SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(e) or Sec. 240.14a-12
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(Name of Registrant as Specified In Its Charter) Fidelity Commonwealth Trust
</TABLE>
(Name of Person(s) Filing Proxy Statement) Arthur S.
Loring, Secretary
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<CAPTION>
<S> <C>
[ ] $125 per Exchange Act Rules 0-11(c)(ii), 14a-6(j) (1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(j) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j) (4) and 0-11.
</TABLE>
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
<TABLE>
<CAPTION>
<S> <C>
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
</TABLE>
(1) Amount Previously Paid: $125
(2) Form, Schedule or Registration Statement No.: 811-2546
(3) Filing Party: Fidelity Commonwealth Trust
(4) Date Filed: July 19, 1994
FIDELITY MARKET INDEX FUND
A FUND OF FIDELITY COMMONWEALTH TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Market Index Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Market Index Fund (the fund) will be held at the
office of Fidelity Commonwealth Trust (the trust), 82 Devonshire Street,
Boston, Massachusetts 02109 on October 26, 1994, at 9:30 a.m. The purpose
of the Meeting is to consider and act upon the following proposals, and to
transact such other business as may properly come before the Meeting or any
adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Coopers & Lybrand L.L.P. as
i ndependent accountants of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting rights
for shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund with the ability
to invest all of its assets in another open-end investment company with
substantially the same investment objective and policies.
6. To adopt a new fundamental investment policy for the fund permitting it
to invest all of its assets in another open-end investment company with
substantially the same investment objective and policies.
7. To amend the fund's fundamental investment limitation concerning real
estate.
8. To amend the fund's fundamental investment limitation concerning
diversification.
9. To eliminate the fund's fundamental investment limitation concerning
short sales of securities.
10. To eliminate the fund's fundamental investment limitation concerning
margin purchases.
11. To amend the fund's fundamental investment limitation concerning
borrowing.
12. To amend the fund's fundamental investment limitation concerning the
concentration of its investments in a single industry.
13. To amend the fund's fundamental investment limitation concerning
commodities.
14. To amend the fund's fundamental investment limitation concerning
lending.
The Board of Trustees has fixed the close of business on August 29, 1994
as the record date for the determination of the shareholders of the fund
entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
August 29, 1994
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time and expense involved in validating your
vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE
A. 1) ABC Corp. John Smith,
Treasurer
2) ABC Corp. John Smith,
Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee
2) ABC Trust Ann B. Collins,
Trustee
3) Ann B. Collins, Trustee Ann B. Collins,
Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY MARKET INDEX FUND
TO BE HELD ON OCTOBER 26, 1994
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Commonwealth Trust (the trust) to be used at the Special Meeting of
Shareholders of Fidelity Market Index Fund (the fund), and at any
adjournments thereof (the Meeting), to be held October 26, 1994 at 9:30
a.m. at 82 Devonshire Street, Boston, Massachusetts 02109, the principal
executive office of the trust. Shareholders of the trust's other funds
(Fidelity Intermediate Bond Fund and Fidelity Small Cap Stock Fund) will
also participate and have been mailed a separate notice and proxy statement
relating to proposals to be voted upon by the trust and/or by the
shareholders of those funds. The purpose of the Meeting is set forth in the
accompanying Notice. The solicitation is made primarily by the mailing of
this Proxy Statement and the accompanying proxy card on or about August 29,
1994. Supplementary solicitations may be made by mail, telephone,
telegraph, or by personal interview by representatives of the trust. The
expenses in connection with preparing this Proxy Statement and its
enclosures and of all solicitations will be paid by FMR. FMR will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. All proxies not
voted, including broker non-votes, will not be counted toward establishing
a quorum. Shareholders should note that while votes to ABSTAIN will count
toward establishing a quorum, passage of any proposal being considered at
the Meeting will occur only if a sufficient number of votes are cast FOR
the proposal. Accordingly, votes to ABSTAIN and votes AGAINST will have the
same effect in determining whether the proposal is approved.
If a quorum is present at the Meeting, but sufficient votes to approve one
or more of the proposed items are not received, or if other matters arise
requiring shareholder attention, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares present at the Meeting or represented by proxy.
When voting on a proposed adjournment, the persons named as proxies will
vote for the proposed adjournment all shares that they are entitled to vote
with respect to each item, unless directed to vote AGAINST the item, in
which case such shares will be voted against the proposed adjournment with
respect to that item. A shareholder vote may be taken on one or more of the
items in this Proxy Statement prior to such adjournment if sufficient votes
have been received and it is otherwise appropriate. A copy of each fund's
annual report for the fiscal year ended April 30, 1994 has been mailed or
delivered to shareholders of each respective fund entitled to vote at the
meeting.
Shares of each fund in the trust issued and outstanding as of July
31 , 1994 are indicated in the following table:
FIDELITY INTERMEDIATE BOND FUND 187,581,785
FIDELITY SMALL CAP STOCK FUND 62,939,811
FIDELITY MARKET INDEX FUND 8,792,961
To the knowledge of the trust , no shareholder owned of record or
beneficially more than 5 % of the total outstanding shares of
any of the funds on that date. Shareholders of record at the close of
business on August 29, 1994 will be entitled to vote at the Meeting. Each
such shareholder will be entitled to one vote for each share held on that
date.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT
TO APPROVE PROPOSALS 1 AND 2. APPROVAL OF PROPOSAL 3 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF OUTSTANDING VOTING SECURITIES OF EACH
FUND OF THE TRUST AND OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 4
AND 5 REQUIRES A MAJORITY OF OUTSTANDING SHARES OF THE ENTIRE TRUST.
APPROVAL OF PROPOSALS 6 THROUGH 14 REQUIRES THE AFFIRMATIVE VOTE OF A
" MAJORITY OF THE OUTSTANDING VOTING SECURITIES " OF THE
FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), A
"MAJORITY VOTE OF THE OUTSTANDING VOTING SECURITIES'' MEANS THE AFFIRMATIVE
VOTE OF THE LESSER OF (A) 67% OR MORE OF THE SHARES OF THE TRUST OR A FUND
PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN
50% OF THE OUTSTANDING SHARES ARE PRESENT OR REPRESENTED BY PROXY OR (B)
MORE THAN 50% OF THE OUTSTANDING SHARES.
1. TO ELECT A BOARD OF TRUSTEES.
Pursuant to the provisions of the Declaration of Trust of Fidelity
Commonwealth Trust, the Trustees have determined that the number of
Trustees shall be fixed at twelve. It is intended that the enclosed proxy
card will be voted for the election as Trustees of the twelve nominees
listed below, unless such authority has been withheld in the proxy card.
Except for Mr. Mann, all nominees named below are currently Trustees of
Fidelity Commonwealth Trust and have served in that capacity continuously
since originally elected or appointed. Mrs. Davis, Mr. Cox, Mr.
Jones, and Mr. Lynch were selected by the trust's Nominating and
Administration Committee (see page ) and were appointed to the Board in
December 1992, November 1991 , May 1990, and April 1990,
respectively. None of the nominees is related to one another. Those
nominees indicated by an asterisk (*) are "interested persons" of the trust
by virtue of, among other things, their affiliation with either the trust,
the funds' investment adviser, Fidelity Management & Research Company (FMR,
or the Adviser), or the funds' distribution agent, Fidelity Distributors
Corporation (FDC). Each of the nominees is currently a Trustee or General
Partner, as the case may be, of other funds advised by FMR.
In the election of Trustees, those twelve nominees receiving the highest
number of votes cast at the Meeting, providing a quorum is present, shall
be elected.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointme
nt
*J. Gary Burkhead Senior Vice President, is 1987
82 Devonshire Street President of FMR; and President
Boston, MA and a Director of FMR Texas
(53) Inc. (1989), Fidelity
Management & Research (U.K.)
Inc., and Fidelity Management &
Research (Far East) Inc.
Ralph F. Cox Consultant to Western Mining 1991
200 Rivercrest Drive Corporation (1994). Prior to
Forth Worth, TX February 1994, he was
(62) 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 Bonneville Pacific
Corporation (independent power,
1989), 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.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointmen
t
Phyllis Burke Davis Prior to her retirement in 1992
P.O. Box 264 September 1991, Mrs. Davis was
Bridgehampton, NY the Senior Vice President of
(62) 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 Financial consultant. Prior to 1982
77 Fiske Hill September 1986, Mr. Flynn was
Sturbridge, MA Vice Chairman and a Director of
(70) 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.
*Edward C. Johnson President, is Chairman, Chief 1974
3d Executive Officer and a Director
82 Devonshire Street of FMR Corp.; a Director and
Boston, MA Chairman of the Board and of the
(64) 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.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointmen
t
E. Bradley Jones Prior to his retirement in 1984, Mr. 1990
3881-2 Lander Road Jones was Chairman and Chief
Chagrin Falls, OH Executive Officer of LTV Steel
(66) Company. Prior to May 1990, he
was a 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 Professor at Columbia University 1987
680 Steamboat Road Graduate School of Business and
Apartment #1-North a financial consultant. Prior to
Greenwich, CT 1987, he was Chairman of the
(61) 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.
<TABLE>
<CAPTION>
Nominee Principal Occupation ** Year of
(Age) Election or
Appointmen
t
<S> <C> <C>
*Peter S. Lynch Vice Chairman of FMR (1992). 1990
82 Devonshire Street Prior to his retirement on May 31,
Boston, MA 1990, he was a Director of FMR
(51) (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 a 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 Chairman of G.M. Management 1989
135 Aspenwood Drive Group (strategic advisory
Cleveland, OH services). Prior to his retirement
(65) 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 Prior to his retirement in 1985, Mr. 1989
5601 Turtle Bay Drive Malone was Chairman, General
#2104 Electric Investment Corporation
Naples, FL and a Vice President of General
(69) 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.
Marvin L. Mann Chairman of the Board, President, --
55 Railroad Avenue and Chief Executive Officer of
Greenwich, CT Lexmark International, Inc. (office
(61) machines, 1991). Prior to 1991,
he held positions of Vice
President of International
Business Machines Corporation
("IBM") and President and
General Manager of various IBM
divisions and subsidiaries. Mr.
Mann is a Director of M.A. Hanna
Company (chemicals, 1993) and
Infomart (marketing services,
1991), a Trammell Crow Co. In
addition, he serves as the
Campaign Vice Chairman of the
Tri-State United Way (1993) and
is a member of the University of
Alabama President's Cabinet
(1990).
Thomas R. Williams President of The Wales Group, 1989
21st Floor Inc. (management and financial
191 Peachtree Street, advisory services). Prior to retiring
N.E. in 1987, Mr. Williams served as
Atlanta, GA Chairman of the Board of First
(66) 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).
</TABLE>
** Except as otherwise indicated, each individual has held the office shown
or other offices in the same company for the last five years.
As of July 31 , 1994, the nominees and officers of the trust owned,
in the aggregate, less than 1 % of any of the fund's total
outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests 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; and (d) a Trustee
may be removed at any Special Meeting of shareholders by a two-thirds vote
of the outstanding voting securities of the trust. In case a vacancy
shall for any reason exist, the remaining Trustees will fill such vacancy
by appointing another Trustee, so long as, immediately after such
appointment, at least two-thirds of the Trustees have been elected by
shareholders. If, at any time, less than a majority of the Trustees holding
office has been elected by the shareholders, the Trustees then in office
will promptly call a shareholder s' meeting for the purpose of
electing a Board of Trustees. Otherwise, there will normally be no meeting
of shareholders for the purpose of electing Trustees.
The trust's Board, which is currently composed of three interested and
eight non-interested Trustees, met eleven times during the twelve months
ended April 30, 1994. It is expected that the Trustees will meet at least
ten times a year at regularly scheduled meetings.
As a group, the non-interested Trustees received fees and expenses of
$13,849 from the trust in their capacities as Trustees of the funds
for the fiscal year ended April 30, 1994. The non-interested Trustees also
served in similar capacities for other funds advised by FMR (see page ),
and received additional compensation for such services.
The Board of Trustees has adopted a policy whereby non-interested
Trustees, upon reaching their 72nd birthday will resign. Under a defined
benefit retirement program, non-interested Trustees, upon reaching age 72,
are entitled to payments during their lifetime based on their basic Trustee
fees and their length of service.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, of FMR or its affiliates and normally
meets four times a year, or as required, prior to meetings of the Board of
Trustees. Currently, Messrs. Kirk (Chairman), Cox, and Jones are members of
the Committee. This Committee oversees and monitors the financial reporting
process, including recommending to the Board the independent accountants to
be selected for the trust (see Proposal 2), reviewing internal controls and
the auditing function (both internal and external), reviewing the
qualifications of key personnel performing audit work, and overseeing
compliance procedures. During the twelve months ended April 30, 1994, the
Committee held four meetings.
The trust's Nominating and Administration Committee is currently composed
of Messrs. Flynn (Chairman), McDonough, and Williams. The Committee members
confer periodically and hold meetings as required. The Committee is charged
with the duties of reviewing the composition and compensation of the Board
of Trustees, proposing additional non-interested Trustees, monitoring the
performance of legal counsel employed by the funds and the non-interested
Trustees, and acting as administrative committee under the Retirement Plan
for non-interested Trustees. During the twelve months ended April 30, 1994,
the committee held four meetings. The Nominating and Administration
Committee will consider nominees recommended by shareholders.
Recommendations should be submitted to the Committee in care of the
Secretary of the Trust. The trust does not have a compensation committee;
such matters are considered by the Nominating and Administration Committee.
2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS OF THE TRUST.
By a vote of the non-interested Trustees, the firm of Coopers & Lybrand
L.L.P. has been selected as independent accountants for the trust to
sign or certify any financial statements of the trust required by any law
or regulation to be certified by an independent accountant and filed with
the Securities and Exchange Commission (SEC) or any state. Pursuant to the
1940 Act, such selection requires the ratification of shareholders. In
addition, as required by the 1940 Act, the vote of the Trustees is subject
to the right of the trust, by vote of a majority of its outstanding voting
securities at any meeting called for the purpose of voting such action, to
terminate such employment without penalty. Coopers & Lybrand L.L.P.
has advised the trust that it has no direct or material indirect ownership
interest in the trust.
The services provided to the trust include (1) audit of annual financial
statements and, if requested, an audit of semiannual financial statements;
(2) assistance and consultation in connection with SEC filings; and (3) if
requested, review of the federal income tax returns filed on behalf of the
trust. In recommending the selection of the trust's accountants, the Audit
Committee reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such services
would affect the accountants ' independence. Representatives of
Coopers & Lybrand L.L.P. are not expected to be present at the
meeting, but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their
presence.
3. TO AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING RIGHTS
FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders of
the trust approve a proposal to amend Article VIII, Section 1 of the
Declaration of Trust. The amendment would provide voting rights based on a
shareholder's total dollar interest in a fund (dollar-based voting), rather
than on the number of shares owned, for all shareholder votes for a fund.
As a result, voting power would be allocated in proportion to the value of
each shareholder's investment.
BACKGROUND. Fidelity Market Index Fund is a fund of Fidelity Commonwealth
Trust, an open-end management investment company organized as a
Massachusetts business trust. Currently, there are two other funds in the
trust: Fidelity Intermediate Bond Fund and Fidelity Small Cap Stock
Fund. Shareholders of each fund vote separately on matters concerning only
that fund and vote on a trust-wide basis on matters that affect the trust
as a whole, such as electing trustees or amending the Declaration of Trust.
Currently, under the Declaration of Trust, each share is entitled to one
vote, regardless of the relative value of the shares of each fund in the
trust.
The original intent of the one share, one-vote provision was to provide
equitable voting rights as required by the 1940 Act. In the case where a
trust has several series or funds, such as Fidelity Commonwealth Trust,
voting rights may have become disproportionate since the net asset value
per share (NAV) of the separate funds diverge over time. The Staff of the
SEC has issued a "no-action" letter permitting a trust to seek shareholder
approval of a dollar-based voting system. The proposed amendment will
comply with the conditions stated in the no-action letter.
REASON FOR PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights than the one-share, one-vote system
currently in effect for certain votes. The voting power of shareholders
would be commensurate with the value of the shareholder's dollar investment
rather than with the number of shares held.
Under the current voting provisions, an investment in a fund with a lower
NAV may have significantly greater voting power than the same dollar amount
invested in a fund with a higher NAV. The following table shows each fund's
net asset value.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Net Asset Value $1,000 investment
as of July 31, in terms of shares
1994 on July 31, 1994
Fidelity Small Cap Stock Fund $ 9.90 101.010
Fidelity Intermediate Bond Fund $ 10.08 99.206
Fidelity Market Index Fund $ 34.07 29.351
</TABLE>
For example, Fidelity Small Cap Stock Fund shareholders would have
approximately 244 % greater voting power than Fidelity Market Index
Fund shareholders because at current NAVs, a $1,000 investment in Fidelity
Small Cap Stock Fund would equal 101.010 shares, whereas a $1,000
investment in Fidelity Market Index Fund would equal 29.351 shares.
Accordingly, a one share, one-vote system may provide certain shareholders
with a disproportionate ability to affect the vote relative to shareholders
of other funds in the trust. If dollar-based voting had been in
effect, each shareholder would have had 1,000 voting shares. Their voting
power would be proportionate to their economic interest which FMR believes
is a more equitable result, and is the result in a typical corporation
where each voting share generally has an equal market price.
On matters requiring trust-wide votes where all funds are required to
vote, shareholders who own shares with a lower NAV than other funds in the
trust would be giving other shareholders in the trust more voting "power"
than they currently have. On matters affecting only one fund, only
shareholders of that fund vote on the issue. In this instance, under both
the current Declaration of Trust and an amended Declaration of Trust, all
shareholders of the fund would have the same voting rights, since the NAV
is the same for all shares in a single fund.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section 1 determines
the method of calculating voting rights for all shareholder votes for a
fund. If approved Article VIII, Section 1 will be amended as follows
(material to be added is underlined and material to be deleted is
[bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote ... 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 proportionate fractional vote.] A shareholder of each Series
shall be entitled to one vote for each dollar of net asset value (number of
Shares owned times net asset value per Share) per Share of such Series, on
any matter on which such Shareholder is entitled to vote and each
fractional dollar amount 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 to Shareholders.
CONCLUSION. If approved, the amendment will take effect immediately after
the shareholder meeting or after any adjournments thereof. The Trustees
believe the proposed amendment will benefit the trust by bringing greater
equality in voting rights among all shareholders of the trust. The Trustees
recommend that shareholders vote FOR the proposed amendment to the
Declaration of Trust. If the amendment is not approved, the Declaration of
Trust will remain unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER NOTIFICATION OF
APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a vacancy on
the Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion see fit, consistent with the
limitations of the 1940 Act. Section 16 of the 1940 Act states that a
vacancy may be filled by the Trustees, if after filling the vacancy, at
least two-thirds of the Trustees then holding office were elected by the
outstanding shareholders of the trust. It also states that if at any time
less than 50% of the Trustees were elected by shareholders, a shareholder
meeting must be called within 60 days for the purposes of electing Trustees
to fill the existing vacancies.
The Declaration of Trust currently requires that within three months of a
Trustee appointment, notification of such be mailed to each shareholder of
the trust. Trustees also may appoint a Trustee in anticipation of a current
Trustee's retirement or resignation, or in the event of an increase in the
number of Trustees. An appointment in this case currently requires
shareholder notification within three months of the appointment under the
current Declaration of Trust.
Subject to shareholder approval, the Trustees intend to eliminate the
notification requirement from the trust's Declaration of Trust. The
language to be deleted from the Declaration of Trust is [bracketed].
ARTICLE IV
THE TRUSTEES
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.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to
all shareholders of a trust would be costly . If the proposal is
approved, shareholders will be notified of Trustee appointments in the next
financial report for the fund. Other than eliminating the
notification requirement, this proposal does not amend any other aspect of
Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the Declaration of Trust's shareholder notification
requirement in the event of an appointment of a Trustee is in the best
interests of the trust's shareholders. The Trustees recommend voting FOR
the proposed amendment. If the proposal is not approved, the Declaration of
Trust's current section entitled "Resignation and Appointment of Trustees"
will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE THE FUND WITH THE ABILITY
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of the fund's assets in another open-end investment
company with substantially the same investment objective and policies
("Pooled Fund Structure"). The purpose of the Pooled Fund Structure is to
achieve operational efficiencies by consolidating portfolio management
while maintaining different distribution and servicing structures. In order
to implement a Pooled Fund Structure, both the Declaration of Trust and the
fund's policies must permit the structure. Currently, the fund's policies
do not allow for such investments. Proposal 6 on page seeks the fund's
shareholder approval to adopt a fundamental investment policy to permit
investment in another open-end investment company. This proposal, which
amends the Declaration of Trust, clarifies the Board's ability to implement
the Pooled Fund Structure if the fund's policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled investment, or "master" fund. For
example, an institutional equity fund with a high initial minimum
investment amount for large investors might pool its investments with a
retail equity fund designed for investors with lower minimums. This
structure allows several feeder funds with substantially the same objective
but different distribution and servicing features to combine their
investments and manage them as one master pool instead of managing them
separately. The feeder funds combine their investments by investing all of
their assets in one master pooled fund which would be organized as an
open-end management investment company (mutual fund). (Each feeder fund
invested in a single master pooled investment retains its own
characteristics, but is able to achieve operational efficiencies through
investing together with the other feeder funds in the Pooled Fund
Structure.) The current Declaration of Trust does not specifically provide
the Trustees the ability to authorize the Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that the
fund should invest in a Pooled Fund, the Trustees believe it could be in
the best interest of the fund to adopt such a structure at a future date.
If this proposal is approved, the Declaration of Trust amendment would
provide the Trustees with the power to authorize the fund to invest all of
its assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Pooled Fund Structure is permitted
under the fund's investment policies (see Proposal 6), if they determine
that a Pooled Fund Structure is in the best interest of the fund, and if,
upon advice of counsel, they determine that the investment will not have
material adverse tax consequences to the fund or its shareholders. The
Trustees will specifically consider the impact, if any, on fees paid by the
fund as a result of adopting a Pooled Fund Structure . Although the
current Declaration of Trust does not contain any explicit prohibition
against implementing a Pooled Fund Structure, the specific authority is
being sought in the event the Trustees deem it appropriate to adopt a
Pooled Fund Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as
follows: (material to be added is underlined):
"Subject to any applicable limitation in the Declaration of Trust or the
Bylaws of the Trust, the Trustees shall have power and authority:
(t) Notwithstanding any other provision hereof, to invest all of the
assets of any series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest
or interests in such investment company."
CONCLUSION. The Trustees believe the proposed amendment will benefit the
fund by providing the Trustees with the flexibility to adopt a Pooled Fund
Structure in the future if permitted by the fund's investment
policies and if the Trustees determine it to be in the best interest of the
fund. The Trustees recommend that shareholders vote FOR the proposed
amendment to the Declaration of Trust. If approved, the amendment to the
Declaration of Trust will take effect immediately after the shareholder
meeting or any adjournments thereof. If the proposal is not approved,
Article V, Section 1 of the Declaration of Trust will remain unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR THE FUND PERMITTING IT
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY
WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, the adoption of a new fundamental investment policy that
would permit the fund to invest all its assets in another investment
company with substantially the same investment objective and policies
("Pooled Fund Structure"). The purpose of pooling would be to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures.
BACKGROUND. A number of mutual funds have developed so called "master
feeder" fund structures under which several "feeder" funds invest all of
their assets in a single pooled "master" fund. In order to implement a
Pooled Fund Structure, an amendment to the Declaration of Trust is
proposed, as is the adoption of a new fundamental investment policy.
Proposal 5 proposes to amend the Declaration of Trust, and if
approved, would allow the Trustees to authorize the conversion to a Pooled
Fund Structure when permitted by the fund's policies. This proposal would
add a fundamental policy for the fund that permits a Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that the fund
should invest in a master fund, the Trustees believe it could be in the
best interest of the fund to adopt such a structure at a future date.
At present, certain of the fund's fundamental investment policies and
limitations would prevent the fund from investing all of its assets in
another investment company, and would require a vote of shareholders before
such a structure could be adopted. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that
shareholders vote to permit the fund's assets to be invested in a single
Pooled Fund, without a further vote of shareholders, if the Trustees
determine that action to be in the best interest of the fund and its
shareholders. Approval of Proposa l 5 provides the Trustees with
explicit authority to approve a Pooled Fund Structure. If
s hareholders approve this proposal, certain fundamental and
non-fundamental policies and limitations of the fund that currently
prohibit investment in shares of one investment company would be modified
to permit the investment in a Pooled Fund. These policies include the
fund's concentration and underwriting limitations.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different feature
and services (Comparable Funds). Were these Comparable Funds to pool their
assets, operational efficiencies could be achieved, offering the
opportunity to reduce costs. Similarly, FMR anticipates that a
Pooled Fund Structure would facilitate the introduction of new Fidelity
mutual funds, increasing the investment options available to shareholders.
The fund's method of operation and shareholder services would not be
materially affected by its investment in a Pooled Fund, except that the
assets of the fund would be managed as part of a larger pool. Were
the fund to invest all of its assets in a Pooled Fund, it would hold only a
single investment security, and the Pooled Fund would directly invest in
individual securities pursuant to its investment objective. The Pooled
Fund would be managed by FMR or an affiliate, such as FMR Texas in the
case of a money market fund. The Trustees would retain the right to
withdraw the fund's investments from a Pooled Fund at any time and would do
so if the Pooled Fund's investment objective and policies were no longer
appropriate for the fund. The fund would then resume investing directly in
individual securities as it does currently. Whenever the fund is
asked to vote at a shareholder meeting of the Pooled Fund, the fund will
hold a meeting of its shareholders if required by applicable law or
the fund's policies to vote on matters to be considered at the Pooled Fund
shareholder meeting. The fund will cast its votes at the Pooled Fund
meeting in the same proportion as the fund's shareholders voted at theirs.
The fund would otherwise continue its normal operations.
At present, the Trustees have not considered any specific proposal to
authorize pooling of assets. The Trustees will authorize investing the
fund's assets in a Pooled Fund only if they determine that pooling is in
the best interests of the fund and if, upon advice of counsel, they
determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. In determining whether to
invest in a Pooled Fund, the Trustees will consider, among other things,
the opportunity to reduce costs and to achieve operational efficiencies.
The Trustees will not authorize investment in a Pooled Fund if doing so
would materially increase costs (including fees) to shareholders.
FMR intends to seek federal and state regulatory approval in order to
allow the Fidelity funds to invest in Pooled Funds. There is of course, no
assurance that all necessary regulatory approvals will be obtained, or that
cost reductions or increased efficiencies will be achieved.
FMR may benefit from the use of a Pooled Fund if overall assets are
increased (since FMR's fees are based on assets). Also, FMR's expenses of
providing investment and other services to the fund may be reduced. If the
fund's investment in a Pooled Fund were to reduce FMR's expenses
materially, the Trustees would consider whether a reduction in FMR's
management fee would be appropriate if and when a Pooled Fund structure is
implemented.
PROPOSED FUNDAMENTAL POLICY. To allow the fund to invest in a Pooled Fund
at a future date, the Trustees recommend that the fund adopt the following
fundamental policy:
"The fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies, and limitations as the fund . "
If the proposal is adopted, the Trustees intend to adopt a non-fundamental
investment limitation for the fund which states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
CONCLUSION. The Board of Trustees recommends that the fund's shareholders
vote to adopt a new fundamental policy that would permit the fund, subject
to future review by the Board of Trustees as described above, to invest all
its assets in an open-end investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund. If
the proposal is not adopted, the fund's current fundamental investment
policies will remain unchanged with respect to potential investment in
Pooled Funds.
7. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING REAL
ESTATE.
The fund's fundamental investment limitation concerning real estate
currently states:
"The fund may not 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)."
Subject to shareholder approval, the Trustees intend to replace this
fundamental investment limitation with the following fundamental investment
limitation governing purchases and sales of real estate.
"The fund may not 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)."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the fund is authorized to invest and to conform the
fund's fundamental real estate limitation to a limitation that is expected
to become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the proposal is
approved, the new fundamental real estate limitation may not be changed
without a future vote of shareholders.
Adoption of the proposed limitation concerning real estate is not expected
to significantly affect the way in which the fund is managed or the way in
which securities or instruments are selected for the fund. However, to the
extent that the fund invests to a greater extent in real estate related
securities, it will be subject to the risks of the real estate market. This
industry is sensitive to factors such as changes in real estate values and
property taxes, overbuilding, variations in rental income, and interest
rates. Performance could also be affected by the structure, cash flow, and
management skill of real estate companies.
The fund does not expect to acquire real estate. However, the proposed
limitation would clarify several points. First, the proposed
limitation would make it explicit that the fund may acquire a security or
other instrument that is secured by a mortgage or other right to foreclose
on real estate, in the event of a default. Second, the proposed limitation
would clarify the fact that the fund may invest without limitation in
securities issued or guaranteed by companies engaged in acquiring,
constructing, financing, developing, or operating real estate projects
(e.g., securities of issuers that develop various industrial, commercial,
or residential real estate projects such as factories, office buildings, or
apartments). Any investments in these securities or other instruments are,
of course, subject to the fund's investment objective and policies and to
other limitations regarding diversification and concentration in particular
industries. The proposed limitation covers all types of real estate-related
investments while the current limitation refers to "marketable" securities.
Any unmarketable investments will continue to be limited to 10% of total
assets by the fund's existing non-fundamental limitation.
CONCLUSION. The Board of Trustees has concluded that the adoption of the
proposed amendment will benefit the fund and its shareholders. The Trustees
recommend that shareholders of the fund vote FOR the proposed amendment.
The amended limitation, upon shareholder approval, will become effective
immediately. If the proposal is not approved, the fund's current limitation
will remain unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 8 through 14 is to revise several of the
fund's investment limitations to conform to limitations which are the
standards for similar types of funds managed by FMR. The Board of Trustees
asked FMR to analyze the various fundamental and non-fundamental investment
limitations of the Fidelity funds, and, where practical and appropriate to
a fund's investment objective and policies, propose to shareholders
adoption of standard fundamental limitations and elimination of certain
other fundamental limitations. Generally, when fundamental limitations are
eliminated, Fidelity's standard non-fundamental limitations replace them.
By making these limitations non-fundamental, the Board of Trustees may
amend a limitation as they deem appropriate, without seeking shareholder
vote. The Board of Trustees would amend the limitations to respond, for
instance, to developments in the marketplace, or changes in federal or
state law. The costs of shareholder meetings if called for these purposes
are generally borne by the fund and its shareholders.
It is not anticipated that these proposals will substantially affect the
way the fund is currently managed. However, FMR is presenting them to you
for your approval because FMR believes that increased standardization will
help to promote operational efficiencies and facilitate monitoring of
compliance with fundamental and non-fundamental investment limitations.
Although adoption of a new or revised limitation is not likely to have any
impact on the current investment techniques employed by the fund, it will
contribute to the overall objectives of standardization.
8. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION.
Fidelity Market Index Fund's current fundamental investment limitation
regarding diversification states:
"The fund may not 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."
The Trustees recommend that shareholders vote to replace the fund's
fundamental investment limitation with the following fundamental investment
limitation governing diversification:
"The fund may not, 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."
The primary purpose of the proposal is to revise the fund's fundamental
diversification limitation to conform to a limitation that is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) The standard more closely
tracks the language of the diversification limitation required under the
1940 Act. If the proposal is approved, the amended fundamental
diversification limitation cannot be changed without a future vote of
shareholders.
Adoption of the proposed limitation concerning diversification is not
expected to affect the way in which the fund is managed, the investment
performance of the fund, or the securities or instruments in which the fund
invests.
CONCLUSION. The Board of Trustees recommends voting FOR the proposed
amendment. The amended limitation, upon shareholder approval, will become
effective immediately . If the proposal is not approved by
shareholders of the fund, the fund's current limitation will remain
unchanged.
9. TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
SHORT SALES OF SECURITIES.
Fidelity Market Index Fund's current fundamental investment limitation on
selling securities short is as follows:
"The fund may not 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."
The Trustees of the fund recommend that shareholders vote to eliminate the
above fundamental investment limitation. If the proposal is approved, the
Trustees intend to replace the current fundamental limitation with a
non-fundamental limitation that could be changed without a vote of
shareholders. The proposed non-fundamental limitation is set forth below,
with a brief analysis of the substantive difference between it and the
current limitation.
"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."
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. In
an investment technique known as a short sale "against the box," an
investor sells securities short while owning the same securities in the
same amount, or having the right to obtain equivalent securities. The
investor could have the right to obtain equivalent securities, for example,
through its ownership of warrants, options, or convertible bonds.
Certain state regulations currently prohibit mutual funds from entering
into any short sales, other than short sales against the box. The fund does
not currently anticipate entering into any short sales other than short
sales against the box. If the proposal is approved, however, the Board of
Trustees would be able to change the proposed non-fundamental limitation in
the future, without a vote of shareholders, if state regulations were to
change to permit other types of short sales, or if waivers from existing
requirements were available, subject to appropriate disclosure to
investors.
Elimination of the fund's fundamental limitation on short selling is
unlikely to affect the fund's investment techniques at this time. The Board
of Trustees believes that efforts to standardize the fund's investment
limitation will facilitate FMR's investment compliance efforts (see
"Adoption of Standardized Investment Limitations" on page ) and are in the
best interests of shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the proposal to
eliminate the fund's fundamental investment limitation regarding short
sales of securities. If approved, the proposal will take effect
immediately. If the proposal is not approved by the shareholders of the
fund, the fund's current limitation will remain unchanged.
10. TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
MARGIN PURCHASES.
Fidelity Market Index Fund's current fundamental investment limitation
concerning purchasing securities on margin is as follows:
"The fund may not 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."
The Trustees recommend that shareholders of the fund vote to eliminate the
above fundamental investment limitation. If the proposal is approved, the
Trustees intend to adopt a substantially identical non-fundamental
limitation that could be changed without a vote of shareholders.
Margin purchases involve the purchase of securities with money borrowed
from a broker. "Margin" is the cash or eligible securities that the
borrower places with a broker as collateral against the loan. The fund's
current fundamental limitation prohibits the fund from purchasing
securities on margin, except to obtain such short-term credits as may be
necessary for the clearance of transactions and for initial and variation
margin payments made in connection with the purchase and sale of futures
contracts and options on futures contracts. With these exceptions, mutual
funds are prohibited from entering into most types of margin purchases by
applicable SEC policies. The proposed non-fundamental limitation includes
these exceptions.
If the proposal is approved by shareholders, the Trustees intend to adopt
the following non-fundamental investment limitation, which would prohibit
margin purchases except as permitted under the conditions referred to
above:
"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."
Although elimination of the fund's fundamental limitation on margin
purchases is unlikely to affect the fund's investment techniques at this
time, in the event of a change in federal regulatory requirements, the fund
may alter its investment practices in the future. The Board of Trustees
believes that efforts to standardize investment limitations will facilitate
FMR's investment compliance efforts (see "Adoption of Standardized
Investment Limitations" on page ) and are in the best interests of
shareholders.
CONCLUSION. The Trustees recommend voting FOR the proposal to eliminate
the fund's fundamental investment limitation regarding margin purchases. If
approved, the new non-fundamental limitation will become effective
immediately. If the proposal is not approved by the shareholders of the
fund, the fund's current limitation will remain unchanged.
11. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
BORROWING.
Fidelity Market Index Fund's current fundamental investment limitation
concerning borrowing states:
"The fund may not 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."
Subject to shareholder approval, the Trustees intend to replace the fund's
current fundamental investment limitation with the following amended
fundamental investment limitation governing borrowing:
"The fund may not 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."
The primary purpose of the proposal is to revise the fund's fundamental
borrowing limitation to conform to a limitation that is expected to become
the standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the proposal is approved, the amended
fundamental borrowing limitation cannot be changed without a future vote of
shareholders.
Adoption of the proposed limitation concerning borrowing is not expected
to affect the way in which the fund is managed, the investment performance
of the fund, or the securities or instruments in which the fund invests.
However, the proposed fundamental limitation would clarify one
point. Under the current limitation, the fund must reduce borrowings that
come to exceed 33 1/3% of total assets only when there is a decline in net
assets.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. Accordingly, the Trustees recommend that
shareholders of the fund vote FOR the proposed amendment. The amended
limitation, upon shareholder approval, will become effective immediately.
If the proposal is not approved, the fund's current limitation will remain
unchanged.
12. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE
CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
The fund's current fundamental investment limitation concerning the
concentration of its investments within a single industry states:
"The fund may not 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)."
Subject to shareholder approval, the Trustees of the fund intend to
replace this fundamental investment limitation with the following amended
fundamental investment limitation governing concentration:
"The fund may not 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."
The primary purpose of the proposal is to revise the fund's fundamental
concentration limitation to conform to a limitation which is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the proposal is
approved, the new fundamental concentration limitation could not be changed
without a future vote of shareholders.
Adoption of the proposed limitation on concentration is not expected to
affect the way the fund is managed, the investment performance of the fund,
or the securities or instruments in which the fund invests. The proposed
amended limitation is not substantially different from the current policy
and is not likely to have any impact on the investment techniques employed
by the fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. The Trustees recommend voting FOR the
proposed amendment. The new limitation, upon shareholder approval, will
become effective immediately. If the proposal is not approved, the fund's
current fundamental investment limitation will remain unchanged.
13. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
COMMODITIES.
The fund's current fundamental investment limitation concerning
commodities states:
"The fund may not 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)."
Subject to shareholder approval, the Trustees intend to replace this
fundamental investment limitation with the following fundamental investment
limitation governing commodities.
"The fund may not 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)."
The primary purpose of this proposal is to implement a fundamental
investment limitation on commodities that conforms to a limitation that is
expected to become the standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If the
proposal is approved, the new fundamental commodities limitation cannot be
changed without a future vote of shareholders.
Adoption of the proposed limitation on commodities is not expected to
affect the way in which the fund is managed, the investment performance of
the fund, or the securities or instruments in which the fund invests.
However, the proposed limitation would clarify two points. First, the
proposed limitation would make it explicit that the fund may acquire
physical commodities as the result of ownership of instruments other than
securities. Second, the proposed limitation would clarify that the fund may
invest without limit in securities or other instruments backed by physical
commodities. Any investments of this type are, of course, subject to the
fund's investment objective, policies, and other limitations.
CONCLUSION. The Board of Trustees has concluded that the adoption of the
proposed amendment will benefit the fund and its shareholders. The Trustees
recommend that shareholders of the fund vote FOR the proposed amendment.
The amended limitation, upon shareholder approval, will become effective
immediately. If the proposal is not approved, the fund's current limitation
will remain unchanged.
14. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
LENDING.
The current fundamental investment limitation concerning lending for the
fund is as follows:
"The fund may not 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."
Subject to shareholder approval, the Trustees intend to replace the
limitation with the following fundamental investment limitation governing
lending:
"The fund may not 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 primary purpose of this proposal is to revise the fund's fundamental
lending limitation to conform to a limitation expected to become the
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the proposal is approved, the new
fundamental lending limitation cannot be changed without a future vote of
shareholders.
Adoption of the proposed limitation on lending is not expected to affect
the way in which the fund is managed, the investment performance of the
fund, or the instruments in which the fund invests. However, the proposed
limitation would clarify two points. First, the proposed limitation
provides specific authority for the fund to acquire the entire portion of
an issue of debt securities. Ordinarily, if a fund purchases an entire
issue of debt securities, there may be greater risks of illiquidity and
unavailability of public information if the issuer has no other issue of
securities outstanding, and it may be more difficult to obtain pricing
information to be used in establishing the fund's daily share price.
Second, the proposed amendment eliminates the reference to "portfolio
securities" in the exception for repurchase agreements.
The Trustees may change non -fundamental limitations in response to
regulatory, market, legal or other developments without further approval by
shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and is in the best interest of
shareholders. The Trustees recommend voting FOR the proposed amendment. The
amended limitation, upon shareholder approval, will become effective
immediately. If the proposal is not approved by shareholders of the fund,
the fund's current limitation will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of
the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies whose net assets as of July 1994,
were in excess of $255 billion. The Fidelity family of funds
currently includes a number of funds with a broad range of investment
objectives and permissible portfolio compositions. The Boards of these
funds are substantially identical to that of this fund . In addition,
FMR serves as investment adviser to certain other funds which are generally
offered to limited groups of investors. Information concerning the
advisory fees, net assets, and total expenses of the funds advised by FMR
is contained in the Table of Average Net Assets and Expense Ratio's in
Exhibit 1 on page 35.
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 information, and may supply portfolio management services to FMR
in connection with certain funds advised by FMR. 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.
FMR, its officers and directors, its affiliated companies and personnel,
and the Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions which have occurred to date have included 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.
The Consolidated Statement of Financial Condition of Fidelity Management &
Research Company and subsidiaries as of December 31, 1993 is shown
beginning on page .
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board; J.
Gary Burkhead, President; and Peter S. Lynch, Vice Chairman. Each of the
Directors is also a Trustee of the Fund. Messrs. Johnson 3d, Burkhead,
John H. Costello, Gary L. French , Arthur S. Loring, and
William J. Hayes are currently officers of the fund and officers
or employees of FMR or FMR Corp. With the exception of Mr. Costello, all of
these persons are stockholders of FMR Corp. FMR's address is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of the
Directors of FMR.
All of the stock of FMR is owned by a parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts, which was organized on October
31, 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions, Fidelity Service Co., which is
the transfer and shareholder servicing agent for certain of the retail
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. Messrs. Johnson 3d, Burkhead, William L. Byrnes, James C.
Curvey, Caleb Loring, Jr. and Ms. Abigail P. Johnson are the Directors of
FMR Corp. On June 30 , 1994, Messrs. Johnson 3d, Burkhead, Curvey,
and Loring, Jr. and Ms. Johnson owned approximately 24%, 3%, 3%, 13%,
and 24 %, respectively, of the voting common stock of FMR Corp. In
addition, various Johnson family members and various trusts for the benefit
of Johnson family members, for which Messrs. Burkhead, Curvey, or Loring,
Jr. are Trustees, owned in the aggregate approximately 32 % of the
voting common stock of FMR Corp. Messrs. Johnson 3d, Burkhead, and Curvey
owned approximately 2%, 3% and 1 %, respectively, of the non-voting
common and equivalent stock of FMR Corp. In addition, various trusts for
the benefit of members of the Johnson family, for which Mr. Loring, Jr. is
the sole Trustee, and other trusts for the benefit of Johnson family
members, through limited partnership interest s in a partnership the
corporate general partner of which is controlled by Mr. Johnson 3d, Mr.
Loring, Jr., and other Johnson family members, together owned approximately
43 % of the non-voting common and equivalent stock of FMR Corp.
Through ownership of voting common stock and the execution of a
shareholders' voting agreement, 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 .
During the period May 1, 1993 through June 30, 1994 the following
transactions were entered into by officers and/or Trustees of the fund or
of FMR Corp. involving more than 1% of the voting common, non-voting common
or preferred stock of FMR Corp. Mr. C. Bruce Johnstone redeemed 12,500
shares of non-voting common stock for a cash payment of approximately $1.8
million. Mr. Edward C. Johnson 3d converted 2,064 shares of voting common
stock into 2,064 shares of non-voting common stock. Mr. Caleb Loring, Jr.
purchased 1,064 shares of voting common stock with a cash payment of
approximately $166,000.
PRESENT 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 Trustee s; 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 following table.
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 $ 1,351,033 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
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 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 the
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 if certain
requirements are satisfied. Pursuant to such requirements, the Board of
Trustees has authorized FBSI to execute fund 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 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 this business with such firms.
The fund pays both commissions and spreads in connection with 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 a 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.
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.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of
the Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Co., P.O. Box 789,
Boston, Massachusetts 02102, whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of
copies of the Proxy Statement and each fund's respective Annual Report you
wish to receive in order to supply copies to the beneficial owners of the
respective shares.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research Company
(a Wholly-Owned Subsidiary of FMR Corp.):
We have audited the accompanying consolidated statement of financial
condition of Fidelity Management & Research Company as of December 31,
1993. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement 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 statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
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 statement referred to above presents fairly,
in all material respects, the consolidated financial position of Fidelity
Management & Research Company as of December 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
________
ASSETS
($000)
Cash and cash equivalents $ 109
Management fees receivable 103,826
Invested assets:
Managed funds (market value $59,845,000) 56,416
Other investments (fair value $25,816,000) 20,822
Property and equipment, net 141,584
Deferred income taxes 35,910
Note receivable from affiliate 11,250
Prepaid expenses and other assets 9,597
Total Assets $ 379,514
LIABILITIES AND STOCKHOLDER'S EQUITY
Payable to mutual funds $ 8,580
Accounts payable and accrued expenses 30,349
Payable to parent company 235,232
Other liabilities 3,871
Total Liabilities 278,032
Stockholder's equity:
Common stock, $.30 par value;
authorized 50,000 shares;
issued and outstanding
26,500 shares 8
Additional paid-in capital 50,074
Retained earnings 51,400
Total Stockholder's Equity 101,482
Total Liabilities and Stockholder's Equity $ 379,514
The accompanying notes are an integral part
of the consolidated statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fidelity Management & Research Company and Subsidiaries (the Company)
provide investment management and advisory services and other services
principally for the Fidelity Investments Family of Funds. The Company also
provides computer support and systems development services to affiliated
companies.
On March 1, 1993, ownership of the Company's wholly-owned subsidiary,
Fidelity Investments Institutional Services Company, Inc. was distributed
to the Company's parent. As of that date, this subsidiary had total assets
and stockholder's equity of approximately $73,000,000, and $60,000,000,
respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated statement of financial condition includes the accounts of
Fidelity Management & Research Company and its wholly-owned subsidiaries.
All intercompany accounts have been eliminated.
INVESTED ASSETS
Managed funds investments (consisting primarily of Fidelity Mutual Funds)
are carried at the lower of aggregate cost or market. Other investments
consist primarily of investments in limited partnerships which are carried
at cost. Certain restrictions exist with respect to the sale or transfer of
these investments to third parties. For managed funds investments and other
investments, fair value is determined by the quoted market price except in
the case of restricted investments which are valued based on management's
assessment of fair value. When the Company has determined that an
impairment, which is deemed other than temporary, in the market or fair
value of an investment has occurred, the carrying value of the investment
is reduced to its net realizable value.
INCOME TAXES
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation of furniture and equipment is computed over the
estimated useful lives of the related assets, which are principally three
to five years, using the straight-line method. Leasehold improvements are
amortized over the lesser of their economic useful lives or the period of
the lease. Maintenance and repairs are charged to operations when incurred.
Renewals and betterments of a nature considered to materially extend the
useful life of the assets are capitalized.
PENSION AND PROFIT SHARING PLANS
The Company participates in FMR Corp.'s noncontributory defined benefit
pension plan covering all of its eligible employees. There are no
statistics available for the actuarial data of this separate company. There
are no unfunded vested benefits.
The Company also participates in FMR Corp.'s defined contribution profit
sharing and retirement plans covering substantially all eligible employees.
B. PROPERTY AND EQUIPMENT, NET
At December 31, 1993, property and equipment, at cost, consist of (in
thousands):
Furniture $ 1,853
Equipment (principally computer related) 320,141
Leasehold improvements 6,712 328,706
Less: Accumulated depreciation and amortization 187,122
$ 141,584
C. NOTE RECEIVABLE FROM AFFILIATE
On December 2, 1993, the Company issued a non-recourse mortgage to an
affiliate for property located in Irving, Texas. The $11,250,000 note
receivable is due on January 1, 2009, and accrues interest at 7.6325%.
Payments of principal and interest are due monthly.
D. TRANSACTIONS WITH AFFILIATED COMPANIES
In connection with its operations, the Company provides services to and
obtains services from affiliated companies. Transactions related to these
services are settled, in the normal course of business, through an
intercompany account with the Company's parent, FMR Corp. The terms of
these transactions may not be the same as those which would otherwise exist
or result from agreements and transactions among unrelated parties.
EXHIBIT 1
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B) ASSETS (C)
GROWTH AND INCOME
Balanced (3) 7/31/93 $ 2,154.5 0.53% 0.53% 0.93%
Dividend Growth (3) 7/31/93** 9.2 0.62(dagger) - 2.50(dagger)
Global Balanced (1) 7/31/93** 35.7 0.77(dagger) 0.77(dagger) 2.12(dagger)
Growth & Income 7/31/93 5,195.4 0.53 0.53 0.83
Puritan (3) 7/31/93 6,319.2 0.47 0.47 0.74
Advisor Income &
Growth 10/31/93 870.1 0.53 0.53 1.51
International Growth
& Income (2) 10/31/93 301.5 0.77 0.77 1.52
Advisor Equity Portfolio
Income :
Class A (3) 11/30/93 19.1 0.50 0.50 1.77
Institutional Class (3) 11/30/93 167.8 0.50 0.50 0.79
Convertible Securities (3) 11/30/93 782.6 0.53 0.53 0.92
Equity-Income II (3) 11/30/93 3,544.3 0.53 0.53 0.88
Variable Insurance
Products:
Equity-Income 12/31/93 952.1 0.53 0.53 0.62
Equity-Income (3) 1/31/94 6,040.5 0.38 0.38 0.66
Real Estate (3) 1/31/94 417.9 0.63 0.63 1.13
Utilities Income (3) 1/31/94 1,394.4 0.53 0.53 0.86
U.S. Equity Index 2/28/94 1,647.0 0.28 - 0.28
Market Index 4/30/94 300.9 0.45 0.45 0.45
Fidelity Fund (3) 6/30/94 1,545.0 0.41 0.41 0.65
ASSET ALLOCATION
Asset Manager 9/30/93 4,704.2 0.72 0.72 1.09
Asset Manager:
Growth (3)(4) 9/30/93 566.0 0.73 0.63 1.19
Asset Manager:
Income (3)(4) 9/30/93 79.1 0.44 - 0.65
Variable Insurance
Products II:
Asset Manager (3) 12/31/93 1,432.9 0.72 0.72 0.88
Index 500 12/31/93 20.8 0.28 - 0.28
GROWTH
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES
TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE
NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B)
ASSETS (C)
Blue Chip Growth 7/31/93 589.5 0.72 0.72 1.25
Low-Priced Stock (3) 7/31/93 2,048.8 0.76 0.76 1.12
OTC Portfolio 7/31/93 1,202.7 0.74 0.74 1.08
Advisor Strategic
Opportunities (3) 9/30/93 $ 219.2 0.54% 0.54% 1.57%
Destiny I 9/30/93# 2,920.5 0.60(dagger) 0.60(dagger) 0.65(dagger)
Destiny II 9/30/93# 1,100.8 0.71(dagger) 0.71(dagger) 0.84(dagger)
Strategic
Opportunities (3) 9/30/93 19.2 0.54 0.54 0.89
Advisor Emerging Asia
Fund, Inc. (5) 10/31/94** 117.0 1.01(dagger) 1.01(dagger) 1.86(dagger)
Advisor Global
Resources (3) 10/31/93 14.4 0.77 0.77 2.62
Advisor Growth
Opportunities 10/31/93 1,204.5 0.68 0.68 1.64
Advisor Overseas (2) 10/31/93 65.5 0.77 0.77 2.38
Canada (2) 10/31/93 61.1 0.86 0.86 2.00
Capital Appreciation (3) 10/31/93 1,139.1 0.48 0.48 0.86
Disciplined Equity (3) 10/31/93 622.1 0.70 0.70 1.09
Diversified
International (2) 10/31/93 119.1 0.73 0.73 1.47
Emerging Markets (2) 10/31/93 144.4 0.77 0.77 1.91
Europe (2) 10/31/93 488.3 0.64 0.64 1.25
Europe Capital
Appreciation (2) 10/31/94** 231.8 0.78(dagger) 0.78(dagger) 1.58(dagger)
Japan (1) 10/31/93 98.4 0.77 0.77 1.71
Latin America (2) 10/31/93** 114.6 0.77(dagger) 0.77(dagger) 1.94(dagger)
Overseas (2) 10/31/93 1,025.1 0.77 0.77 1.27
Pacific Basin (1) 10/31/93 251.2 0.80 0.80 1.59
Southeast Asia (1) 10/31/93** 139.3 0.77(dagger) 0.71(dagger) 2.00(dagger)
Stock Selector (3) 10/31/93 459.7 0.71 0.71 1.10
Value (3) 10/31/93 1,100.8 0.72 0.72 1.11
Worldwide (2) 10/31/93 148.9 0.78 0.78 1.40
Advisor Equity Portfolio
Growth :
Class A (3) 11/30/93 176.0 0.66 0.66 1.84
Institutiona l Class (3) 11/30/93 226.7 0.66 0.66 0.94
Emerging Growth (3) 11/30/93 620.6 0.80 0.80 1.19
Growth Company (3) 11/30/93 2,119.8 0.75 0.75 1.07
New Millennium 11/30/93** 187.5 0.68(dagger) 0.68(dagger) 1.32(dagger)
Retirement Growth (3) 11/30/93 2,404.1 0.76 0.76 1.05
Congress Street 12/31/93 63.4 0.46 0.46 0.61
Contrafund (3) 12/31/93 4,138.1 0.69 0.69 1.06
Exchange 12/31/93 187.7 0.54 0.54 0.57
Trend (3) 12/31/93 1,296.7 0.65 0.65 0.92
Variable Insurance
Products:
Growth 12/31/93 $ 1,016.0 0.63% 0.63% 0.71%
Overseas (2) 12/31/93 398.7 0.77 0.77 1.03
Mid-Cap Stock (3) 1/31/95** 17.6 0.62(dagger) 0.62(dagger) 2.23(dagger)
Select Portfolios:
Air Transportation (3) 2/28/94 17.8 0.63 0.63 2.31
American Gold 2/28/94 313.4 0.63 0.63 1.49
Automotive (3) 2/28/94 133.8 0.63 0.63 1.68
Biotechnology (3) 2/28/94 549.9 0.63 0.63 1.61
Brokerage and Investment
Management (3) 2/28/94 69.3 0.63 0.63 1.77
Chemicals (3) 2/28/94 27.4 0.63 0.63 1.93
Computers (3) 2/28/94 41.2 0.63 0.63 1.89
Construction and
Housing (3) 2/28/94 42.1 0.63 0.63 1.66
Consumer Products (3) 2/28/94 9.0 0.63 0.49 2.48
Defense and
Aerospace (3) 2/28/94 4.6 0.63 - 2.53
Developing
Communications (3) 2/28/94 177.0 0.63 0.63 1.56
Electronics (3) 2/28/94 54.3 0.63 0.63 1.67
Energy (3) 2/28/94 126.1 0.63 0.63 1.66
Energy Service (3) 2/28/94 94.0 0.63 0.63 1.65
Environmental
Services (3) 2/28/94 56.6 0.63 0.63 2.03
Financial Services (3) 2/28/94 168.8 0.62 0.62 1.63
Food and Agriculture (3) 2/28/94 110.1 0.62 0.62 1.64
Health Care (3) 2/28/94 552.3 0.63 0.63 1.55
Home Finance (3) 2/28/94 224.4 0.63 0.63 1.58
Industrial Equipment (3) 2/28/94 58.2 0.63 0.63 1.68
Industrial Materials (3) 2/28/94 33.8 0.64 0.64 2.08
Insurance (3) 2/28/94 22.4 0.63 0.63 1.93
Leisure (3) 2/28/94 88.1 0.63 0.63 1.53
Medical Delivery (3) 2/28/94 105.8 0.63 0.63 1.79
Multimedia (3) (6) 2/28/94 62.8 0.63 0.63 1.63
Natural Gas (3) 2/28/94** 45.1 0.63(dagger) 0.63(dagger) 1.93(dagger)
Paper and Forest
Products (3) 2/28/94 27.0 0.64 0.64 2.07
Precious Metals and
Minerals (3) 2/28/94 378.4 0.63 0.63 1.55
Regional Banks (3) 2/28/94 201.0 0.62 0.62 1.60
Retailing (3) 2/28/94 $ 57.7 0.62% 0.62% 1.83%
Software and Computer
Services (3) 2/28/94 172.2 0.63 0.63 1.57
Technology (3) 2/28/94 163.4 0.63 0.63 1.54
Telecommunications (3) 2/28/94 353.3 0.63 0.63 1.53
Transportation (3) 2/28/94 10.5 0.63 0.63 2.39
Utilities (3) 2/28/94 310.9 0.63 0.63 1.35
Magellan (3) 3/31/94 29,816.4 0.76 0.76 0.99
Small Cap Stock 4/30/94** 572.2 0.68(dagger) 0.68(dagger) 1.18(dagger)
Fidelity Fifty (3) 6/30/94 44.2 0.63 0.63 1.58
CURRENCY PORTFOLIOS
Deutsche Mark
Peformance, L.P. 12/31/93 8.4 0.50 - 1.50
Sterling
Performance, L.P. 12/31/93 3.0 0.50 - 1.50
Yen Performance, L.P. 12/31/93 4.0 0.50 - 1.50
INCOME
Ginnie Mae 7/31/93 953.2 0.47 0.47 0.80
Mortgage Securities 7/31/93 428.9 0.47 0.47 0.76
Spartan Limited Maturity
Government 7/31/93 1,653.7 0.65 0.65 0.65
Spartan Ginnie Mae 8/31/93 766.9 0.65 0.41 0.41
Government Securities 9/30/93** 616.6 0.47(dagger) 0.47(dagger)
0.69(dagger)
Short-Intermediate
Government 9/30/93 167.6 0.47 0.18 0.61
Spartan Investment
Grade Bond (3) 9/30/93 59.1 0.65 0.65 0.65
Spartan Short-Term
Income (3) 9/30/93 547.0 0.65 0.20 0.20
Advisor Government
Investment 10/31/93 40.8 0.46 - 0.68
Advisor High Yield 10/31/93 299.1 0.51 0.51 1.11
Advisor Short Fixed
Income 10/31/93 359.6 0.47 0.47 0.95
Advisor Institutional
Limited Term Bond:
Class A 11/30/93 174.3 0.42 0.42 0.64
Institutional Class 11/30/93 22.5 0.42 0.42 1.23
Institutional Short-
Intermediate
Government:
Class I 11/30/93 $ 255.2 0.45% 0.45% 0.45%
Class II 11/30/94** .1 0.45(dagger) 0.45(dagger) 0.70(dagger)
Advisor Emerging
Markets Income 12/31/94** 6.2 0.71(dagger) - 1.50(dagger)
Global Bond (2) 12/31/93 434.1 0.71 0.71 1.17
New Markets Income (2) 12/31/93** 114.6 0.71(dagger) 0.28(dagger)
1.24(dagger)
Short-Term World
Income (2) 12/31/93 400.1 0.62 0.62 1.00
Spartan Bond
Strategist (3) 12/31/93** 15.4 0.70(dagger) 0.70(dagger) 0.70(dagger)
Variable Insurance
Products:
High Income 12/31/93 343.1 0.51 0.50 0.64
Variable Insurance
Products II:
Investment Grade
Bond 12/31/93 98.9 0.47 0.47 0.68
Spartan Long-Term
Government Bond 1/31/94 85.8 0.65 0.65 0.65
U.S. Bond Index 2/28/94 190.2 0.32 - 0.32
Capital & Income (3) 4/30/94 2,644.6 0.71 0.71 0.97
Intermediate Bond (3) 4/30/94 1,782.5 0.31 0.31 0.64
Investment Grade Bond (3) 4/30/94 1,026.3 0.41 0.41 0.74
Short-Term Bond (3) 4/30/94 2,230.0 0.46 0.46 0.80
Spartan Government
Income 4/30/94 397.4 0.65 0.65 0.65
Spartan High Income 4/30/94 671.4 0.75 0.75 0.75
Spartan Short-Intermediate
Government 4/30/94 61.7 0.65 0.10 0.10
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/94 74.1 0.41 0.41 0.41
MONEY MARKET
Daily Money Fund:
Capital Reserves:
Money Market (4) 7/31/93 443.3 0.50 0.31 0.95
U.S. Government
Money Market (4) 7/31/93 269.5 0.50 0.38 0.95
Money Market (4) 7/31/93 1,554.7 0.50 0.50 0.61
U.S. Treasury (4) 7/31/93 $ 2,841.7 0.50% 0.50% 0.57%
U.S. Treasury
Income (4) 7/31/93 1,166.9 0.42 0.20 0.20
Spartan U.S. Treasury
Money Market (4) 7/31/93 2,138.9 0.55 0.42 0.42
Daily Income Trust (4) 8/31/93 2,302.8 0.30 0.30 0.57
Money Market Trust:
Domestic Money
Market (4) 8/31/93 690.3 0.42 0.42 0.42
Retirement Government
Money Market (4) 8/31/93 1,338.8 0.42 0.42 0.42
Retirement Money
Market (4) 8/31/93 1,661.1 0.42 0.42 0.42
U.S. Government (4) 8/31/93 297.5 0.42 0.42 0.42
U.S. Treasury (4) 8/31/93 181.5 0.42 0.42 0.42
U.S. Government
Reserves (4) 9/30/93 1,139.5 0.43 0.43 0.73
Cash Reserves (4) 11/30/93 9,761.4 0.14 0.13 0.48
State and Local Asset
Management Series:
Government Money
Market (4) 11/30/93 844.5 0.43 0.43 0.43
Variable Insurance
Products:
Money Market (4) 12/31/93 307.3 0.14 0.13 0.22
Select Money Market (4) 2/28/94 462.6 0.13 0.13 0.72
Institutional Cash:
Domestic Money
Market (4) 3/31/94 762.8 0.20 0.12 0.18
Money Market :
Class A (4) 3/31/94 5,263.1 0.20 0.15 0.18
Class B (4) 3/31/94** 34.4 0.20(dagger) 0.15(dagger) 0.50(dagger)
U.S. Government (4) 3/31/94 4,830.3 0.20 0.14 0.18
U.S. Treasury (4) 3/31/94 1,898.0 0.20 0.15 0.18
U.S. Treasury II:
Class A (4) 3/31/94 4,916.5 0.20 0.14 0.18
Class B (4) 3/31/94** 1.5 0.20(dagger) 0.14(dagger) 0.50(dagger)
Spartan Money Market (4) 4/30/94 4,512.4 0.45 0.31 0.31
Spartan U.S. Governmenrt
Money Market (4) 4/30/94 799.3 0.45 0.45 0.45
The North Carolina
Capital Management Trust:
Cash Portfolio (4) 6/30/94 1,391.7 0.39 0.39 0.39
TAX-EXEMPT INCOME
Daily Money Fund:
Capital Reserves:
Municipal Money
Market (4) 7/31/93 $ 91.7 0.50% 0.22% 0.95%
Spartan Aggressive
Municipal 8/31/93** 6.4 0.60(dagger) 0.60(dagger) 0.60(dagger)
Spartan Intermediate
Municipal 8/31/93** 82.6 0.55(dagger) - -
Spartan Maryland
Municipal Income 8/31/93** 13.4 0.55(dagger) - -
Spartan Municipal
Income 8/31/93 869.8 0.55 0.47 0.47
Spartan Municipal
Money Market (4) 8/31/93 1,561.2 0.50 0.27 0.27
Spartan Short-
Intermediate
Municipal 8/31/93# 819.9 0.55(dagger) 0.55(dagger) 0.55(dagger)
Advisor High Income
Municipal 10/31/93 316.4 0.42 0.42 0.92
Daily Tax-Exempt
Money (4) 10/31/93 504.9 0.50 0.50 0.61
Spartan New Jersey
Municipal Money
Market (4) 10/31/93 329.1 0.50 0.44 0.44
Tax-Exempt Money
Market Trust (4) 10/31/93 2,789.6 0.27 0.27 0.49
Advisor Institutional
Limited Term
Tax-Exempt:
Class A 11/30/93 22.1 0.42 0.24 0.65
Institutional Class 11/30/93 15.4 0.42 - 0.90
Advisor Short-Inter-
Mediate Tax Exempt 11/30/94** 6.5 0.41(dagger) - 0.75(dagger)
Connecticut Municipal
Money Market (4) 11/30/93 300.3 0.42 0.42 0.61
High Yield Tax-Free 11/30/93 2,161.9 0.42 0.42 0.56
New Jersey Tax-Free
Money Market (4) 11/30/93 357.5 0.42 0.42 0.63
Spartan Connecticut
Municipal:
High Yield 11/30/93 450.4 0.55 0.55 0.55
Money Market (4) 11/30/93 128.5 0.50 0.24 0.24
Spartan Florida Municipal:
Income 11/30/93 $ 377.5 0.55% 0.25% 0.25%
Money Market (4) 11/30/93 204.4 0.50 0.18 0.18
Spartan New Jersey
Municipal High Yield 11/30/93 399.2 0.55 0.55 0.55
Aggressive Tax-Free 12/31/93 891.9 0.47 0.47 0.64
Insured Tax-Free 12/31/93 426.3 0.42 0.42 0.61
Limited Term
Municipals 12/31/93 1,174.6 0.41 0.41 0.57
Michigan Tax-Free:
High Yield 12/31/93 528.9 0.42 0.42 0.59
Money Market (4) 12/31/93 161.3 0.42 0.41 0.62
Minnesota Tax-Free 12/31/93 320.0 0.42 0.42 0.61
Municipal Bond 12/31/93 1,279.8 0.37 0.37 0.49
Ohio Tax-Free:
High Yield 12/31/93 442.1 0.41 0.41 0.57
Money Market (4) 12/31/93 244.4 0.42 0.42 0.59
Spartan Pennsylvania
Municipal:
High Yield 12/31/93 283.2 0.55 0.55 0.55
Money Market (4) 12/31/93 218.8 0.50 0.50 0.50
Massachusetts Tax-Free:
High Yield 1/31/94 1,365.4 0.41 0.41 0.54
Money Market (4) 1/31/94 577.0 0.41 0.41 0.66
New York Tax-Free:
High Yield 1/31/94 477.9 0.41 0.41 0.58
Insured 1/31/94 395.2 0.41 0.41 0.58
Money Market (4) 1/31/94 564.0 0.41 0.41 0.62
Spartan Massachusetts
Municipal Money
Market (4) 1/31/94 339.5 0.50 0.40 0.40
Spartan New York
Municipal:
High Yield 1/31/94 427.7 0.55 0.55 0.55 Intermediate 1/31/94** 4.3
0.55(dagger) - -
Money Market (4) 1/31/94 446.6 0.50 0.50 0.50
California Tax-Free:
High Yield 2/28/94 588.0 0.41 0.41 0.57
Insured 2/28/94 299.5 0.41 0.29 0.48
Money Market (4) 2/28/94 540.0 0.41 0.41 0.64
Spartan California
Municipal:
High Yield 2/28/94 598.5 0.55 0.52 0.52
Intermediate 2/28/94** $ 7.7 0.55(dagger)% -% -%
Money Market (4) 2/28/94 944.0 0.50 0.21 0.21
Institutional Tax-
Exempt Cash (4) 5/31/94 2,549.9 0.20 0.14 0.18
(a) All fund data are as of the fiscal year end noted in the chart or as
of June 30, 1994, if fiscal year end figures are not yet available. Average
net assets are computed on the basis of average net assets of each fund at
the close of business on each business day throughout its fiscal
period.
(b) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations, or paid by or
due from brokers to which cer
tain portfolio trades have been directed.
(dagger) Annualized
# Year end changed
** Less than a complete fiscal year
(1) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: Fidelity Management & Research
(U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far East) Inc. (FMR
Far East), Fidelity Investments Japan Ltd. (FIJ), Fidelity International
Investment Advisors (FIIA), and Fidelity International Investment Advisors
(U.K.) Limited (FIIAL U.K.), with respect to the fund.
(2) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: FMR U.K., FMR Far East, FIJ (New
Markets Income and Advisor Emerging Markets only), FIIA, and FIIAL U.K.,
with respect to the fund.
(3) Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K. and FMR Far East, with respect to the fund.
(4) Fidelity Management & Research Company has entered into a
sub-advisory agreement with FMR Texas Inc., with respect to the fund.
(5) Fidelity Management & Research Company has entered into sub-advisory
agreements with FIIA and FIJ, with respect to the fund.
(6) Effective April 25, 1994, Select Broadcast and Media Portfolio has
been renamed to Multimedia Portfolio.
FMI -PXS- 8 94 CUSIP # 315912204 /FUND #31 7
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY COMMONWEALTH TRUST: FIDELITY MARKET INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY COMMONWEALTH TRUST: FIDELITY MARKET INDEX FUND which the
undersigned is entitled to vote at the Special Meeting of Shareholders of
the fund to be held at the office of the trust at 82 Devonshire St.,
Boston, MA 02109, on October 26, 1994 at 9:30 a.m. and at any adjournments
thereof. All powers may be exercised by a majority of said proxy holders
or substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposals described in the
Proxy Statement as specified on the reverse side. Receipt of the Notice of
the Meeting and the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
CUSIP# 315912204/FUND# 317
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees specified below as [ ] FOR all nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Edward H. Malone, Marvin L. Mann, Gerald nominees.
C. McDonough, and Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2. To ratify the selection of Coopers & Lybrand L.L.P. as FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants of the trust.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights for shareholders of the trust.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
with the ability to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
6. To adopt a new fundamental investment policy for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
fund permitting it to invest all of its assets in another
open-end investment company with substantially the
same investment objective and policies.
7. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
limitation concerning real estate.
8. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
limitation concerning diversification.
9. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
limitation concerning short sales of securities.
10. To eliminate the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
limitation concerning margin purchases.
11. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
limitation concerning borrowing.
12. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
limitation concerning the concentration of its
investments in a single industry.
13. To amend the fund's fundamental investme nt FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
limitation concerning commodities.
14. To amend the fund's fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
limitation concerning lending.
</TABLE>
FMI-PXC-894
CUSIP# 31 5912204/FUND# 317
FIDELITY MARKET INDEX FUND
Dear Fellow Shareholder:
I am writing to let you know that a special meeting of Fidelity Market
Index Fund shareholders will be held in October to vote on several
important proposals that affect the fund and your investment in it. As a
shareholder, you have the opportunity to voice your opinion on these
matters. This package contains information about the proposals and the
materials to use when voting by mail.
Please take the time to read the enclosed materials and cast your vote on
the yellow proxy card(s). PLEASE VOTE PROMPTLY. IT IS EXTREMELY IMPORTANT,
NO MATTER HOW MANY SHARES YOU OWN.
This is an opportunity to voice your opinion on matters that affect your
fund. Voting promptly helps save money. If we do not receive enough votes,
we must resolicit shareholders in an attempt to increase voter
participation.
HERE IS A BRIEF SUMMARY OF THE PROPOSALS.
All of the proposals summarized below have been carefully reviewed by the
Board of Trustees. The Board of Trustees is responsible for protecting your
interests as a shareholder. The Trustees believe these proposals are in the
best interest of shareholders. They recommend that you vote for each
proposal.
PROPOSAL 1 is to elect Trustees to the Board to supervise the trust's
activities and review contractual arrangements with companies that provide
the trust with services. A copy of the fund's most recent Annual Report
for the fiscal year ending April 30, 1994 may be included with this
mailing.
PROPOSAL 2 is to ratify the selection of Coopers & Lybrand L.L.P. as
independent accountants of the trust.
PROPOSAL 3 is to amend the Declaration of Trust to provide voting rights
based on a shareholder's total dollar value in the trust rather than on the
number of shares owned. As a result, for trust-wide votes such as electing
trustees, voting power would be proportionate to the dollar value of each
shareholder's investment.
PROPOSAL 4 is to amend the Declaration of Trust to eliminate the
requirement of notifying trust shareholders within three months in the
event of an appointment of a Trustee. The proposal does not amend any
other aspect of Trustee resignation or appointment.
PROPOSAL 5 is to amend the Declaration of Trust to provide the fund with
the ability to invest all of its assets in another open-end investment
company with substantially the same investment objective and policies.
PROPOSAL 6 is to adopt a new fundamental investment policy for the fund
permitting it to invest all of its assets in another open-end investment
company with substantially the same investment objective and policies.
PROPOSAL 7 is to amend the investment limitation concerning real estate
for the fund. The main purpose of this proposal is to allow the fund
greater flexibility to purchase and sell the securities of issuers in the
real estate business, subject to the fund's investment objective. The
proposal is not expected to change the investment performance of the fund,
or how the fund is managed.
FMI-PXL-894
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS. The primary purpose of
Proposals 8 through 14 is to revise several of the funds investment
limitations to conform to limitations which are expected to become standard
for all funds managed by FMR. The standardized limitations clarify the
fund's authority in various areas of investing and bring the fund's
limitations up to date by reflecting changes in the market and in
regulatory policies in recent years. The proposals do not affect the
fundamental investment objective of the fund, however, and are not expected
to result in any significant changes in the fund's investment strategy.
Each of these proposals is described in greater detail in the enclosed
Proxy Statement.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
We encourage you to exercise your right as a shareholder and to vote
promptly. To cast your vote, simply complete the yellow proxy card enclosed
in this package. Be sure to sign the card before mailing it in the
postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-544-6666. We'll be glad to help you get your vote in quickly. Thank
you for your participation in this important initiative for your fund.
Sincerely,
Edward C. Johnson 3d
President
