to Exhibit 14(c) to Post-Effective
Amendment No. 41.
(d) 403(b)(7) Custodial Account Agreement, as currently in effect, is
incorporated herein as Exhibit 14(d) to Post-Effective Amendment No. 42.
(e) Group IRA, the Custodial Agreement and Disclosure Statement, as
currently in effect, is incorporated herein by reference to Exhibit 14(e)
to Post-Effective Amendment No. 41.
(f) Fidelity Master Plan for Savings and Investments Adoption Agreement,
as currently in effect, is incorporated herein by reference to Exhibit
14(f) to Post-Effective Amendment No. 42.
(g) Fidelity Investment 401(a) Prototype Plan for Tax-Exempt Employers,
Basic Plan Document No. 3, as currently in effect, is incorporated herein
by reference to Exhibit 14(g) to Post-Effective Amendment No. 41.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Thrift Trust is incorporated herein by reference to Exhibit 15 to
Post-Effective Amendment No. 30.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Market Index Fund is incorporated herein by reference to Exhibit 15(b) to
Post-Effective Amendment No. 39.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Small Cap Stock Fund is incorporated herein by reference to Exhibit 15(c)
to Post-Effective Amendment No. 47.
16 (a) A schedule for computation of performance quotations for Fidelity
Intermediate Bond Fund is incorporated herein by reference to Exhibit 16 to
Post-Effective Amendment No. 34.
(b) A schedule for computation of performance quotations for Spartan
Market Index Fund is incorporated herein by reference as Exhibit 16(b) to
Post-Effective Amendment No. 38.
(c) A schedule for computation of performance quotations for Fidelity
Small Cap Stock Fund is incorporated herein by reference as Exhibit 16(c)
to Post-Effective Amendment No. 47.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these
funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities
April 30, 1994
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Intermediate Bond Fund 374,965
Fidelity Market Index Fund 14,075
Fidelity Small Cap Stock Fund 72,108
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of funds advised
by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director
of Worldwide Research of FMR.
Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management
& Research (Far East) Inc.; Treasurer of FMR Texas Inc.,
Senior Vice President and Chief Financial Officer of the Fidelity
funds.
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management
& Research (U.K.) Inc.; Senior Vice President and
Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research
(U.K.) Inc.; Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
FMR Texas Inc.; Senior Vice President and Chief
Financial Officer of the Fidelity funds.
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management
& Research (U.K.) Inc.; Secretary of FMR Texas
Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
respective custodians, The Bank of New York, 110 Washington Street, New
York, N.Y. (Fidelity Intermediate Bond Fund), and Brown Brothers Harriman
& Co., 40 Water Street, Boston, Massachusetts, (Fidelity Market Index
Fund and Fidelity Small Cap Stock Fund).
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Intermediate Bond Fund, Fidelity
Market Index Fund, and Fidelity Small Cap Stock Fund undertakes, provided
the information required by Item 5A is contained in the annual report, to
furnish each person to whom a prospectus has been delivered, upon their
request and without charge, a copy of the Registrant's latest annual report
to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 51 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 16th day
of June 1994.
FIDELITY COMMONWEALTH TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee June 16, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer June 16, 1994
Gary L. French
/s/J. Gary Burkhead Trustee June 16, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee June 16, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee June 16, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee June 16, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee June 16, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee June 16, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee June 16, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee June 16, 1994
Edward H. Malone
/s/Gerald C. McDonough* Trustee June 16, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee June 16, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
EXHIBIT 24(A)(1)
(2_FIDELITY_LOGOS)FIDELITY
INTERMEDIATE BOND
FUND
ANNUAL REPORT
APRIL 30, 1994
INVESTMENTS APRIL 30, 1994
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 26.2%
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
BASIC INDUSTRIES - 0.2%
CHEMICAL & PLASTICS - 0.1%
Grace (W.R.) & Co. 7.4%, 2/1/00 $ 2,500 $ 2,465
PAPER & FOREST PRODUCTS - 0.1%
International Paper Co. 9.7%, 3/15/00 1,030 1,151
TOTAL BASIC INDUSTRIES 3,616
DURABLES - 0.4%
CONSUMER ELECTRONICS - 0.4%
Black & Decker Corp. 7 1/2%, 4/1/03 6,500 6,160
ENERGY - 1.5%
OIL & GAS - 1.5%
Societe Nationale Elf Aquitaine:
7 3/4%, 5/1/99 15,000 15,374
8%, 10/15/01 10,000 10,319
25,693
FINANCE - 18.6%
ASSET-BACKED SECURITIES -1.0%
Discover Card Trust, 6 1/8%, 5/15/98 2,550 2,538
Ford Credit Auto Loan Master Trust 7 3/8%,
4/15/99 12,000 12,263
SCFC Recreational Vehicle Loan Trust 7 1/4%,
9/15/06 3,622 3,632
18,433
BANKS - 7.8%
Central Fidelity Banks, Inc. 8.15%, 11/15/02 5,000 5,108
Citicorp 8%, 2/1/03 2,000 2,019
Continental Bank NA Chicago 12 1/2%, 4/1/01 9,000 11,236
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (c) 6,100 5,871
Crestar Financial Corp. 8 1/4%, 7/15/02 10,750 11,004
Export-Import Bank Korea 7.85%, 11/1/96 9,000 9,240
First Fidelity Bancorporation 8 1/2%, 4/1/98 5,000 5,234
First Interstate Bancorp.:
8 5/8%, 4/1/99 9,000 9,464
9 3/8%, 1/23/02 1,835 2,007
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
First National Bank of Boston 8 3/8%, 12/15/02 $ 5,000 $ 5,147
First USA Bank Wilmington DE 5 3/4%, 1/15/99 4,000 3,743
Fleet Financial Group, Inc.:
7 5/8%, 12/1/99 5,000 5,051
8 1/8%, 7/1/04 5,000 5,095
Florida National Banks Fla., Inc. 9 7/8%,
5/15/99 5,000 5,525
HSBC Finance Nederland BV 7.40%,
4/15/03 (c) 5,000 4,850
Integra Financial Corp. 6 1/2%, 4/15/00 3,000 2,865
MBNA American Bank, N.A. 7 1/4%, 9/15/02 7,000 6,790
Mercantile Bancorporation, Inc. 7 5/8%,
10/15/02 5,000 4,934
Midland American Capital Corp. gtd. 12 3/4%,
11/15/03 7,825 9,400
Provident Bank 7 1/8%, 3/15/03 2,000 1,900
Signet Banking Corp. 9 5/8%, 6/1/99 2,000 2,177
Sovran Financial Corp. 9 3/4%, 6/15/99 5,000 5,520
UJB Financial Corp. 8 5/8%, 12/10/02 10,000 10,478
Zions Bancorporation 8 5/8%, 10/15/02 2,900 3,005
137,663
CREDIT & OTHER FINANCE - 8.2%
American General Financial Corporation
12 3/4%, 12/1/94 3,000 3,129
American Residential Mortgage Corp. 6.09%,
12/15/98 2,000 1,878
Aristar, Inc.:
7 3/8%, 2/15/97 10,000 10,147
8 7/8%, 8/15/98 390 409
Associates Corp. of North America:
12 3/4%, 8/15/94 4,800 4,904
6 7/8%, 1/15/97 1,000 1,005
8.80%, 8/1/98 90 95
Deere (John) Capital Corp. 9 5/8%, 11/1/98 6,000 6,515
Ford Motor Credit Corp.:
8.9%, 1/25/95 5,000 5,128
8 3/4%, 6/26/95 8,500 8,798
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
General Motors Acceptance Corp.:
7.05%, 4/13/95 $ 10,000 $ 10,130
8 5/8%, 7/15/96 10,000 10,384
7 3/4%, 2/25/97 20,000 20,467
Grand Metropolitan Investment Corp. 8 1/8%,
8/15/96 7,000 7,243
Heller Financial, Inc. 9 3/8%, 3/15/98 750 805
Household Finance Corp.:
10 1/8%, 6/15/96 1,225 1,310
7 5/8%, 12/15/96 2,000 2,047
Household International, Inc. 5 3/4%, 6/15/94 10,000 10,014
Margaretten Financial Corp. 6 3/4%, 6/15/00 5,000 4,725
Railcar Trust 7 3/4%, 6/1/04 14,556 14,884
Secured Finance, Inc. Kroger gtd. secured 9.05%,
12/15/04 4,000 4,318
Society Corporation 8 7/8%, 5/15/96 7,500 7,823
Texaco Capital, Inc. gtd. 8 1/2%, 2/15/03 500 527
Toyota Motor Credit Corp. 7.1%, 8/15/94 7,000 7,051
Transamerica Finance Corp. 12 3/4%, 9/1/94 1,000 1,023
144,759
INSURANCE - 0.0%
St. Paul Companies, Inc. 9 3/8%, 6/15/97 440 472
SAVINGS & LOANS - 1.5%
Ahmanson (H.F.) & Co.:
9 7/8%, 11/15/99 9,500 10,507
8 1/4%, 10/1/02 3,000 3,073
Great Western Financial Corp. 8.6%, 2/1/02 6,000 6,253
Home Savings of America 10 1/2%, 6/12/97 3,500 3,756
Household Bank FSB Newport Beach CA
6 1/2%, 7/15/03 4,000 3,640
27,229
SECURITIES INDUSTRY - 0.1%
Morgan Stanley Group, Inc. 8 7/8%,
10/15/01 1,000 1,061
TOTAL FINANCE 329,617
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Deere & Co. 9 1/8%, 7/1/96 $ 3,000 $ 3,161
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.7%
Telecommunications, Inc. 6.58%, 2/15/05 2,500 2,400
Time Warner, Inc. 6.05%, 7/1/95 (c) 10,000 9,986
12,386
LEISURE DURABLES & TOYS - 0.3%
Brunswick Corp. 8 1/8%, 4/1/97 4,500 4,587
PUBLISHING - 0.7%
Knight Ridder, Inc. 8 1/2%, 9/1/01 3,000 3,130
News America Holdings, Inc. 8 5/8%, 2/1/03 10,000 10,072
13,202
TOTAL MEDIA & LEISURE 30,175
NONDURABLES - 0.3%
BEVERAGES - 0.1%
Coca-Cola Enterprises, Inc. 7 7/8%, 2/1/02 960 980
HOUSEHOLD PRODUCTS - 0.2%
Clorox Co. 8.80%, 7/15/01 4,000 4,304
TOBACCO - 0.0%
Philip Morris Companies, Inc. 8 7/8%, 7/1/96 450 470
TOTAL NONDURABLES 5,754
RETAIL & WHOLESALE - 0.2%
GROCERY STORES - 0.2%
Great Atlantic & Pacific Tea, Inc.
9 1/8%, 1/15/98 4,250 4,372
TECHNOLOGY - 0.3%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Comdisco, Inc. 7 3/4%, 1/29/97 3,000 3,057
Xerox Corp. 9 1/4%, 2/15/00 2,000 2,053
5,110
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
TRANSPORTATION - 0.8%
AIR TRANSPORTATION - 0.5%
Qantas Airways Ltd. 6 5/8%, 6/30/98 (c) $ 5,000 $ 4,834
Southwest Airlines Co. 8 3/4%, 10/15/03 3,500 3,732
8,566
TRUCKING & FREIGHT - 0.3%
Airborne Freight Corp. 8 7/8%, 12/15/02 5,000 5,253
TOTAL TRANSPORTATION 13,819
UTILITIES - 2.0%
ELECTRIC UTILITY - 2.0%
British Columbia Hydro & Power Authority
15 1/2%, 11/15/11 10,000 12,637
Carolina Power & Light Co. 5.20%, 1/1/95 2,000 2,001
Hydro-Quebec 8.4%, 1/15/22 20,000 20,006
Pacificorp 8 7/8%, 6/15/94 500 502
35,146
TOTAL NONCONVERTIBLE BONDS
(Cost $463,885) 462,623
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 34.5%
U.S. TREASURY OBLIGATIONS - 34.0%
4 5/8%, 8/15/95 61,000 60,476
3 7/8%, 8/31/95 63,000 61,838
4 5/8%, 2/15/96 10,000 9,822
9 3/8%, 4/15/96 21,000 22,388
5 1/8%, 3/31/98 10,000 9,544
9 1/4%, 8/15/98 2,500 2,750
8 7/8%, 2/15/99 17,000 18,554
7 7/8%, 2/15/00 51,245 52,254
6 3/8%, 8/15/02 5,000 4,805
8 7/8%, 2/15/19 42,900 49,583
8 1/8%, 8/15/19 156,000 167,310
7 7/8%, 2/15/21 40,500 42,354
8 1/8%, 5/15/21 20,500 22,053
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
U.S. TREASURY OBLIGATIONS - CONTINUED
7 1/4%, 2/15/23 $ 8,000 $ 7,734
6.25%, 8/15/23 1,000 872
Stripped coupon:
2/15/96 2,450 2,216
2/15/98 65,000 51,016
8/15/06 9,715 3,919
2/15/08 10,000 3,577
Stripped principal payment:
0%, 2/15/19 30,500 4,726
0%, 2/15/20 18,100 2,614
600,405
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.5%
Financing Corporation:
10.70%, 10/6/17 500 660
Principal strips:
0%, 11/30/17 10,000 1,731
0%, 4/6/18 8,000 1,352
Tennessee Valley Authority:
8 1/4%, 10/1/94 500 508
8 1/4%, 11/15/96 5,000 5,232
9,483
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $625,025) 609,888
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 7.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.0%
8 1/2%, 6/15/13 222 228
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.7%
6 1/2%, 5/1/23 to 4/1/24 9,999 9,143
adj. rate 9.038%, 6/1/97 (d) 64 64
12%, 3/1/17 2,400 2,706
12 1/2%, 9/1/11 to 8/1/15 790 896
12,809
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.4%
8%, 8/15/16 to 9/15/23 24,741 24,633
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - CONTINUED
8 1/2%, 11/15/16 to 2/15/23 $ 8,733 $ 8,898
8 3/4%, 7/15/94 3 3
9%, 3/15/16 to 10/15/18 16,101 16,783
9 1/2%, 9/15/09 to 8/15/22 53,349 56,249
10%, 12/15/13 to 2/15/22 5,102 5,497
112,063
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES (Cost $126,385) 125,100
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0%
Collateralized Mortgage Securities Corp,.
7%, 7/1/05 387 380
MBNA Trust 9 1/2%, 10/25/20 614 565
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $966) 945
FOREIGN GOVERNMENT OBLIGATIONS - 15.2%
Canadian Government 8 1/4%, 11/1/95 CAD 54,000 39,698
Danish Government:
euro 7 3/4%, 12/15/96 1,350 1,392
8%, 5/15/03 DKK 85,000 13,821
7%, 12/15/04 DKK 90,000 13,687
French Government OAT:
8 1/2%, 11/25/02 FRF 5,000 984
8 1/2%, 4/25/03 FRF 105,000 20,664
German Government:
8 5/8%, 2/20/96 DEM 1,500 954
8%, 9/22/97 DEM 30,000 19,273
Ireland Republic 8 5/8%, 4/15/01 10,500 11,280
Kingdom of Sweden 10 3/4%, 1/23/97 SEK 5,000 697
Kingdom of Thailand 8 1/4%, 3/15/02 10,000 10,215
Korea Development Bank:
7%, 7/15/99 11,000 10,729
9.6%, 12/1/00 1,000 1,087
9 1/2%, 3/15/01 3,000 3,260
9.48%, 4/2/01 7,000 7,604
9.4%, 8/1/01 5,000 5,414
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
Malaysian Government:
euro 9 1/2%, 10/31/96 $ 815 $ 866
9 7/8%, 9/27/00 3,250 3,632
Manitoba Province:
CDA 6 7/8%, 9/15/02 17,500 16,647
yankee 8.8%, 1/15/20 15,000 15,965
Mexican Government Cetes 0%,
7/21/94-9/22/94 MXN 118,772 34,901
Ontario Province:
7 3/8%, 1/27/03 7,500 7,359
15 1/8%, 5/1/11 7,080 8,550
17%, 11/5/11 5,500 7,111
Quebec Province 9 1/8%, 3/1/00 11,000 11,935
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $277,980) 267,725
SUPRANATIONAL OBLIGATIONS - 3.3%
African Development Bank:
10 1/2%, 11/1/95 4,000 4,262
9 1/2%, 12/15/95 5,000 5,270
10%, 11/1/97 4,000 4,392
8.70%, 5/1/01 5,000 5,436
7 3/4%, 12/15/01 8,000 8,183
Asian Development Bank 9 3/8%, 6/8/95 5,000 5,195
European Investment Bank 11 5/8%, 2/1/99 2,500 3,176
Inter-American Development Bank:
11 3/8%, 5/1/95 2,000 2,112
9.45%, 9/15/98 2,000 2,185
International Bank for Reconstruction &
Development:
euro 11 1/8%, 1/13/98 2,000 2,269
4 1/2%, 3/20/03 JPY 1,500,000 15,205
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $55,392) 57,685
OTHER SECURITIES - 1.0%
PRINCIPAL VALUE
AMOUNT (A) (NOTE 1)
(000S) (000S)
Ridgefield Investments Ltd. sr. notes 0%, 2/2/95
(collateralized by Mexican govt. securities) (c) $ 7,537 $ 6,339
Wilton Investments Ltd. sr. notes (collateralized
by Mexican govt. and U.S. govt. securities)
Series C, 0%, 6/3/94 (b) 10,710 10,658
TOTAL OTHER SECURITIES
(Cost $17,825) 16,997
REPURCHASE AGREEMENTS - 12.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%
dated 4/29/94 due 5/2/94 $ 224,831 224,764
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,792,222) $ 1,765,727
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
SELL
2,810 30-year U.S. Tresury Bond Futures June 1994 $ 293,645 $ 19,459
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 16.6%
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
37,834 CAD 7/5/94 $ 27,269 $ 35
197,100 DKK 6/29/94 30,314 (836)
244,933 FRF 7/20/94 43,141 (1,548)
1,513,956 JPY 6/7/94 14,942 (333)
5,250 SEK 7/19/94 684 (27)
TOTAL CONTRACTS TO SELL
(Receivable amount $113,641) $ 116,350 $ (2,709)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.6%
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
DKK - Danish krone
FRF - French franc
DEM - German Deutsche mark
JPY - Japanese yen
MXN - Mexican peso
SEK - Swedish krona
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000)
Wilton Investments Ltd. sr
notes (collateralized by
Mexican govt. and U.S.
govt. securities) Series C,
0%, 6/3/94 3/3/93 $ 9,844
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $31,880,000 or 1.8% of net
assets.
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 71.1% AAA, AA, A 71.2%
Baa 11.3% BBB 12.6%
Ba 1.5% BB 0.1%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
Securities rated as "Ba" by Moody's and "BB" by S&P were rated
investment grade by other nationally recognized rating agencies or assigned
an investment grade rating at the time of acquisition by Fidelity.
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated
by either S&P or Moody's amounted to 0.3%.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 75.8%
Canada 7.9
France 2.7
Mexico 2.7
Supranational 2.4
Korea 2.1
Denmark 1.6
Germany 1.1
Others (individually less than 1%) 3.7
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,792,437,000. Net unrealized depreciation aggregated
$26,710,000, of which $23,892,000 related to appreciated investment
securities and $50,602,000 related to depreciated investment securities.
The fund hereby designates $126,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1994
ASSETS 5. 6.
7.Investment in securities, at value (including 8. $ 1,765,727
repurchase agreements of $224,764) (cost
$1,792,222) (Notes 1 and 2) - See accompanying
schedule
9.Short foreign currency contracts (Note 2) $ (116,350) 10.
Contracts held, at value
11. Receivable for contracts held 113,641 (2,709)
12.Cash 13. 1
14.Receivable for investments sold 15. 25
16.Receivable for fund shares sold 17. 2,268
18.Interest receivable 19. 26,150
20.Receivable for daily variation on futures contracts 21. 703
22. TOTAL ASSETS 23. 1,792,165
LIABILITIES 24. 25.
26.Payable for investments purchased 8,618 27.
28.Dividends payable 601 29.
30.Accrued management fee 457 31.
32.Other payables and accrued expenses 678 33.
34. TOTAL LIABILITIES 35. 10,354
36.NET ASSETS 37. $ 1,781,811
38.Net Assets consist of (Note 1): 39. 40.
41.Paid in capital 42. $ 1,803,490
43.Distributions in excess of net investment income 44. (4,522)
(Note 1)
45.Accumulated undistributed net realized gain (loss) on 46. (7,412)
investments
47.Net unrealized appreciation (depreciation) on: 48. 49.
50. Investment securities 51. (26,495)
52. Foreign currency contracts 53. (2,709)
54. Futures contracts 55. 19,459
56.NET ASSETS, for 174,209 shares outstanding 57. $ 1,781,811
58.NET ASSET VALUE, offering price and redemption price 59. $10.23
per share ($1,781,811 (divided by) 174,209 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1994
INVESTMENT INCOME 61. $ 134,021
60.Interest (including security lending fees of $103)
(Notes 5 and 6)
EXPENSES 62. 63.
64.Management fee (Note 4) $ 5,579 65.
66.Transfer agent fees (Note 4) 4,699 67.
68.Accounting and security lending fees (Note 4) 466 69.
70.Non-interested trustees' compensation 11 71.
72.Custodian fees and expenses 412 73.
74.Registration fees 103 75.
76.Audit 81 77.
78.Legal 20
79.Miscellaneous 24 80.
81. TOTAL EXPENSES 82. 11,395
83.NET INVESTMENT INCOME 84. 122,626
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 86. 87.
(NOTES 1, 2 AND 3)
85.Net realized gain (loss) on:
88. Investment securities (6,885) 89.
90. Foreign currency contracts (669) 91.
92. Futures contracts 6,281 (1,273)
93.Change in net unrealized appreciation (depreciation) 94. 95.
on:
96. Investment securities (92,429) 97.
98. Foreign currency contracts (1,354) 99.
100. Futures contracts 19,459 101.
102. Delayed delivery commitments (48) (74,372)
103.NET GAIN (LOSS) 104. (75,645)
105.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 106. $ 46,981
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
107.Operations $ 122,626 $ 106,672
Net investment income
108. Net realized gain (loss) on investments (1,273) 6,722
109. Change in net unrealized appreciation (74,372) 56,954
(depreciation) on investments
110. 46,981 170,348
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
111.Distributions to shareholders: (116,646) (107,479)
From net investment income
112. From net realized gain - (8,116)
113. In excess of net realized gain (14,842) -
114. TOTAL DISTRIBUTIONS (131,488) (115,595)
115.Share transactions 1,008,481 900,934
Net proceeds from sales of shares
116. Reinvestment of distributions 122,132 107,982
117. Cost of shares redeemed (902,833) (659,674)
118. 227,780 349,242
Net increase (decrease) in net assets resulting from
share transactions
119. 143,273 403,995
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 120. 121.
122. Beginning of period 1,638,538 1,234,543
123. $ 1,781,811 $ 1,638,538
End of period (including distributions in excess of net
investment income of $4,522 and $593, respectively)
OTHER INFORMATION 125. 126.
124.Shares
127. Sold 94,032 85,388
128. Issued in reinvestment of distributions 11,378 10,228
129. Redeemed (84,388) (62,645)
130. Net increase (decrease) 21,022 32,971
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
131. YEARS ENDED APRIL 30,
132. 1994 1993 1992 1991 1990
133.SELECTED PER-SHARE DATA
134.Net asset value, $ 10.700 $ 10.270 $ 10.070 $ 9.690 $ 9.850
beginning of period
135.Income from Investment .705 .784 .764 .800 .866
Operations
Net investment income
136. Net realized and (.381) .496 .197 .380 (.160)
unrealized
gain (loss) on investments
137. Total from investment .324 1.280 .961 1.180 .706
operations
138.Less Distributions (.704) (.790) (.761) (.800) (.866)
From net investment income
139. From net realized gain - (.060) - - -
on
investments
140. In excess of net realized (.090) - - - -
gain
on investments
141. Total distributions (.794) (.850) (.761) (.800) (.866)
142.Net asset value, end of $ 10.230 $ 10.700 $ 10.270 $ 10.070 $ 9.690
period
143.TOTAL RETURN(dagger) 2.93% 12.90% 9.82% 12.61% 7.24%
144.RATIOS AND SUPPLEMENTAL DATA
145.Net assets, end of period $ 1,782 $ 1,639 $ 1,235 $ 878 $ 661
(in millions)
146.Ratio of expenses to .64% .61% .63% .66% .72%
average net assets
147.Ratio of expenses to .64% .66% .65% .66% .72%
average net assets before
expense reductions
148.Ratio of net investment 6.88% 7.44% 7.45% 8.05% 8.57%
income to average net
assets
149.Portfolio turnover rate 81% 51% 80% 73% 82%
</TABLE>
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Intermediate Bond Fund (the fund) is a fund of Fidelity
Commonwealth Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities (including restricted securities) for which market quotations
are not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
paydown gains/losses on certain securities, futures and
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
options transactions, foreign currency transactions, market discount and
losses deferred due to wash sales and futures and options. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
an increase in paid in capital of $2,394,000, an increase in distributions
in excess of net investment income of $3,556,000 and an increase in
accumulated net realized gain on investments of $1,162,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $10,658,000 or 0.6% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,412,025,000 and $1,249,927,000, respectively, of which U.S.
government
PURCHASES AND SALES OF
INVESTMENTS - CONTINUED
and government agency obligations aggregated $1,255,217,000 and
$1,126,877,000, respectively.
The market value of futures contracts opened and closed amounted to
$699,368,000 and $377,976,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .15%.
For the period, the management fee was equivalent to an annual rate of .31%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
5. INTERFUND LENDING
PROGRAM.
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $52,011,000 and $48,347,000,
respectively. The weighted average interest rate was 3.38%. Interest earned
from the interfund lending program amounted to $32,000 and is included in
interest income on the Statement of Operations.
6. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Commonwealth Trust and the Shareholders of
Fidelity Intermediate Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Commonwealth Trust: Fidelity Intermediate Bond Fund, including the
schedule of portfolio investments, as of April 30, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confir- mation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Commonwealth Trust: Fidelity Intermediate Bond Fund as of April
30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Michael Gray, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
EXHIBIT 24(A)(2)
(2_FIDELITY_LOGOS)FIDELITY
MARKET INDEX
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on stock market
cautions.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 30 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 34 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 38 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
INVESTMENTS APRIL 30, 1994
Showing Percentage of Total Value of Investments
COMMON STOCKS - 98.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
AEROSPACE & DEFENSE - 1.2%
Boeing Co. 29,380 $ 1,322,043
Lockheed Corp. 5,360 328,970
Martin Marietta Corp. 8,280 368,460
McDonnell Douglas Corp. 3,450 405,375
Northrop Corp. 4,200 160,650
Rockwell International Corp. 19,100 744,900
3,330,398
DEFENSE ELECTRONICS - 0.4%
E-Systems, Inc. 2,900 116,363
Litton Industries, Inc. (a) 3,740 115,473
Loral Corp. 7,200 266,400
Raytheon Co. 11,720 755,940
1,254,176
SHIP BUILDING & REPAIR - 0.1%
General Dynamics Corp. 5,400 218,700
TOTAL AEROSPACE & DEFENSE 4,803,274
BASIC INDUSTRIES - 7.5%
CHEMICALS & PLASTICS - 4.4%
Air Products & Chemicals, Inc. 9,920 429,040
Albemarle Corp. (a) 5,100 73,950
Avery Dennison Corp. 5,000 144,375
Cytec Industries, Inc. (a) 1,107 15,913
du Pont (E.I.) de Nemours & Co. 58,630 3,349,239
Dow Chemical Co. 23,770 1,491,568
Eastman Chemical Co. 7,142 317,819
Engelhard Corp. 8,325 216,450
Ethyl Corp. 10,200 119,850
FMC Corp. (a) 3,100 146,863
First Mississippi Corp. 1,700 25,500
Goodrich (B.F.) Company 2,210 103,041
Grace (W.R.) & Co. 8,100 330,075
Great Lakes Chemical Corp. 6,200 403,775
Hercules, Inc. 3,640 391,300
Minnesota Mining & Manufacturing Co. 37,320 1,824,015
Monsanto Co. 10,320 848,820
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Morton International, Inc. 4,200 $ 366,450
Nalco Chemical Co. 5,980 201,078
PPG Industries, Inc. 9,200 696,900
Praxair, Inc. 11,600 221,850
Raychem Corp. 3,600 127,350
Rohm & Haas Co. 5,900 337,775
Union Carbide Corp. 13,100 345,513
12,528,509
IRON & STEEL - 0.4%
Armco, Inc. (a) 9,000 41,625
Bethlehem Steel Corp. (a) 7,900 158,988
Inland Steel Industries, Inc. (a) 3,200 107,200
Nucor Corp. 7,500 460,313
USX-U.S. Steel Group 5,860 199,240
Worthington Industries, Inc. 7,825 144,763
1,112,129
METALS & MINING - 0.7%
ASARCO, Inc. 3,600 87,750
Alcan Aluminium Ltd. 19,523 409,465
Aluminum Co. of America 7,610 517,480
Cyprus Amax Minerals Co. 7,950 223,594
Inco Ltd. 9,888 239,566
Phelps Dodge Corp. 6,040 334,465
Reynolds Metals Co. 5,140 215,880
2,028,200
PACKAGING & CONTAINERS - 0.2%
Ball Corp. 2,544 68,370
Bemis Co., Inc. 4,400 102,850
Crown Cork & Seal Co., Inc. (a) 7,680 276,480
447,700
PAPER & FOREST PRODUCTS - 1.8%
Boise Cascade Corp. 3,300 70,950
Champion International Corp. 8,000 244,000
Federal Paper Board Co., Inc. 3,600 76,500
Georgia-Pacific Corp. 7,800 465,075
International Paper Co. 10,700 698,175
James River Corp. of Virginia 7,100 125,138
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Kimberly-Clark Corp. 13,880 $ 761,665
Louisiana-Pacific Corp. 9,460 318,093
Mead Corp. 5,100 214,838
Potlatch Corp. 2,540 103,505
Rayonier, Inc. 2,567 72,518
Scott Paper Co. 6,410 274,829
Stone Container Corp. (a) 6,114 82,539
Temple-Inland, Inc. 4,800 227,400
Union Camp Corp. 6,000 266,250
Westvaco Corp. 5,800 179,800
Weyerhaeuser Co. 17,700 754,463
4,935,738
TOTAL BASIC INDUSTRIES 21,052,276
CONGLOMERATES - 1.3%
Allied-Signal, Inc. 24,500 845,250
Crane Co. 2,600 65,975
Dial Corp. (The) 4,100 192,700
Harris Corp. 3,500 153,563
ITT Corp. 10,270 921,733
Teledyne, Inc. 4,760 80,325
Textron, Inc. 7,600 400,900
Tyco Laboratories, Inc. 3,990 189,026
United Technologies Corp. 10,770 686,588
Whitman Corp. 9,300 148,800
3,684,860
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.3%
Armstrong World Industries, Inc. 3,210 179,760
Masco Corp. 13,200 376,200
Owens-Corning Fiberglas Corp. (a) 3,700 128,575
Sherwin-Williams Co. 7,640 240,660
925,195
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.1%
Centex Corp. 2,760 $ 78,660
Kaufman & Broad Home Corp. 2,800 50,750
Morrison-Knudsen Corp. 2,700 63,450
Pulte Corp. 2,400 64,800
Skyline Corp. 1,000 18,875
276,535
ENGINEERING - 0.2%
EG&G, Inc. 4,920 73,185
Fluor Corp. 7,130 364,521
Foster Wheeler Corp. 3,100 124,775
562,481
TOTAL CONSTRUCTION & REAL ESTATE 1,764,211
DURABLES - 4.6%
AUTOS, TIRES, & ACCESSORIES - 3.7%
Chrysler Corp. 30,500 1,460,188
Cooper Tire & Rubber Co. 7,200 188,100
Cummins Engine Co., Inc. 3,200 138,400
Dana Corp. 4,100 221,913
Eaton Corp. 6,080 337,440
Echlin, Inc. 5,000 130,000
Ford Motor Co. 43,050 2,513,044
General Motors Corp. 61,530 3,491,828
Genuine Parts Company 10,725 382,078
Goodyear Tire & Rubber Co. 13,000 507,000
Johnson Controls, Inc. 3,500 172,375
NACCO Industries, Inc. Class A 800 40,100
Navistar International Corp. (a) 2,360 44,545
Pep Boys - Manny, Moe & Jack 5,300 161,650
PACCAR, Inc. 3,338 178,583
SPX Corp. 1,200 18,300
Snap-on Tools Corp. 3,700 141,063
TRW, Inc. 5,560 362,790
10,489,397
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Black & Decker Corp. 7,200 $ 138,600
Fedders USA Inc. (a) 1,700 13,175
Maytag Co. 9,300 175,538
Newell Co. 6,800 266,050
Stanley Works 3,900 152,100
Whirlpool Corp. 6,100 356,850
1,102,313
HOME FURNISHINGS - 0.0%
Bassett Furniture Industries, Inc. 1,200 31,050
TEXTILES & APPAREL - 0.5%
Hartmarx Corp. (a) 2,800 18,900
Liz Claiborne, Inc. 7,000 175,000
NIKE, Inc. Class B 6,580 352,853
Oshkosh B'Gosh, Inc. Class A 1,200 15,600
Reebok International Ltd. 7,300 224,475
Russell Corp. 3,500 98,875
Springs Industries, Inc. Class A 1,500 50,063
Stride Rite Corp. 4,300 52,675
VF Corp. 5,600 280,700
1,269,141
TOTAL DURABLES 12,891,901
ENERGY - 10.1%
COAL - 0.0%
Eastern Enterprises Co. 2,000 52,250
ENERGY SERVICES - 0.8%
Baker Hughes, Inc. 12,100 222,338
Dresser Industries, Inc. 11,940 271,635
Halliburton Co. 9,880 292,695
Helmerich & Payne, Inc. 2,100 54,863
McDermott International, Inc. 4,600 97,750
Rowan Companies, Inc. (a) 7,200 52,200
Schlumberger Ltd. 21,080 1,159,400
2,150,881
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - 9.3%
Amerada Hess Corp. 8,040 $ 404,010
Amoco Corp. 43,010 2,413,936
Ashland Oil, Inc. 5,230 202,663
Atlantic Richfield Co. 13,820 1,318,083
Burlington Resources, Inc. 8,000 359,000
Chevron Corp. 28,140 2,504,460
Exxon Corp. 107,460 6,756,548
Kerr-McGee Corp. 4,360 195,110
Louisiana Land & Exploration Co. 2,540 100,330
Maxus Energy Corp. (a) 11,600 52,200
Mobil Corp. 34,550 2,703,538
Occidental Petroleum Corp. 26,400 468,600
Oryx Energy Co. 8,360 141,075
Pennzoil Co. 3,830 188,628
Phillips Petroleum Co. 22,600 706,250
Royal Dutch Petroleum Co. 46,420 5,059,780
Santa Fe Energy Resources, Inc. 7,766 68,923
Sun Company, Inc. 9,180 310,973
Texaco, Inc. 22,440 1,444,575
Unocal Corp. 20,900 577,363
USX-Marathon Group 24,800 418,500
26,394,545
TOTAL ENERGY 28,597,676
FINANCE - 11.6%
BANKS - 5.7%
Banc One Corp. 32,422 1,069,926
Bank of Boston Corp. 8,349 214,987
Bankers Trust New York Corp. 7,050 471,469
BankAmerica Corp. 30,964 1,339,193
Barnett Banks, Inc. 8,400 387,450
Boatmen's Bancshares, Inc. 8,800 277,200
Chase Manhattan Corp. 16,000 544,000
Chemical Banking Corp. 21,767 756,403
Citicorp (a) 32,563 1,204,831
CoreStates Financial Corp. 10,300 272,950
First Chicago Corp. 7,216 381,546
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
First Fidelity Bancorporation 7,015 $ 325,321
First Interstate Bancorp 6,710 535,123
First Union Corp. 14,690 655,541
Fleet Financial Group, Inc. 12,082 456,096
Keycorp. (New) 37,355 1,181,352
Mellon Bank Corp. 5,542 308,967
Morgan (J.P.) & Co., Inc. 17,019 1,046,669
NBD Bancorp, Inc. 13,850 392,994
NationsBank Corp. 23,559 1,230,958
Norwest Corp. 26,000 669,500
PNC Financial Corp. 20,260 564,748
Shawmut National Corp. 8,100 181,238
SunTrust Banks, Inc. 10,700 494,875
U.S. Bancorp 8,550 215,353
Wachovia Corp. 10,000 311,250
Wells Fargo & Co. 4,870 706,150
16,196,090
CREDIT & OTHER FINANCE - 1.0%
American Express Co. 42,000 1,244,250
Beneficial Corp. 4,500 171,000
Dean Witter Discover & Co. 14,718 553,765
Household International, Inc. 8,145 255,549
MBNA Corp. 12,900 322,500
Transamerica Corporation 6,650 334,994
2,882,058
FEDERAL SPONSORED CREDIT - 1.0%
Federal Home Loan Mortgage Corporation 15,500 875,750
Federal National Mortgage Association 23,670 1,970,528
2,846,278
INSURANCE - 3.3%
Aetna Life & Casualty Co. 9,630 500,760
Alexander & Alexander Services, Inc. 3,500 51,188
American General Corp. 18,720 477,360
American International Group, Inc. 27,475 2,342,244
CIGNA Corp. 6,220 363,870
CNA Financial Corp. (a) 5,380 341,630
Capital Holding Corp. 8,720 261,600
Chubb Corp. (The) 7,580 579,870
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Continental Corp. 4,800 $ 108,000
General Re Corp. 7,340 818,410
Jefferson Pilot Corp. 4,315 210,896
Lincoln National Corp. 8,160 311,100
Marsh & McLennan Companies, Inc. 6,360 537,420
SAFECO Corp. 5,460 294,158
St. Paul Companies, Inc. (The) 3,650 289,719
Torchmark Corp. 6,420 239,948
Travelers, Inc. (The) 27,621 959,830
UNUM Corp. 6,700 330,813
USF&G Corp. 7,700 96,250
USLIFE Corp. 1,980 74,250
9,189,316
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 10,100 184,325
Golden West Financial Corp. 5,500 210,375
Great Western Financial Corp. 11,550 187,688
582,388
SECURITIES INDUSTRY - 0.4%
Merrill Lynch & Co., Inc. 18,200 671,125
Salomon, Inc. 9,600 465,600
1,136,725
TOTAL FINANCE 32,832,855
HEALTH - 8.2%
DRUGS & PHARMACEUTICALS - 4.9%
ALZA Corp. Class A 6,700 169,175
Allergan, Inc. 5,700 122,550
American Cyanamid Co. 7,750 364,250
American Home Products Corp. 26,860 1,551,165
Amgen, Inc. (a) 11,700 473,850
Bristol-Myers Squibb Co. 44,790 2,413,061
Lilly (Eli) & Co. 25,360 1,248,980
Merck & Co., Inc. 110,490 3,273,266
Pfizer, Inc. 27,440 1,618,960
Schering-Plough Corp. 16,670 1,016,870
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Syntex Corporation 19,160 $ 289,795
Upjohn Co. 15,060 402,855
Warner-Lambert Co. 11,740 796,853
13,741,630
MEDICAL EQUIPMENT & SUPPLIES - 2.5%
Abbott Laboratories 71,620 2,032,218
Bard (C.R.), Inc. 4,500 109,688
Bausch & Lomb, Inc. 5,140 239,010
Baxter International, Inc. 23,900 546,713
Becton, Dickinson & Co. 6,500 251,063
Biomet, Inc. (a) 10,000 98,750
Johnson & Johnson 56,520 2,338,515
Mallinckrodt Group, Inc. 6,630 216,304
McKesson Corp. 3,500 232,750
Medtronic, Inc. 5,000 376,875
Millipore Corp. 2,400 115,800
Pall Corp. 10,066 171,122
St. Jude Medical, Inc. 4,000 103,000
U.S. Surgical Corp. 4,900 86,363
6,918,171
MEDICAL FACILITIES MANAGEMENT - 0.8%
Beverly Enterprises, Inc. (a) 6,900 91,425
Columbia/HCA Healthcare Corp. (a) 29,520 1,250,910
Community Psychiatric Centers 3,700 53,650
Manor Care, Inc. 4,950 137,363
National Medical Enterprises, Inc. 14,400 246,600
U.S. Healthcare, Inc. 14,200 532,500
2,312,448
TOTAL HEALTH 22,972,249
INDUSTRIAL MACHINERY & EQUIPMENT - 5.7%
ELECTRICAL EQUIPMENT - 3.5%
Corning, Inc. 17,440 549,360
Emerson Electric Co. 19,470 1,134,128
General Electric Co. 73,850 7,024,981
General Signal Corp. 3,960 129,690
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Grainger (W.W.), Inc. 4,400 $ 275,000
Honeywell, Inc. 11,580 377,798
Scientific-Atlanta, Inc. 3,250 108,875
Westinghouse Electric Corp. 30,430 353,749
Zenith Electronics Corp. (a) 2,800 25,200
9,978,781
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
Briggs & Stratton Corp. 1,300 109,525
Caterpillar, Inc. 8,830 970,196
Cincinnati Milacron, Inc. 2,600 53,950
Clark Equipment Co. (a) 1,540 105,105
Cooper Industries, Inc. 9,910 377,819
Deere & Co. 7,090 544,158
Dover Corp. 4,960 272,800
Gardner Denver Machinery, Inc. 396 3,366
Giddings & Lewis, Inc. 2,900 73,225
Harnischfeger Industries, Inc. 2,200 46,200
Illinois Tool Works, Inc. 9,760 403,820
Ingersoll-Rand Co. 9,140 319,900
Parker-Hannifin Corp. 4,200 182,175
TRINOVA Corp. 2,400 83,700
Tenneco, Inc. 14,370 736,463
Timken Co. 2,659 90,738
Varity Corp. (a) 2,990 119,600
4,492,740
POLLUTION CONTROL - 0.6%
Browning-Ferris Industries, Inc. 14,960 437,580
Ogden Corp. 3,800 80,750
Rollins Environmental Services Inc 5,200 23,400
Safety Kleen Corp. 5,025 75,375
WMX Technologies, Inc. 41,760 1,090,980
Zurn Industries, Inc. 1,110 23,310
1,731,395
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 16,202,916
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 4.7%
BROADCASTING - 1.2%
CBS, Inc. 1,321 $ 400,263
Capital Cities/ABC, Inc. 1,341 952,110
Comcast Corp. Class A 19,050 300,038
Tele-Communications, Inc. Class A (a) 38,500 755,563
Time Warner, Inc. 32,458 1,152,259
3,560,233
ENTERTAINMENT - 0.7%
Disney (Walt) Co. 46,320 1,962,810
King World Productions, Inc. 3,200 119,600
2,082,410
LEISURE DURABLES & TOYS - 0.3%
Brunswick Corp. 8,200 189,625
Fleetwood Enterprises, Inc. 4,000 83,500
Hasbro, Inc. 7,550 256,700
Mattel, Inc. 10,765 270,471
Outboard Marine Corp. 1,700 38,038
838,334
LODGING & GAMING - 0.3%
Bally Manufacturing Corp. (a) 4,100 27,163
Hilton Hotels Corp. 4,140 231,323
Marriott International, Inc. 9,200 244,950
Promus Companies, Inc. (a) 8,850 323,025
826,461
PUBLISHING - 1.4%
American Greetings Corp. Class A 6,360 186,030
Dow Jones & Co. Inc. 8,600 330,025
Dun & Bradstreet Corp. 15,320 900,050
Gannett Co., Inc. 12,650 664,125
Harcourt Gen Inc. 6,576 214,542
Knight-Ridder, Inc. 4,780 286,203
McGraw-Hill, Inc. 4,250 276,781
Meredith Corp. 1,300 56,550
New York Times Co. (The) Class A 9,100 230,913
Times Mirror Co., Series A 11,100 351,038
Tribune Co. 5,790 367,665
3,863,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.8%
Luby's Cafeterias, Inc. 2,350 $ 55,813
McDonald's Corp. 30,600 1,836,000
Ryan's Family Steak Houses, Inc. (a) 4,600 35,650
Shoney's, Inc. (a) 3,500 66,500
Wendy's International, Inc. 8,600 154,800
2,148,763
TOTAL MEDIA & LEISURE 13,320,123
NONDURABLES - 11.4%
AGRICULTURE - 0.1%
Pioneer Hi-Bred International, Inc. 7,700 269,500
BEVERAGES - 3.4%
Anheuser-Busch Companies, Inc. 23,270 1,259,489
Brown-Forman Corp. Class B 1,860 166,935
Coca-Cola Company (The) 112,440 4,680,315
Coors (Adolph) Co. Class B 3,300 61,463
PepsiCo, Inc. 68,660 2,506,090
Seagram Co. Ltd. 32,220 949,566
9,623,858
FOODS - 3.0%
Archer-Daniels-Midland Co. 28,825 662,975
Borden, Inc. 12,200 158,600
CPC International, Inc. 13,020 628,215
Campbell Soup Co. 21,780 854,865
ConAgra, Inc. 21,750 611,719
General Mills, Inc. 13,820 713,458
Gerber Products Co. 6,000 183,750
Heinz (H.J.) Co. 21,900 717,225
Hershey Foods Corp. 7,760 346,290
Kellogg Co. 19,740 994,403
Pet, Inc. 9,000 159,750
Quaker Oats Co. 5,900 379,813
Ralcorp Holdings, Inc. 2,993 47,888
Ralston Purina Co. 8,980 323,280
SYSCO Corp. 15,940 414,440
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Sara Lee Corp. 42,000 $ 871,500
Wrigley (Wm.) Jr. Company 10,080 520,380
8,588,551
HOUSEHOLD PRODUCTS - 3.0%
Alberto Culver Co. Class B cv 2,500 53,438
Avon Products, Inc. 6,210 368,719
Clorox Co. 4,660 235,330
Colgate-Palmolive Co. 13,360 783,230
Gillette Company 19,080 1,280,745
International Flavors & Fragrances, Inc. 9,750 355,875
Premark International, Inc. 2,800 221,200
Procter & Gamble Co. 59,060 3,359,038
Rubbermaid, Inc. 13,880 367,820
Unilever NV ADR 13,870 1,539,570
8,564,965
TOBACCO - 1.9%
American Brands, Inc. 17,460 591,458
Philip Morris Companies, Inc. 75,860 4,134,370
UST, Inc. 18,000 501,750
5,227,578
TOTAL NONDURABLES 32,274,452
PRECIOUS METALS - 0.5%
American Barrick Resources Corp. 20,000 461,054
Echo Bay Mines Ltd. 9,600 110,219
Homestake Mining Co. 11,900 226,100
Newmont Mining Corp. 7,438 306,818
Placer Dome Inc. 20,600 424,604
1,528,795
RETAIL & WHOLESALE - 6.5%
APPAREL STORES - 0.7%
Brown Group, Inc. 1,500 56,438
Charming Shoppes, Inc. 8,900 93,450
Gap, Inc. 12,580 592,833
Genesco, Inc. (a) 2,000 7,750
Limited, Inc. (The) 31,400 604,450
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Melville Corp. 9,160 $ 364,110
TJX Companies, Inc. 6,300 151,200
1,870,231
DRUG STORES - 0.2%
Long Drug Stores, Inc. 1,770 57,304
Rite Aid Corporation 7,600 146,300
Walgreen Co. 10,620 443,385
646,989
GENERAL MERCHANDISE STORES - 3.7%
Dayton Hudson Corp. 6,150 485,850
Dillard Department Stores, Inc Class A 9,760 326,960
K mart Corp. 35,300 582,450
May Department Stores Co. (The) 21,480 899,475
Mercantile Stores Co., Inc. 3,210 121,980
Nordstrom, Inc. 7,100 310,625
Penney (J.C.) Co., Inc. 20,420 1,107,785
Price/Costco, Inc. 9,095 137,562
Sears, Roebuck & Co. 30,310 1,424,570
Wal-Mart Stores, Inc. 198,960 5,023,740
Woolworth Corp. 11,440 190,190
10,611,187
GROCERY STORES - 0.7%
Albertson's, Inc. 21,880 626,315
American Stores Co. 12,280 307,000
Bruno's, Inc. 6,800 51,850
Fleming Companies, Inc. 3,253 81,732
Giant Food, Inc. Class A 5,200 118,300
Great Atlantic & Pacific Tea Co., Inc. 3,250 81,250
Kroger Co. (The) (a) 9,300 211,575
Supervalu, Inc. 6,100 199,013
Winn-Dixie Stores, Inc. 6,520 308,070
1,985,105
RETAIL & WHOLESALE, MISC - 1.2%
Circuit City Stores, Inc. 8,300 157,700
Handleman Co. (Del.) 2,900 31,538
Home Depot, Inc. (The) 38,782 1,628,844
Lowe's Companies, Inc. 12,760 449,790
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISC - CONTINUED
Tandy Corp. 5,566 $ 184,374
Toys "R" Us, Inc. (a) 25,225 873,416
3,325,662
TOTAL RETAIL & WHOLESALE 18,439,174
SERVICES - 1.1%
ADVERTISING - 0.1%
Interpublic Group of Companies, Inc. 6,500 190,125
LEASING & RENTAL - 0.2%
Blockbuster Entertainment Corp. 18,300 496,388
Ryder Systems, Inc. 6,600 165,000
661,388
PRINTING - 0.4%
Alco Standard Corp. 4,200 221,025
Deluxe Corp. 7,200 194,400
Donnelley (R.R.) & Sons Co. 13,420 365,695
Harland (John H.) Co. 2,700 61,425
Moore Corporation Ltd. 8,637 156,943
999,488
SERVICES - 0.4%
Block (H&R), Inc. 9,080 385,900
Ecolab, Inc. 5,500 121,688
Jostens, Inc. 3,900 61,913
National Education Corp. (a) 2,500 13,125
National Service Industries, Inc. 4,300 114,488
Pittston Company Services Group 3,500 87,500
Service Corp. International 7,250 178,531
Western Atlas, Inc. 3,740 160,820
1,123,965
TOTAL SERVICES 2,974,966
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - 7.1%
COMMUNICATIONS EQUIPMENT - 0.6%
Andrew Corp. (a) 2,100 $ 81,375
Cisco Systems, Inc. (a) 21,400 648,688
DSC Communications Corp. (a) 4,100 246,000
M/A-Com, Inc. (a) 2,200 12,100
Northern Telecom Ltd. 21,700 645,413
1,633,576
COMPUTER SERVICES & SOFTWARE - 1.0%
Autodesk, Inc. 2,020 102,515
Automatic Data Processing, Inc. 12,160 626,240
Ceridian Corp. (a) 3,800 93,100
Computer Associates International, Inc. 14,400 466,200
Computer Sciences Corp. (a) 4,350 165,300
Lotus Development Corp. (a) 3,800 246,050
Novell, Inc. (a) 27,100 497,963
Oracle Systems Corp. (a) 24,700 737,913
Shared Medical Systems Corp. 2,000 51,250
2,986,531
COMPUTERS & OFFICE EQUIPMENT - 2.8%
Amdahl Corp. 9,900 66,825
Apple Computer, Inc. 10,050 301,500
Compaq Computer Corp. (a) 7,160 794,760
Cray Research, Inc. (a) 2,260 48,308
Data General Corp. (a) 3,000 22,500
Digital Equipment Corp. (a) 11,720 246,120
Hewlett-Packard Co. 21,980 1,763,895
Intergraph Corp. (a) 4,000 38,000
International Business Machines Corp. 50,070 2,866,508
Pitney Bowes, Inc. 13,640 521,730
Sun Microsystems, Inc. (a) 8,300 185,713
Tandem Computers, Inc. (a) 9,800 115,150
Unisys Corp. (a) 14,100 153,338
Xerox Corp. 8,950 884,931
8,009,278
ELECTRONIC INSTRUMENTS - 0.1%
Perkin-Elmer Corp. 3,800 110,200
Tektronix, Inc. 2,600 78,650
188,850
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - 2.1%
AMP, Inc. 9,090 $ 580,624
Advanced Micro Devices, Inc. (a) 7,900 208,363
Intel Corp. 35,980 2,194,780
Motorola, Inc. 47,000 2,097,375
National Semiconductor Corp. (a) 9,600 198,000
Texas Instruments, Inc. 7,380 564,570
Thomas & Betts Corp. 1,660 103,750
5,947,462
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 28,570 1,185,655
Polaroid Corp. 4,040 125,240
1,310,895
TOTAL TECHNOLOGY 20,076,592
TRANSPORTATION - 1.9%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 6,570 398,306
Delta Air Lines, Inc. 4,280 203,300
UAL Corp. (a) 2,140 276,328
USAir Group, Inc. (a) 4,500 36,563
914,497
RAILROADS - 1.3%
Burlington Northern, Inc. 7,650 433,181
CSX Corp. 9,000 700,875
Conrail, Inc. 6,840 385,605
Norfolk Southern Corp. 12,040 769,055
Santa Fe Pacific Corp. 15,842 352,485
Union Pacific Corp. 17,740 1,046,660
3,687,861
TRUCKING & FREIGHT - 0.3%
Consolidated Freightways, Inc. (a) 3,100 85,250
Federal Express Corp. (a) 4,790 365,238
Roadway Services, Inc. 3,400 238,850
Yellow Corp. 2,400 50,250
739,588
TOTAL TRANSPORTATION 5,341,946
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - 14.0%
CELLULAR - 0.6%
Airtouch Communications 41,330 $ 1,017,751
McCaw Cellular Communications, Inc. Class A (a) 14,000 680,750
1,698,501
ELECTRIC UTILITY - 4.2%
American Electric Power Co., Inc. 16,000 520,000
Baltimore Gas & Electric Co. 12,550 302,769
Carolina Power & Light Co. 13,900 370,088
Central & South West Corp. 16,280 417,175
Commonwealth Edison Co. 18,500 469,438
Consolidated Edison Co. of New York, Inc. 20,200 618,625
Detroit Edison Company 12,700 342,900
Dominion Resources, Inc. (Va.) 14,510 613,048
Duke Power Co. 17,760 650,460
Entergy Corp. (New) 15,700 480,813
FPL Group, Inc. 16,200 573,075
Houston Industries, Inc. 11,300 406,800
Niagara Mohawk Power Corp. 12,300 226,013
Northern States Power Co. (Minn.) 5,760 241,920
Ohio Edison Co. 13,200 245,850
PSI Resources, Inc. 4,900 109,638
Pacific Gas & Electric Co. 37,400 991,100
PacifiCorp. 24,100 430,788
Peco Energy Co. 19,100 546,738
Public Service Enterprise Group, Inc. 20,900 603,488
SCEcorp 38,700 619,200
Southern Co. 55,400 1,080,300
Texas Utilities Co. 19,286 679,832
Union Electric Co. 8,800 309,100
11,849,158
GAS - 0.9%
Arkla, Inc. 10,600 70,225
Coastal Corp. (The) 9,000 284,625
Columbia Gas System, Inc. (The) 4,420 124,865
Consolidated Natural Gas Co. 7,990 314,606
ENSERCH Corp. 5,700 80,513
Enron Corp. 20,640 611,460
NICOR, Inc. 4,740 126,203
ONEOK, Inc. 2,300 38,238
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - CONTINUED
GAS - CONTINUED
Pacific Enterprises 7,280 $ 166,530
Panhandle Eastern Corp. 10,300 207,288
Peoples Energy Corp. 3,000 93,000
Sonat, Inc. 7,560 229,635
Transco Energy Co. 3,500 52,938
Williams Companies, Inc. 8,800 226,600
2,626,726
TELEPHONE SERVICES - 8.3%
American Telephone & Telegraph Co. 116,862 5,974,570
Ameritech Corp. 47,200 1,858,500
Bell Atlantic Corp. 37,750 1,953,563
BellSouth Corp. 42,920 2,612,755
GTE Corp. 81,780 2,586,293
MCI Communications Corp. 46,360 1,060,485
NYNEX Corp. 35,720 1,299,315
Pacific Telesis Group 35,930 1,149,760
Southwestern Bell Corp. 51,920 2,154,680
Sprint Corporation 29,490 1,083,758
U.S. West, Inc. 37,240 1,517,529
23,251,208
TOTAL UTILITIES 39,425,593
TOTAL COMMON STOCKS
(Cost $229,421,248) 278,183,859
PREFERRED STOCKS - 0.0%
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
National Intergroup, Inc., Series A, (Cost $28,110) 942 32,735
U.S. TREASURY OBLIGATIONS - 0.2%
PRINCIPAL
AMOUNT
8 5/8%, 10/15/95 (Cost $553,281) (b) $ 500,000 522,110
REPURCHASE AGREEMENTS - 1.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%
dated 4/29/94 due 5/2/94 $ 3,545,403 $ 3,544,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $233,546,639) $ 282,282,704
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
20 S&P 500 Index Contracts June 1994 $ 4,533,550 $ (30,050)
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 1.6%
LEGEND
7. Non-income producing
8. Security was pledged to cover margin requirements for futures contracts.
At the period end, the value of securities pledged amounted to $522,110.
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $233,655,663. Net unrealized appreciation aggregated
$48,627,041, of which $62,919,208 related to appreciated investment
securities and $14,292,167 related to depreciated investment securities.
At April 30, 1994, the fund had a capital loss carryforward of
approximately $1,621,000 which will expire on April 30, 2002.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994
ASSETS 9. 10.
11.Investment in securities, at value (including 12. $ 282,282,704
repurchase agreements of $3,544,000) (cost
$233,546,639) (Notes 1 and 2) - See accompanying
schedule
13.Cash 14. 115
15.Receivable for fund shares sold 16. 282,219
17.Receivable for daily variation on futures contracts 18. 13,000
19.Dividends receivable 20. 534,502
21.Interest receivable 22. 1,767
23.Other receivables 24. 186
25. TOTAL ASSETS 26. 283,114,493
LIABILITIES 27. 28.
29.Payable for investments purchased $ 11,395 30.
31.Payable for fund shares redeemed 295,883 32.
33.Accrued management fee 104,682 34.
35.Other payables and accrued expenses 206 36.
37. TOTAL LIABILITIES 38. 412,166
39.NET ASSETS 40. $ 282,702,327
41.Net Assets consist of (Note 1): 42. 43.
44.Paid in capital 45. $ 235,434,204
46.Undistributed net investment income 47. 331,986
48.Accumulated undistributed net realized gain (loss) on 49. (1,769,878)
investments
50.Net unrealized appreciation (depreciation) on: 51. 52.
53. Investment securities 54. 48,736,065
55. Futures contracts 56. (30,050)
57.NET ASSETS, for 8,442,285 shares outstanding 58. $ 282,702,327
59.NET ASSET VALUE, offering price and redemption price 60. $33.49
per share ($282,702,327 (divided by) 8,442,285 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED APRIL 30, 1994
INVESTMENT INCOME 62. $ 8,287,249
61.Dividends
63.Interest (including security lending fees of $566) (Note 64. 237,440
5)
65. TOTAL INCOME 66. 8,524,689
EXPENSES 67. 68.
69.Management fee (Note 4) $ 1,351,033 70.
71.Non-interested trustees' compensation 2,511 72.
73.Interest (Note 6) 627 74.
75. TOTAL EXPENSES 76. 1,354,171
77.NET INVESTMENT INCOME 78. 7,170,518
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 80. 81.
(NOTES 1 AND 3)
79.Net realized gain (loss) on:
82. Investment securities (1,801,434) 83.
84. Futures contracts (45,435) (1,846,869)
85.Change in net unrealized appreciation (depreciation) 86. 87.
on:
88. Investment securities 9,933,160 89.
90. Futures contracts 116,300 10,049,460
91.NET GAIN (LOSS) 92. 8,202,591
93.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 94. $ 15,373,109
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED APRIL 30,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 7,170,518 $ 6,740,226
Net investment income
96. Net realized gain (loss) on investments (1,846,869) 2,312,305
97. Change in net unrealized appreciation (depreciation) 10,049,460 13,466,912
on
investments
98. NET INCREASE (DECREASE) IN NET ASSETS RESULTING 15,373,109 22,519,443
FROM
OPERATIONS
99.Distributions to shareholders (7,060,930) (6,696,837)
From net investment income
100. From net realized gain (1,588,864) -
101. Distributions in excess of net realized gain (70,859) -
102. TOTAL DISTRIBUTIONS (8,720,653) (6,696,837)
103.Share transactions 71,828,516 130,822,814
Net proceeds from sales of shares
104. Reinvestment of distributions 8,306,752 6,448,141
105. Cost of shares redeemed (109,030,499) (77,810,587)
106. Redemption fees (Note 1) 46,171 62,997
107. (28,849,060) 59,523,365
Net increase (decrease) in net assets resulting from
share
transactions
108. (22,196,604) 75,345,971
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 109. 110.
111. Beginning of period 304,898,931 229,552,960
112. $ 282,702,327 $ 304,898,931
End of period (including undistributed net investment
income of $331,986 and $215,489, respectively)
OTHER INFORMATION 114. 115.
113.Shares
116. Sold 2,066,131 4,094,013
117. Issued in reinvestment of distributions 244,698 201,211
118. Redeemed (3,152,524) (2,430,144)
119. Net increase (decrease) (841,695) 1,865,080
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
120. YEARS ENDED APRIL 30, MARCH 6, 1990
(COMMENCEMENT
OF
OPERATIONS) TO
121.SELECTED 1994 1993 1992 1991 APRIL 30, 1990
PER-SHARE DATA
122.Net asset value, $ 32.84 $ 30.94 $ 28.06 $ 24.58 $ 25.00
beginning of period
123.Income from
Investment
Operations
124. Net investment .81 .81 .82 .76 .13
income
125. Net realized and .81 1.89 2.94 3.49 (.57)
unrealized gain
(loss) on
investments
126. Total from 1.62 2.70 3.76 4.25 (.44)
investment
operations
127.Less Distributions
128. From net (.80) (.81) (.83) (.85) -
investment
income
129. From net realized (.17) - (.07) - -
gain
130. In excess of net (.01) - - - -
realized gain
131. Total distributions (.98) (.81) (.90) (.85) -
132.Redemption fees .01 .01 .02 .08 .02
added to paid in
capital
133.Net asset value, $ 33.49 $ 32.84 $ 30.94 $ 28.06 $ 24.58
end of period
134.TOTAL RETURN (dagger) (double dagger) 4.95 8.85 13.74 18.04 (1.68)%
% % % %
135.RATIOS AND SUPPLEMENTAL
DATA
136.Net assets, end of $ 282,702 $ 304,899 $ 229,553 $ 111,931 $ 14,767
period (000 omitted)
137.Ratio of expenses .45 .44 .35 .28 .28%*
to average net assets % % % %
138.Ratio of expenses .45 .45 .45 .45 .45%*
to average net assets % % % %
before expense
reductions
139.Ratio of net 2.38 2.54 2.84 3.52 3.41%*
investment income to % % % %
average net assets
140.Portfolio turnover 3 0 1 1 0%
rate % % % %
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(double dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING SOME OF THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Market Index Fund (the fund) is a fund of Fidelity Commonwealth
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-
dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
non-
taxable dividends. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption fee equal to .50% of the proceeds of the redeemed shares. A
portion of the fee is accounted for as a reduction of transfer agent
expenses. This portion of the redemption fee is used to offset the
transaction costs and other expenses that short-term trading imposes on the
fund and its shareholders. The remainder of the redemption fee is accounted
for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
an increase in paid in capital of $215,696, an increase in undistributed
net investment income of $21,003 and a decrease in accumulated net realized
gain on investments of $236,699.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve to varying degrees, elements of
market
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
risk and risks in excess of the amount recognized in the Statement of
Assets and Liabilities. The face or contract amounts reflect the extent of
the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,449,481 and $36,793,476, respectively, of which U.S.
government and government agency obligations aggregated $0 and $2,090,781,
respectively.
The market value of futures contracts opened and closed amounted to
$60,771,705 and $63,894,785, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of
.45% of the fund's average net assets.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to
6. BANK BORROWINGS -
CONTINUED
time. The maximum loan and the average daily loan balances during the
periods for which loans were outstanding amounted to $1,325,000 and
$1,197,800, respectively. The weighted average interest rate was 3.768%.
Interest expense includes $627 paid under the bank borrowing program.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Commonwealth Trust and the Shareholders of
Fidelity Market Index Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Commonwealth Trust: Fidelity Market Index Fund, including the
schedule of portfolio investments, as of April 30, 1994 and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended
and for the period March 6, 1990 (commencement of operations) to April 30,
1990. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994, by correspondence with the custodian
and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Commonwealth Trust: Fidelity Market Index Fund as of April 30,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the four years in the period then ended
and for the period March 6, 1990 (commencement of operations) to April 30,
1990, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan(Registered trademark) Fund
Real Estate Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
SMALL CAP STOCK
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on stock market
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 26 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 30 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 34 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
INVESTMENTS APRIL 30, 1994
Showing Percentage of Total Value of Investments
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.9%
Precision Castparts Corp. 23,400 $ 760,500
ROHR Industries, Inc (a). 15,500 135,625
Sturm Ruger & Co., Inc. 10,900 348,800
Thiokol Corp. 160,500 3,872,063
UNC, Inc. (a) 52,000 520,000
5,636,988
DEFENSE ELECTRONICS - 0.2%
Flir Systems, Inc. (a) 18,000 263,250
La Barge, Inc. (a) 7,000 12,250
Tech-Sym Corp. (a) 28,000 595,000
Watkins-Johnson Co. 22,000 709,500
1,580,000
TOTAL AEROSPACE & DEFENSE 7,216,988
BASIC INDUSTRIES - 1.8%
CHEMICALS & PLASTICS - 0.3%
Bailey Corp. (a) 22,000 217,250
First Mississippi Corp. 23,000 345,000
Lamson & Sessions Co. (a) 14,000 92,750
Sealed Air Corp. (a) 8,000 233,000
Vigoro Corp. 25,000 734,375
1,622,375
IRON & STEEL - 1.4%
Carpenter Technology Corp. 5,000 293,125
Chaparral Steel Company 22,000 222,750
Cleveland Cliffs, Inc. 32,000 1,188,000
National Steel Corp. Class B (a) 76,000 950,000
Steel Technologies, Inc. 10,000 180,000
TriMas Corp. 21,100 545,963
Weirton Steel Corp. (a) 12,000 103,500
Wheeling Pittsburgh Corp. (a) 328,000 5,412,000
8,895,338
METALS & MINING - 0.1%
Brush Wellman, Inc. 10,000 162,500
Magma Copper Co. Class B (a) 47,200 702,100
864,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.0%
Alltrista Corp. (a) 5,000 $ 93,750
TOTAL BASIC INDUSTRIES 11,476,063
CONGLOMERATES - 0.2%
CONGLOMERATES - 0.2%
Instrument Systems Corp. (a) 56,000 490,000
Quixote Corp. 24,300 510,300
Teleflex, Inc. 5,000 173,750
1,174,050
CONSTRUCTION & REAL ESTATE - 2.4%
BUILDING MATERIALS - 1.2%
ACX Technologies, Inc. (a) 20,000 690,000
Carlisle Companies, Inc. 10,000 323,750
Dexter Corp. 3,300 79,200
Grow Group, Inc. (a) 10,000 158,750
Medusa Corp. 160,000 3,980,000
Patrick Industries, Inc. 32,000 328,000
Ply-Gem Industries, Inc. 8,500 172,125
Republic Gypsum Co. 1,000 13,250
Southdown, Inc. (a) 13,800 351,900
Texas Industries, Inc. 40,000 1,505,000
Thermo Power Corp. (a) 16,800 130,200
7,732,175
CONSTRUCTION - 0.4%
Blount, Inc. Class A 7,000 251,125
Continental Homes Holding Corp. 47,400 764,325
Engle Homes, Inc. 14,000 175,000
Granite Construction, Inc. 30,000 675,000
KIT Manufacturing. Co. (a) 6,500 64,188
Schult Homes Corp. 2,000 28,000
Toll Brothers, Inc. (a) 50,000 700,000
2,657,638
ENGINEERING - 0.8%
Glenayre Technologies, Inc. 120,100 5,224,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Macerich Company 16,000 $ 314,000
TOTAL CONSTRUCTION & REAL ESTATE 15,928,163
DURABLES - 6.4%
AUTOS, TIRES, & ACCESSORIES - 0.8%
Amcast Industrial Corp. 7,000 161,000
Automotive Industries Holding, Inc. (a) 47,000 1,257,250
Defiance Industries, Inc. (a) 39,400 265,950
Durakon Industries, Inc. (a) 4,000 76,000
Gentex Corp. (a) 28,900 841,713
Hayes Wheels International, Inc. 27,000 742,500
Lear Seating Corp. 8,000 155,000
NACCO Industries, Inc. Class A 3,000 150,375
Purolator Products Co. 13,000 201,500
Simpson Industries, Inc. 8,000 164,000
Stant Corp. 4,000 61,000
Wabash National Corp. 25,000 1,137,500
5,213,788
CONSUMER DURABLES - 0.2%
Department 56 Inc. (a) 7,000 194,250
Forschner Group, Inc. 71,800 1,068,025
1,262,275
CONSUMER ELECTRONICS - 0.5%
Harman International Industries, Inc. (a) 24,100 750,113
Mr. Coffee, Inc. (a) 35,000 481,250
Rival Co. (The) 82,200 1,726,200
Toro Co. 17,500 463,750
3,421,313
HOME FURNISHINGS - 0.4%
Bush Industries, Inc. Class A 67,500 1,898,438
Haverty Furniture Companies, Inc. 18,000 225,000
La-Z Boy Chair Co. 5,000 167,500
2,290,938
TEXTILES & APPAREL - 4.5%
Culp, Inc. 9,300 108,113
Farah, Inc. (a) 35,000 730,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Fieldcrest Cannon, Inc. (a) 26,000 $ 819,000
Galey & Lord, Inc. (a) 45,800 916,000
Haggar Corp. 104,100 2,966,850
Hartmarx Corp. (a) 9,600 64,800
Interface, Inc. Class A 17,000 233,750
Justin Industries Inc. 12,000 159,000
Kellwood Co. 91,000 2,195,375
Nautica Enterprises, Inc. (a) 365,800 9,876,600
Oxford Industries, Inc. 52,700 1,660,050
Pillowtex Corp. (a) 50,000 875,000
Quiksilver (a) 306,000 4,245,750
St. John Knits (a) 163,000 4,136,125
28,987,038
TOTAL DURABLES 41,175,352
ENERGY - 5.0%
ENERGY SERVICES - 4.2%
Chiles Offshore Corp. (a) 31,000 135,625
Dual Drilling Co. (a) 18,000 173,250
Energy Service, Inc. (a) 1,144,000 4,433,000
Input/Output, Inc. (a) 311,800 14,654,600
Lone Star Technologies, Inc. (a) 481,700 3,432,113
Lufkin Industries, Inc. 1,000 17,750
Marine Drilling Cos., Inc. (a) 66,800 350,700
Newpark Resources, Inc. (a) 17,000 246,500
Noble Drilling Corp. (a) 115,000 790,625
Offshore Logistics, Inc. (a) 15,000 210,000
Pool Energy Services Co. (a) 123,400 879,225
Seitel, Inc. (a) 30,500 842,563
Smith International, Inc. (a) 53,000 662,500
Wheatley TXT Corp. 5,000 57,500
26,885,951
OIL & GAS - 0.8%
Enron Liquids Pipeline LP 4,000 116,000
Holly Corp. 18,000 517,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Kaneb Pipeline Partners, L.P. 2,000 $ 51,250
KCS Group, Inc. 190,600 4,622,050
5,306,800
TOTAL ENERGY 32,192,751
FINANCE - 9.0%
BANKS - 0.8%
Cullen Frost Bankers, Inc. 8,000 288,000
Dauphin Deposit Corp. 11,000 269,500
Deposit Guaranty Corp. 5,200 146,900
Fourth Financial Corp. 7,900 222,188
Hibernia Corp. Class A 78,000 614,250
Magna Group, Inc. 13,000 243,750
Premier Bancorp, Inc. 22,200 388,500
Union Planters Corp. 14,000 371,000
Westamerica Bancorp 43,600 1,264,400
Whitney Holding Corp. 44,500 1,023,500
Worthen Banking Corp. 3,000 66,000
Zions Bancorporation 10,000 385,000
5,282,988
CREDIT & OTHER FINANCE - 2.0%
Equicredit Corp. (a) 81,500 1,334,563
Foothill Group, Inc., Class A 171,300 2,355,375
GFC Financial Corp. 5,000 162,500
Hamilton Financial Services Corp. 8,000 38,000
Money Store, Inc. 157,450 3,070,275
North American Mortgage Co. 154,300 3,761,063
SPS Transaction Services, Inc. 3,200 177,600
United Companies Financial Corp. 49,200 1,771,200
12,670,576
INSURANCE - 5.2%
Acordia, Inc. 7,000 194,250
American Income Holding, Inc. 45,700 1,228,188
Capital RE Corp. 173,300 3,271,038
Capitol American Financial Corp. 29,000 677,875
CMAC Investments (a) 138,800 3,747,600
Delphi Financial Group, Inc. Class A (a) 60,400 1,117,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Enhance Financial Services Group Corp. 29,400 $ 554,925
Fidelity National Financial, Inc. 82,500 1,454,063
First American Financial Corp. California 131,700 3,720,525
Fremont General Corp. 182,050 4,209,906
Frontier Insurance Group, Inc. 6,000 277,500
Horace Mann Educators Corp. 12,000 330,000
Orion Capital Corp. 1,500 46,500
Penncorp Financial Group, Inc. 354,000 5,133,000
Phoenix Re Corp. 292,300 6,869,050
Protective Life Corp. 10,000 423,750
Washington National Corp. 4,000 91,500
33,347,070
SAVINGS & LOANS - 0.2%
Dime Savings Bank of New York, FSB (a) 124,000 1,054,000
Metropolitan Financial Corp. 22,000 349,250
NBB Bancorp Inc. 5,000 214,375
1,617,625
SECURITIES INDUSTRY - 0.8%
Alex. Brown, Inc. 33,000 886,875
Eaton Vance Corp. 9,000 276,750
Legg Mason, Inc. 126,650 2,707,144
Pioneer Group, Inc. 37,000 1,438,375
5,309,144
TOTAL FINANCE 58,227,403
HEALTH - 11.4%
DRUGS & PHARMACEUTICALS - 0.5%
Celtrix Laboratories, Inc. (a) 35,000 210,000
Jones Medical Industries, Inc. 25,000 287,500
Molecular Biosystems, Inc. (a) 7,000 122,500
Protein Design Labs, Inc. 28,000 563,500
Roberts Pharmaceutical Corp. (a) 62,700 2,061,263
3,244,763
MEDICAL EQUIPMENT & SUPPLIES - 2.9%
American Medical Electronics, Inc. (a) 310,000 2,693,125
ADAC Laboratories 10,000 80,000
Beckman Instruments, Inc. 20,000 495,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Bergen Brunswig Corp. Class A 15,000 $ 264,375
Cordis Corp. (a) 41,800 1,933,250
Datascope Corp. (a) 16,000 228,000
FoxMeyer Corp. 15,000 195,000
Healthdyne, Inc. (a) 21,000 136,500
Herbalife International, Inc. 102,000 2,409,750
Mentor Corp. 10,000 145,000
Omnicare, Inc. 110,000 3,217,500
Owens & Minor, Inc. 12,000 279,000
Steris Corporation (a) 112,000 3,136,000
Sunrise Medical, Inc. (a) 22,000 547,250
VISX, Inc. 172,800 2,894,400
18,654,150
MEDICAL FACILITIES MANAGEMENT - 8.0%
Abbey Healthcare Group, Inc. (a) 107,000 2,086,500
Community Psychiatric Centers 209,000 3,030,500
Coventry Corp. (a) 125,000 6,031,250
Employee Benefit Plans, Inc. (a) 92,000 966,000
Gencare Health Systems, Inc. (a) 26,000 858,000
Health Management Associates, Inc. Class A (a) 16,000 586,000
Homedco Group, Inc. (a) 58,000 1,906,750
Horizon Healthcare Corp. (a) 29,700 694,238
Integrated Health Services, Inc. (a). 159,000 5,068,125
Intergroup Healthcare Corp. (a) 148,000 6,641,500
Lincare Holdings, Inc. (a) 188,600 4,314,225
Living Centers of America, Inc. (a) 101,291 2,886,794
Maxicare Health Plans, Inc. (a) 38,300 440,450
Multicare Companies, Inc. (a) 5,000 97,500
Ornda Healthcorp (a) 9,706 167,429
Ramsay-HMO, Inc. (a) 20,000 1,095,000
Regency Health Services, Inc. (a) 90,000 1,428,750
Salick Health Care, Inc. (a) 51,000 790,500
Sierra Health Services, Inc. (a) 46,000 1,173,000
TakeCare, Inc. (a) 100,000 7,318,750
United HealthCare Corp. 60,544 2,512,576
Universal Health Services, Inc. Class B (a) 58,500 1,396,688
Vencor, Inc. 17,400 567,675
52,058,200
TOTAL HEALTH 73,957,113
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
ELECTRICAL EQUIPMENT - 0.6%
Amphenol Corp. Class A (a) 15,300 $ 269,663
Baldor Electric Co. 3,080 75,460
BMC Industries, Inc. (a) 31,000 802,125
Charter Power Systems, Inc. 19,300 246,075
IEC Electronics Corp. (a) 37,000 462,500
Roper Industries, Inc. 23,000 557,750
Willcox & Gibbs, Inc. (a) 88,000 539,000
Zenith Electronics Corp. (a) 111,700 1,005,300
3,957,873
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
Bearings, Inc. 4,000 132,500
Donaldson Company, Inc. 3,000 67,125
Duriron Company, Inc. 28,000 472,500
FSI International, Inc. (a) 33,800 405,600
Goulds Pumps, Inc. 21,000 451,500
Graco, Inc. 10,000 226,250
Indresco, Inc. (a) 35,000 463,750
IDEX Corp. (a) 32,000 1,216,000
JLG Industries, Inc. 43,900 1,201,763
Kennametal, Inc. 32,000 1,616,000
Littelfuse, Inc. 10,000 232,500
Park-Ohio Industries, Inc. (a) 15,000 245,625
Regal-Beloit Corp. 8,000 217,000
Ultratech Stepper, Inc. 13,000 307,125
Varlen Corp. 9,000 168,750
Watts Industries, Inc. Class A 21,000 493,500
7,917,488
POLLUTION CONTROL - 0.1%
Sanifill, Inc. (a) 14,000 341,250
Western Waste Industries, Inc. (a) 8,000 140,000
481,250
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 12,356,611
MEDIA & LEISURE - 2.9%
ENTERTAINMENT - 0.9%
Carmike Cinemas, Inc. Class A (a) 28,000 514,500
Casino America, Inc. (a) 54,800 1,020,650
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - CONTINUED
Players International, Inc. 130,000 $ 2,681,250
RHI Entertainment, Inc. (a) 38,000 1,358,500
5,574,900
LEISURE DURABLES & TOYS - 0.5%
ARCTCO, Inc. 14,000 367,500
Coachmen Industries, Inc. 142,200 2,186,325
Outboard Marine Corp. 44,000 984,500
3,538,325
LODGING & GAMING - 0.4%
Hollywood Casino Corp. Class A (a) 17,000 131,750
Rio Hotel & Casino, Inc. (a) 35,900 572,156
Santa Anita Realty Enterprises, Inc. comb. cert. 6,000 117,000
Showboat, Inc. 21,200 373,650
Station Casinos, Inc. 62,000 868,000
Video Lottery Technologies, Inc. (a) 28,600 439,725
2,502,281
PUBLISHING - 1.0%
Banta Corp. 18,000 657,000
Gibson Greetings, Inc. 16,200 319,950
Houghton Mifflin Co. 18,000 789,750
Meredith Corp. 7,000 304,500
Pulitzer Publishing Co. 2,000 73,250
Score Board, Inc. (a) 530,400 4,641,000
6,785,450
RESTAURANTS - 0.1%
Luby's Cafeterias, Inc. 14,000 332,500
Sbarro, Inc. 5,000 176,250
508,750
TOTAL MEDIA & LEISURE 18,909,706
NONDURABLES - 1.4%
BEVERAGES - 0.1%
Celestial Seasonings, Inc. (a) 13,000 367,250
Coca-Cola Bottling Co. 14,000 381,500
748,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
FOODS - 1.0%
Flowers Industries, Inc. 14,000 $ 236,250
Hudson Foods, Inc. Class A 162,700 2,501,513
J&J Snack Foods Corp (a). 216,900 3,334,838
Michael Foods, Inc. 15,000 148,125
6,220,726
HOUSEHOLD PRODUCTS - 0.3%
First Brands Corp. 12,000 405,000
Guest Supply, Inc. (a) 23,000 388,125
Maybelline, Inc. 3,000 97,125
Paragon Trade Brands, Inc. (a) 19,000 551,000
Stanhome, Inc. 9,000 298,125
West, Inc. 3,000 70,500
1,809,875
TOTAL NONDURABLES 8,779,351
PRECIOUS METALS - 0.4%
Hecla Mining Co. (a) 204,000 2,320,500
RETAIL & WHOLESALE - 7.3%
APPAREL STORES - 1.3%
American Eagle Outfitters, Inc. 1,500 23,438
Baker (J.), Inc. 93,000 1,976,250
Claire's Stores, Inc. 156,000 2,632,500
Mothers Work (a) 3,000 63,750
One Price Clothing Stores, Inc. (a) 22,500 408,750
United States Shoe Corp. 201,700 3,630,600
8,735,288
DRUG STORES - 0.1%
Big B, Inc. 19,000 223,250
Medicine Shoppe International, Inc. 12,500 281,250
504,500
GENERAL MERCHANDISE STORES - 0.7%
Casey's General Stores, Inc. (a) 184,200 2,233,425
Gottschalks, Inc. (a) 7,000 82,250
Michaels Stores, Inc. (a) 42,100 1,862,925
4,178,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.0%
Super Food Services, Inc. 9,000 $ 108,000
RETAIL & WHOLESALE, MISCELLANEOUS - 5.2%
Blair Co. 6,000 261,750
BMC West Corp. (a) 294,000 8,599,500
Damark International, Inc. Class A 81,000 1,964,250
Fabri-Centers of America, Inc. (a) 5,000 78,125
Good Guys, Inc. 60,000 930,000
Hechinger Co. Class A 60,000 907,500
Intertan, Inc. (a) 41,700 276,263
Lillian Vernon Corp. 8,000 175,000
Micro Warehouse, Inc. (a) 46,000 1,201,750
Rex Stores Corp. (a) 104,000 1,937,000
Sun Television & Appliances, Inc. 30,900 270,375
Tiffany & Company, Inc. 14,000 425,250
Transmedia Network, Inc. (a) 86,700 1,018,725
Waban, Inc. (a) 60,600 1,022,625
Williams-Sonoma, Inc. (a) 424,700 14,545,975
33,614,088
TOTAL RETAIL & WHOLESALE 47,140,476
SERVICES - 2.0%
ADVERTISING - 0.0%
Foote Cone & Belding Communications, Inc. 4,000 171,000
LEASING & RENTAL - 0.1%
Agency Rent-A-Car, Inc. 1,000 13,000
PHH Corp. 10,000 355,000
368,000
PRINTING - 0.6%
Merrill Corp. 124,500 2,863,500
New England Business Service, Inc. 19,000 382,375
Standard Register Co. 9,000 191,250
Wallace Computer Services, Inc. 18,000 598,500
4,035,625
SERVICES - 1.3%
CDI Corp. (a) 5,000 70,000
Day Runner, Inc. (a) 1,500 27,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - CONTINUED
Devry, Inc. (a) 43,700 $ 1,201,750
Health Care Services Group, Inc. (a) 14,000 159,250
Lawyers Title Corp. 12,000 157,500
National Education Corp. (a) 33,000 173,250
Robert Half International, Inc. (a) 153,300 5,499,638
Vectra Technologies (a) 10,000 72,500
Zebra Technologies Corp. Class A (a) 38,000 1,092,500
8,453,388
TOTAL SERVICES 13,028,013
TECHNOLOGY - 30.3%
COMMUNICATIONS EQUIPMENT - 4.3%
Aspect Telecommunications Corp. (a) 67,800 2,084,850
Bolt Beranek & Newman, Inc. (a) 57,000 705,375
Centigram Communications Corp. (a) 169,500 4,894,313
InterVoice, Inc. (a) 100,900 1,160,350
Level One Communications, Inc. (a). 20,000 392,500
Network General Corp. 489,300 9,113,213
Telebit Corp. (a) 119,000 1,338,750
US Robotics, Inc. (a) 74,000 2,349,500
Xircom, Inc. (a) 273,000 6,142,500
28,181,351
COMPUTER SERVICES & SOFTWARE - 4.6%
Brandon Systems Corp. 2,000 29,500
Business Records Corp. Holding Co. (a) 3,000 102,000
Chipcom Corp. (a) 177,000 8,296,875
Computer Horizons Corp. (a) 10,500 105,000
Educational Insights, Inc. 8,000 73,000
Electronics for Imaging Inc. (a) 24,500 367,500
Gerber Scientific, Inc. 7,000 105,875
IMRS, Inc. 8,000 186,000
Intelligent Electronics, Inc. 84,200 1,599,800
Intuit (a) 223,000 8,028,000
Keane, Inc. (a) 3,000 116,625
Landmark Graphics Corp. 34,800 1,122,300
MicroAge, Inc. (a) 278,900 7,111,950
Payco American Corp. (a) 2,000 18,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
SPSS, Inc. 3,000 $ 27,375
Shared Medical Systems Corp. 39,000 999,375
Sterling Software, Inc. (a) 17,600 514,800
VMark Software, Inc. (a) 43,200 864,000
Xcellenet, Inc. 12,000 162,000
29,830,475
COMPUTERS & OFFICE EQUIPMENT - 5.1%
ADAPTEC, Inc. (a) 77,000 1,212,750
Cray Research, Inc. (a) 131,300 2,806,538
Exabyte (a) 148,800 2,883,000
Filenet Corp. 280,800 7,722,000
Gates/FA Distributing, Inc. (a) 98,700 1,949,325
Media Vision Technology, Inc. (a) 45,500 292,906
Merisel, Inc. (a) 161,700 2,799,431
MICROS Systems, Inc. (a) 5,000 122,500
Norand Corp. (a) 29,500 1,084,125
PenTech International, Inc. (a) 12,000 70,500
Radius, Inc. (a) 9,000 61,875
Sequoia Systems, Inc. 29,000 145,000
Symbol Technologies, Inc. (a) 9,200 231,150
Tech Data Corp. (a) 508,000 9,080,500
Tricord Systems, Inc. (a) 214,400 2,572,800
33,034,400
ELECTRONIC INSTRUMENTS - 3.4%
Electro Scientific Industries, Inc. (a) 87,000 935,250
Fisher Scientific International, Inc. 39,000 1,326,000
Helix Technology Corp. 1,000 19,250
KLA Instruments Corp. (a) 70,100 2,952,963
Lam Research Corp. (a) 26,800 810,700
Medar, Inc. (a) 14,000 182,000
Novellus System, Inc. (a) 418,000 15,204,750
Silicon Valley Group, Inc. (a) 47,000 511,125
21,942,038
ELECTRONICS - 12.9%
Advance Circuits, Inc. (a) 88,500 1,216,875
Altera Corp. (a) 333,000 12,903,750
Atmel Corp. (a) 866,200 21,438,450
Augat, Inc. (a) 246,500 5,084,063
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Bell Microproducts, Inc. (a) 20,000 $ 265,000
Benchmark Electronics, Inc. 19,100 482,275
Chips & Technologies, Inc. (a) 222,800 1,002,600
Cypress Semiconductor Corp. 132,000 2,194,500
DH Technology, Inc. (a) 18,000 315,000
Dovatron International, Inc. (a) 13,800 301,875
Flextronics International 7,000 77,000
Genus, Inc. (a) 27,000 109,688
Integrated Device Technology, Inc. (a) 419,900 12,649,488
International Rectifier Corp. (a) 83,000 1,317,625
LSI Logic Corp. (a) 50,000 1,112,500
Marshall Industries (a) 211,200 5,464,800
Maxim Integrated Products, Inc. (a) 160,000 7,820,000
Methode Electronics, Inc. Class A 21,000 330,750
Microchip Technology, Inc. (a) 89,000 2,492,000
Photronics, Inc. (a) 19,000 370,500
Pioneer-Standard Electronics, Inc. 125,400 3,385,800
Recoton Corp. (a) 30,000 817,500
Sterling Electronics Corp. (a). 17,000 235,875
Tencor Instruments (a) 31,000 581,250
VLSI Technology, Inc. (a) 106,000 1,470,750
83,439,914
TOTAL TECHNOLOGY 196,428,178
TRANSPORTATION - 3.8%
AIR TRANSPORTATION - 1.0%
SkyWest, Inc. 166,100 6,415,613
RAILROADS - 0.1%
Wisconsin Central Transportation Corp. 9,000 657,000
SHIPPING - 1.1%
American President Companies, Ltd. 324,400 6,609,650
Kirby Corp. (a) 14,000 304,500
OMI Corp. (a) 13,263 86,210
7,000,360
TRUCKING & FREIGHT - 1.6%
Airborne Freight Corp. 165,400 6,078,450
Arnold Industries, Inc. 3,200 57,600
Landstar System, Inc. 12,000 300,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
TNT Freightways Corp. 61,650 $ 1,448,775
Werner Enterprises, Inc. 6,400 169,600
XTRA Corp. 25,300 1,116,363
Yellow Corp. 73,000 1,528,419
10,699,207
TOTAL TRANSPORTATION 24,772,180
UTILITIES - 1.3%
CELLULAR - 0.0%
Cellular Communications Puerto Rico Inc. (a) 14,000 294,000
ELECTRIC UTILITY - 0.9%
Central Hudson Gas & Electric Corp. 10,000 291,250
Central Louisiana Electric Co., Inc. 7,000 176,750
Commonwealth Energy Systems 2,000 84,000
Iowa-Illinois Gas & Electric Co. 7,000 164,500
Public Service Co. of New Mexico (a) 330,000 4,413,750
Sierra Pacific Resources 5,600 105,000
TNP Enterprises, Inc. 5,000 81,875
United Illuminating Co. 7,000 256,375
5,573,500
GAS - 0.1%
Energen Corp. 3,000 59,625
New Jersey Resources Corp. 900 22,275
Northwest Natural Gas Co. 7,000 236,250
ONEOK, Inc. 5,300 88,113
Southwestern Energy Co. 10,000 163,750
Transco Energy Co. 24,000 363,000
933,013
TELEPHONE SERVICES - 0.3%
ALC Communications Corp. (a) 46,000 1,627,250
Lincoln Telecommunications Co. 18,000 290,250
1,917,500
TOTAL UTILITIES 8,718,013
TOTAL COMMON STOCKS
(Cost $535,758,503) 573,800,911
US TREASURY OBLIGATIONS - 0.8%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
U.S. Treasury Bills, yields at date of purchase
3.58% to 3.63%, 7/7/94
(Cost $5,265,335) $ 5,300,000 $ 5,263,377
REPURCHASE AGREEMENTS - 10.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%,
dated 4/29/94 due 5/2/94 $ 68,866,447 68,846,000
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $609,869,838) $ 647,910,288
LEGEND
7. Non-income producing
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $610,248,874. Net unrealized appreciation aggregated
$37,661,414 of which $73,324,284 related to appreciated investment
securities and $35,662,870 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending April 30,
1995 $16,790,772 of losses recognized during the period November 1, 1993 to
April 30, 1994.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994
ASSETS 8. 9.
10.Investment in securities, at value (including 11. $ 647,910,288
repurchase agreements of $68,846,000) (cost
$609,869,838) (Notes 1 and 2) - See accompanying
schedule
12.Cash 13. 1,917,541
14.Receivable for investments sold 15. 16,869,508
16.Receivable for fund shares sold 17. 5,457,775
18.Dividends receivable 19. 162,503
20. TOTAL ASSETS 21. 672,317,615
LIABILITIES 22. 23.
24.Payable for investments purchased $ 8,004,106 25.
26.Payable for fund shares redeemed 1,625,556 27.
28.Accrued management fee 362,143 29.
30.Other payables and accrued expenses 521,429 31.
32. TOTAL LIABILITIES 33. 10,513,234
34.NET ASSETS 35. $ 661,804,381
36.Net Assets consist of (Note 1): 37. 38.
39.Paid in capital 40. $ 640,930,275
41.Undistributed net investment income 42. 3,464
43.Accumulated undistributed net realized gain (loss) on 44. (17,169,808)
investments
45.Net unrealized appreciation (depreciation) on 46. 38,040,450
investment securities
47.NET ASSETS, for 62,393,791 shares outstanding 48. $ 661,804,381
49.NET ASSET VALUE, offering price and redemption price 50. $10.61
per share ($661,804,381 (divided by) 62,393,791 shares)
51.Maximum offering price per share 52. $10.94
(100/97 of $10.61)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 28, 1993 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1994
INVESTMENT INCOME 54. $ 3,037,820
53.Dividends
55.Interest 56. 2,790,967
57. TOTAL INCOME 58. 5,828,787
EXPENSES 59. 60.
61.Management fee (Note 4) $ 3,261,052 62.
63.Transfer agent fees (Note 4) 1,812,306 64.
65.Accounting fees and expenses (Note 4) 263,768 66.
67.Non-interested trustees' compensation 338 68.
69.Custodian fees and expenses 68,868 70.
71.Registration fees 363,325 72.
73.Audit 18,394 74.
75.Legal 1,406 76.
77.Interest (Notes 5 and 6) 3,553 78.
79.Miscellaneous 2,246 80.
81. Total expenses before reductions 5,795,256 82.
83. Expense reductions (Note 7) (104,492) 5,690,764
84.NET INVESTMENT INCOME 85. 138,023
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 87. 88.
(NOTES 1 AND 3)
86.Net realized gain (loss) on:
89. Investment securities (12,032,977) 90.
91. Futures contracts (2,645,175) (14,678,152)
92.Change in net unrealized appreciation (depreciation) 93. 38,040,450
on investment securities
94.NET GAIN (LOSS) 95. 23,362,298
96.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 97. $ 23,500,321
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
JUNE 28, 1993
(COMMENCEMENT
OF OPERATIONS) TO
APRIL 30, 1994
INCREASE (DECREASE) IN NET ASSETS
98.Operations $ 138,023
Net investment income
99. Net realized gain (loss) on investments (14,678,152)
100. Change in net unrealized appreciation (depreciation) on investments 38,040,450
101. 23,500,321
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
102.Distributions to shareholders (138,023)
From net investment income (875,408)
In excess of net investment income
103. In excess of net realized gain (2,630,427)
104. TOTAL DISTRIBUTIONS (3,643,858)
105.Share transactions 1,088,308,959
Net proceeds from sales of shares
106. Reinvestment of distributions 3,618,979
107. Cost of shares redeemed (449,980,020)
108. 641,947,918
Net increase (decrease) in net assets resulting from share transactions
109. 661,804,381
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 110.
111. Beginning of period -
112. End of period (including undistributed net investment income of $ 661,804,381
$3,464)
OTHER INFORMATION 114.
113.Shares
115. Sold 103,952,169
116. Issued in reinvestment of distributions 343,665
117. Redeemed (41,902,043)
118. Net increase (decrease) 62,393,791
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
119. JUNE 28, 1993
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 1994
120.SELECTED PER-SHARE DATA
121.Net asset value, beginning of period $ 10.00
122.Income from Investment Operations
123. Net investment income .02
124. Net realized and unrealized gain (loss) on investments .65
125. Total from investment operations .67
126.Less Distributions
127. From net investment income -
128. In excess of net investment income (.02)
129. In excess of net realized gain (.04)
130. Total distributions (.06)
131.Net asset value, end of period $ 10.61
132.TOTAL RETURN (dagger)(double dagger) 6.70%
133.RATIOS AND SUPPLEMENTAL DATA
134.Net assets, end of period (000 omitted) $ 661,804
135.Ratio of expenses to average net assets ** 1.18%*
136.Ratio of expenses to average net assets before expense reductions 1.20%*
**
137.Ratio of net investment income to average net assets .03%*
138.Portfolio turnover rate 210%*
</TABLE>
* ANNUALIZED
** SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
(dagger) THE TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIOD SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994
8. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Small Cap Stock Fund (the fund) is a fund of Fidelity Commonwealth
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. The fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By so qualifying, the fund
will not be subject to income taxes to the extent that it distributes all
of its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income Tax
Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, partnerships, non-taxable dividends and
losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
9. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
10. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,265,687,740 and $717,879,403, respectively.
The market value of futures contracts opened and closed amounted to
$248,119,700 and $245,474,525, respectively.
11. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .35%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. The fund's performance
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
adjustment will not take effect until June 1994. For the period, the
management fee was equivalent to an annual rate of .68% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $2,299,056 on sales of shares of the fund.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. Fidelity Service Co. (FSC), an affiliate of FMR, maintains
the fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $178,800 for the period.
12. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $31,339,000. The weighted average
interest rate was 3.44%. Interest expense includes $2,996 paid under the
interfund lending program.
13. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $5,176,000. The weighted average
interest rate was 3.88%. Interest expense includes $557 paid under the bank
borrowing program.
14. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$104,492 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Commonwealth Trust and the Shareholders of
Fidelity Small Cap Stock Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Commonwealth Trust: Fidelity Small Cap Stock Fund, including the
schedule of portfolio investments, as of April 30, 1994, and the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period June 28, 1993 (commencement of
operations), to April 30, 1994. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included con- firmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Commonwealth Trust: Fidelity Small Cap Stock Fund as of April
30, 1994, the results of its operations, the changes in its net assets and
the financial highlights for the period June 28, 1993 (commencement of
operations), to April 30, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty Fund
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Growth Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
STATE HOUSE - BOSTON, MA
CERTIFICATE OF FIDELITY COMMONWEALTH TRUST
We, J. Gary Burkhead, Senior Vice President and Arthur S. Loring,
Secretary of
FIDELITY COMMONWEALTH TRUST
82 Devonshire Street
Boston, MA 02109
do certify that, in accordance with ARTICLE XII, SECTION 7 of the Fidelity
Commonwealth Declaration of Trust, the Trustees of said Trust, on June 16,
1994, restated such Declaration of Trust incorporating all amendments to
the Declaration of Trust duly adopted by the Trustees and Shareholders
prior to the date of such restatement.
The attached Restatement is hereby filed under Chapter 182, Section 2 of
the General Laws.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 16th day of June, 1994.
/s/ J. Gary Burkhead /s/ Arthur S. Loring
J. Gary Burkhead Arthur S. Loring
Senior Vice President Secretary
Exhibit 1(a)
RESTATED DECLARATION OF TRUST
DATED JUNE 16, 1994
RESTATED DECLARATION OF TRUST, made June 16, 1994 by each of the Trustees
whose signature is affixed hereto (the "Trustees")
WHEREAS, the Trustees desire to restate this Declaration of Trust for the
sole purpose of supplementing the Declaration to incorporate amendments
duly adopted; and
WHEREAS, this Trust was initially made on December 1 , 1986 by Edward C.
Johnson 3d, Caleb Loring, Jr., George K. McKenzie and William R. Spaulding
in order to establish a trust fund for the investment and reinvestment of
funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in Trust
under this restated Declaration of Trust as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as the "Fidelity Commonwealth
Trust."
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The Terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or 50% requirement of the
third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them
in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to Fidelity Commonwealth Trust;
(c) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article X, Section 3;
(d) "Shareholder" means a record owner of Shares of the Trust;
(e) The "Trustees" refer to the individual trustees in their capacity as
trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustee or trustees;
(f) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of the Trust or each Series shall be
divided from time to time, including such class or classes of Shares as the
Trustees may from time to time create and establish and including fractions
of shares as well as whole shares consistent with the requirements of
Federal and/or state securities laws;
(g) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time; and
(h) "Series" refers to series of Shares of the Trust established in
accordance with the provisions of Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series or classes
as the Trustees shall from time to time create and establish. The number of
Shares is unlimited and each Share shall be without par value and shall be
fully paid and nonassessable. The Trustees shall have full power and
authority, in their sole discretion and without obtaining any prior
authorization or vote of the Shareholders or of any Series or class of
Shareholders of the Trust, to create and establish (and to change in any
manner) Shares or any Series or classes thereof with such preferences,
voting powers, rights and privileges as the Trustees may from time to time
determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued
Shares into one or more Series or classes of Shares, to abolish any one or
more Series or classes of Shares, and to take such other action with
respect to the Shares as the Trustees may deem desirable.
ESTABLISHMENT OF SERIES
Section 2. The establishment of any Series shall be effective upon the
adoption of a resolution by a majority of the then Trustees setting forth
such establishment and designation and the relative rights and preferences
of the Shares of such Series. At any time that there are no Shares
outstanding of any particular Series previously established and designated,
the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust. The Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books of the Trust
shall be conclusive as to who are the holders of Shares and as to the
number of Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the
appropriate Series is authorized to invest, valued as provided in Article
X, Section 3. After the date of the initial contribution of capital, the
number of Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding and the amount received by the
Trustees on the account of the contribution shall be treated as an asset of
the Trust. Subsequent investments in the Trust shall be credited to each
Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge
upon investments in the Trust and (b) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series, shall
be allocated by the Trustees between and among one or more of the Series in
such manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders
of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series shall
be so recorded upon the books of the Trust, and shall be held by the
Trustees in Trust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees between or among any one or more of the Series in such manner as
the Trustees in their sole discretion deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes. Any creditor of any Series may look only to the
assets of that Series to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. The Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust
or the Trustees.
LIMITATION OF PERSONAL LIABILITY
Section 7. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust shall include a
recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
ELECTION: INITIAL TRUSTEES
Section 2. On a date fixed by the Trustees, the Shareholders shall elect
not less than three Trustees. A Trustee shall not be required to be a
Shareholder of the Trust. The initial Trustees shall be Edward C. Johnson
3d, Caleb Loring, Jr., George K. McKenzie and William R. Spaulding and such
other individuals as the Board of Trustees shall appoint pursuant to
Section 4 of this Article IV.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that
any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery
or upon such later date as is specified therein; (b) that any Trustee may
be removed at any time by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date when
such removal shall become effective; (c) that any Trustee who requests in
writing to be retired or who has become incapacitated by illness or injury
may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may be
removed at any Special Meeting of the Trust by a vote of two-thirds of the
outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the 1940 Act. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office or by
recording in the records of the Trust, whereupon the appointment shall take
effect. Within three months of such appointment the Trustees shall cause
notice of such appointment to be mailed to each Shareholder at his address
as recorded on the books of the Trust. An appointment of a Trustee may be
made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason
of retirement, resignation or increase in number of Trustees effective at a
later date, provided that said appointment shall become effective only at
or after the effective date of said retirement, resignation or increase in
number of Trustees. As soon as any Trustee so appointed shall have accepted
this trust, the trust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. The power of
appointment is subject to the provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his power for
a period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more than
twelve (12), serving hereunder at any time shall be determined by the
Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is physically or mentally incapacitated by reason of
disease or otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no
vacancy shall remain unfilled for a period longer than six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets of
the Trust shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, but
each Shareholder shall have a proportionate undivided beneficial interest
in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
The Trustees shall not in any way be bound by or limited by present or
future laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in the Declaration of
Trust or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound by or limited
by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that they do not reserve that right to the
Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ a bank or trust company as custodian of any assets of the
Trust subject to any conditions set forth in this Declaration of Trust or
in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or
by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, custodian or underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XII, Section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form; or either in its
own name or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III.
(n) To allocate assets, liabilities and expenses of the Trust to a
particular Series or to apportion the same between or among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series shall be payable solely out of the assets belonging to that Series
as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money and to pledge, mortgage or hypothecate the assets of
the Trust subject to applicable requirements of the 1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued
and sold Shares to and buy such Shares from any such person or any firm or
company in which he is interested, subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and all
subject to any restrictions which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by telephone
consent provided a quorum of Trustees participate in any such telephonic
meeting, unless the 1940 Act requires that a particular action be taken
only at a meeting of the Trustees. At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the Trustees
or by any two other Trustees. Notice of the time, date and place of all
meetings of the Trustees shall be given by the party calling the meeting to
each Trustee by telephone or telegram sent to his home or business address
at least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who attends
the meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to
any one of their number their authority to approve particular matters or
take particular actions on behalf of the Trust.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by
the Trustees and the administration of the Trust, and may be the chief
executive, financial and accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging
to the appropriate Series for their expenses and disbursements, including,
without limitation, fees and expenses of Trustees who are not Interested
Persons of the Trust, interest expense, taxes, fees and commissions of
every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of shares including expenses attributable
to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and State
laws and regulations, charges of custodians, transfer agents, and
registrars, expenses of preparing and setting up in type Prospectuses and
Statements of Additional Information, expenses of printing and distributing
Prospectuses sent to existing Shareholders, auditing and legal expenses,
reports to Shareholders, expenses of meetings of Shareholders and proxy
solicitations therefor, insurance expense, association membership dues and
for such non-recurring items as may arise, including litigation to which
the Trust is a party, and for all losses and liabilities by them incurred
in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series prior to any rights or interests
of the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees may in
their discretion from time to time enter into an investment advisory or
management contract(s) with respect to the Trust or any Series thereof
whereby the other party(ies) to such contract(s) shall undertake to furnish
the Trustees such management, investment advisory, statistical and research
facilities and services and such other facilities and services, if any, and
all upon such terms and conditions, as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration of Trust, the
Trustees may authorize the investment adviser(s) (subject to such general
or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales or exchanges of portfolio securities and other
investment instruments of the Trust on behalf of the Trustees or may
authorize any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more sub-advisers from time to time to perform
such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser
and sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time enter
into (a) contract(s) providing for the sale of the Shares, whereby the
Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In
either case, the contract shall be on such terms and conditions as may be
prescribed in the Bylaws, if any, and such further terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provisions of this Article VII, or of the Bylaws, if any; and such contract
may also provide for the repurchase or sale of Shares by such other party
as principal or as agent of the Trust.
TRANSFER AGENT
Section 3. The Trustees may in their discretion from time to time enter
into a transfer agency and Shareholder service contract(s) whereby the
other party shall undertake to furnish the Trustees with transfer agency
and Shareholder services. The contract shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of the
Bylaws, if any. Such services may be provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more
of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of the
existence of any relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was reasonable and fair and not inconsistent
with the provisions of this Article VII or the Bylaws, if any. The same
person (including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections 1, 2
and 3 above or Article IX, and any individual may be financially interested
or otherwise affiliated with persons who are parties to any or all of the
contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of
Section 15 of the 1940 Act (including any amendments thereof or other
applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any
contract, entered into pursuant to Section 1 shall be effective unless
assented to by a Majority Shareholder Vote.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 2, (ii) for the removal of
Trustees as provided in Article IV, Section 3(d), (iii) with respect to any
investment advisory or management contract as provided in Article VII,
Sections 1 and 5, (iv) with respect to the amendment of this Declaration of
Trust as provided in Article XII, Section 7, (v) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or not
a court action, proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, provided, however, that a Shareholder of a particular Series
shall not be entitled to bring any derivative or class action on behalf of
any other Series of the Trust, and (vi) with respect to such additional
matters relating to the Trust as may be required or authorized by law, by
this Declaration of Trust, or the Bylaws of the Trust, if any, or any
registration of the Trust with the Securities and Exchange Commission (the
"Commission") or any State, as the Trustees may consider desirable. On any
matter submitted to a vote of the Shareholders, all shares shall be voted
by individual Series, except (i) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series; and (ii) when
the Trustees have determined that the matter affects only the interests of
one or more Series, then only the Shareholders of such Series shall be
entitled to vote thereon. Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote, and each fractional Share
shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted by
law, this Declaration of Trust or any Bylaws of the Trust to be taken by
Shareholders.
MEETINGS
Section 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings of the Shareholders
of any Series may be called by the Trustees and shall be called by the
Trustees upon the written request of Shareholders owning at least one-tenth
of the outstanding Shares entitled to vote. Whenever ten or more
Shareholders meeting the qualifications set forth in Section 16(c) of the
1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view
to obtaining signatures on such a request for a meeting, the Trustees shall
comply with the provisions of said Section 16(c) with respect to providing
such Shareholders access to the list of the Shareholders of record of the
Trust or the mailing of such materials to such Shareholders of record.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of
Trust permits or requires that holders of any Series shall vote as a
Series, then a majority of the aggregate number of Shares of that Series
entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series. Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original meeting,
without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the Bylaws, if
any, a majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that
the holders of any Series shall vote as a Series, then a majority of the
Shares of that Series voted on the matter shall decide that matter insofar
as that Series is concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ a bank or trust company
having capital, surplus and undivided profits of at least two million
dollars ($2,000,000), or such other amount or such other entity as shall be
allowed by the Commission or by the 1940 Act, as custodian with authority
as its agent, but subject to such restrictions, limitations or other
requirements, if any, as may be contained in the Bylaws of the Trust:
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust and
the custodian, if such procedures have been authorized in writing by the
Trust;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct;
and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset Value
of any Series in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United States or one of the states
thereof and having capital and surplus and individual profits of at least
two million dollars ($2,000,000) or such other person as may be permitted
by the Commission, or otherwise in accordance with the 1940 Act as from
time to time amended.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit all
or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities
exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person
as may be permitted by the Commission, or otherwise in accordance with the
1940 Act as from time to time amended, pursuant to which system all
securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided
that all such deposits shall be subject to withdrawal only upon the order
of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in the
discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by the
laws of Massachusetts, at any time to declare and cause to be paid
dividends on Shares of a particular Series, from the assets belonging to
that Series, which dividends, at the election of the Trustees, may be paid
daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, and may be
payable in Shares of that Series at the election of each Shareholder of
that Series.
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute pro rata among the
Shareholders of a particular Series as of the record date of that Series
fixed as provided in Section 3 hereof a "stock dividend".
REDEMPTIONS
Section 2. In case any holder of record of Shares of a particular Series
desires to dispose of his Shares, he may deposit at the office of the
transfer agent or other authorized agent of that Series a written request
or such other form of request as the Trustees may from time to time
authorize, requesting that the Series purchase the Shares in accordance
with this Section 2; and the Shareholder so requesting shall be entitled to
require the Series to purchase, and the Series or the principal underwriter
of the Series shall purchase his said Shares, but only at the Net Asset
Value thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall
be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective.
DETERMINATION OF NET ASSET VALUE
AND VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series, exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value per Share
shall be determined separately for each Series of Shares and shall be
determined on such days and at such times as the Trustees may determine.
Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees; provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act and
the rules, regulations and interpretations thereof promulgated or issued by
the Commission or insofar as permitted by any Order of the Commission
applicable to the Series. The Trustees may delegate any of their powers and
duties under this Section 3 with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the value par Share last
determined to be determined again in similar manner and may fix the time
when such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall
specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no
right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share existing after the
termination of the suspension.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of
the Trust, the Trustees shall not be responsible for or liable in any event
for neglect or wrongdoing of them or any officer, agent, employee or
investment adviser of the Trust, but nothing contained herein shall protect
any Trustee against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as "Covered Person") shall be indemnified by the
appropriate Series to the fullest extent permitted by law against liability
and against all expenses reasonably incurred or paid by him in connection
with any claim, action, suit or proceeding in which he becomes involved as
a party or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office or (B) not to
have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither interested
persons of the Trust nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 2 may be paid by the applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the applicable Series if it is ultimately determined
that he is not entitled to indemnification under this Section 2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured against
losses arising out of any such advance payments or (c) either a majority of
the Trustees who are neither interested persons of the Trust nor parties to
the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe
that such Covered Person will be found entitled to indemnification under
this Section 2.
SHAREHOLDERS
Section 3. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his
being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to
bind personally either the Trust's officers or any Shareholder. All persons
extending credit to, contracting with or having any claim against the Trust
or the Trustees shall look only to the assets of the appropriate Series for
payment under such credit, contract or claim; and neither the Shareholders
nor the Trustees, nor any of their agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Declaration of Trust
shall protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to the
provisions of Section 1 of this Article XII and to Article XI, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust, and subject to the
provisions of Section 1 of this Article XII and to Article XI, shall be
under no liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required to
give any bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividends, or
the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in
advance a date not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion
or exchange of Shares shall go into effect, as a record date for the
determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividend, or to receive such
allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed or aforesaid.
TERMINATION OF TRUST
Section 4.
(a) This Trust shall continue without limitation of time but subject to
the provisions of sub-section (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may
(i) sell and convey the assets of the Trust or any affected Series to
another trust, partnership, association or corporation organized under the
laws of any state which is a diversified open-end management investment
company as defined in the 1940 Act, for adequate consideration which may
include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected Series,
and which may include shares of beneficial interest or stock of such trust,
partnership, association or corporation; or
(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
Upon making provision for the payment of all such liabilities in either
(i) or (ii), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) ratably among the
holders of the Shares of the Trust or any affected Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be cancelled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental declaration of trust shall be filed by
the Trustees with the Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether
or not any such supplemental declarations of trust have been made and as to
any matters in connection with the Trust hereunder, and with the same
effect as if it were the original, may rely on a copy certified by an
officer or Trustee of the Trust to be a copy of this instrument or of any
such supplemental declaration of trust. In this instrument or in any such
supplemental declaration of trust, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable
law or this Declaration of Trust in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a declaration of
trust supplemental hereto, which thereafter shall form a part hereof,
except that an amendment which shall affect the Shareholders of one or more
Series but not the Shareholders of all outstanding Series shall be
authorized by vote of the Shareholders holding a majority of the Shares
entitled to vote of each Series affected and no vote of Shareholders of a
Series not affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require authorization by
Shareholder vote. Copies of the supplemental declaration of trust shall be
filed as specified in Section 5 of this Article XII.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, if any, provided, however, that the Trustees may,
without Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "FIDELITY"
Section 9. Fidelity Management & Research Company ("FMR") has
consented to the use by any Series of the Trust of the identifying word
"Fidelity" in the name of any Series of the Trust at some future date. Such
consent is conditioned upon the employment of FMR as investment adviser of
each Series of the Trust. As between the Trust and itself, FMR controls the
use of the name of the Trust insofar as such name contains the identifying
word "Fidelity". FMR may from time to time use the identifying word
"Fidelity" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations or
businesses which it may manage, advise, sponsor or own or in which it may
have a financial interest. FMR may require the Trust or any Series thereof
to cease using the identifying word "Fidelity" in the name of the Trust or
any Series thereof if the Trust or any Series thereof ceases to employ FMR
or a subsidiary or affiliate thereof as investment adviser.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 16th day of June, 1994.
/s/Edward C. Johnson 3d /s/Donald S. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Gerald C. McDonough
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Thomas R. Williams
Richard J. Flynn Thomas R. Williams
/s/E. Bradley Jones
E. Bradley Jones
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Commonwealth Trust and Shareholders of:
Fidelity Market Index Fund
Fidelity Small Cap Stock
Fidelity Intermediate Bond Fund
We consent to the incorporation by reference into the Statements of
Additional Information in Post-Effective Amendment No. 51 to the
Registration Statement (File No. 2-52322) on Form N-1A (the "Registration
Statement") of Fidelity Commonwealth Trust of our reports dated June 3,
1994 accompanying the financial statements and financial highlights of each
of the above referenced Portfolios.
All of the above financial statements and financial highlights are
incorporated by reference into the Statements of Additional Information
included in this Post-Effective Amendment.
We also consent to the references to our Firm under the captions "Auditor"
in the Statements of Additional Information and "Financial Highlights" in
the Prospectuses included in this Post-Effective Amendment.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
June 15, 1994
