SUPPLEMENT TO THE SPARTAN(registered trademark) MARKET INDEX FUND JUNE 20,
1997 PROSPECTUS
SHAREHOLDER MEETING. On or about November 19, 1997, a shareholder meeting
will be held to consider the adoption of a sub-advisory agreement with
Bankers Trust Company (BT), to consider amendments to the fund's
present management contract, and to consider another proposal.
If shareholders of record on September 22, 1997 approve the sub-advisory
agreement and the amended management contract, Fidelity Management &
Research Company (FMR) would continue to serve as the fund's manager and
investment adviser, but would delegate part of its duties to BT. As
sub-adviser, BT would have day-to-day responsibility for managing the
fund's investments. BT would also provide custodial and securities lending
services to the fund. FMR would be responsible for overseeing BT's
performance and would retain its other management responsibilities, subject
to oversight by the Board of Trustees. All other fund services, including
shareholder account services, would be unchanged.
The proposed amendments to the fund's management contract with FMR would
amend the contract to allow for the appointment of a sub-adviser to the
fund and to modify the management fee arrangement between the fund and FMR
to make it consistent with the management fee arrangement of other Fidelity
index funds. Under the present management contract, the fund pays FMR an
all-inclusive management fee at an annual rate of 0.45% of average net
assets. Under the proposed amended management contract, the fund would pay
separately for management fees and its other operating expenses (unless
they were borne by FMR under a voluntary expense limit). Expenses payable
by the fund under the amended management contract could include legal,
printing, and transfer agent costs. Under the proposed amended management
contract, the management fee would be 0.24% of the fund's average net
assets.
FMR has agreed to limit the fund's total operating expenses (including
management fees but excluding interest, taxes, brokerage commissions, or
extraordinary expenses) to 0.19% of its average net assets through December
31, 1999. The 0.19% expense limit is lower than the management fee under
both the present management contract and the proposed amended management
contract. As a result, the proposed change in management fee structure
would have no impact on the fund's expenses at present. However, expenses
in the future cannot be predicted with any certainty. If the proposals are
approved by shareholders, FMR agreed to further limit the fund's total
operating expenses (including management fees but excluding sub-advisory
fees associated with securities lending, interest, taxes, brokerage
commissions or extraordinary expenses) to 0.41% of its average net assets
from January 1, 2000 through December 31, 2003. Thereafter, the fund's
expenses could be higher or lower than 0.45% of average net assets.
BT is a major institutional money manager and one of the nation's leading
managers of index funds with over 20 years' experience in managing
investments indexed to the S&P 500(registered trademark) and other indices.
BT's commitment to the specialized area of index account management allows
it to provide index fund portfolio management services at a lower cost than
if FMR provided these services itself.
Please contact Fidelity at 1-800-544-6666 if you wish to receive a proxy
statement.
