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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
Fidelity Commonwealth Trust
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(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:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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.
<PAGE>
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIDELITY SMALL CAP STOCK FUND
FIDELITY MID-CAP STOCK FUND
FIDELITY LARGE CAP STOCK FUND
FIDELITY SMALL CAP SELECTOR
FIDELITY INTERMEDIATE BOND FUND
FUNDS OF
FIDELITY COMMONWEALTH TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the Meeting)
of Fidelity Small Cap Stock Fund, Fidelity Mid-Cap Stock Fund, Fidelity Large
Cap Stock Fund, Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund
(the funds) will be held at the office of Fidelity Commonwealth Trust (the
trust), 82 Devonshire Street, Boston, Massachusetts 02109 on September 15, 1999,
at 9:00 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 Deloitte & Touche LLP or
PricewaterhouseCoopers LLP as independent accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated Declaration
of Trust.
4. To approve amended management contracts for Fidelity Large Cap Stock
Fund and Fidelity Small Cap Selector.
5. To approve an amended management contract for Fidelity Intermediate
Bond Fund.
6. To approve amended sub-advisory agreements with Fidelity Management &
Research (U.K.) Inc. for Fidelity Mid-Cap Stock Fund, Fidelity Large
Cap Stock Fund, Fidelity Small Cap Selector, and Fidelity Intermediate
Bond Fund.
7. To approve amended sub-advisory agreements with Fidelity Management &
Research (Far East) Inc. for Fidelity Mid-Cap Stock Fund, Fidelity
Large Cap Stock Fund, Fidelity Small Cap Selector, and Fidelity
Intermediate Bond Fund.
8. To approve a distribution and service plan pursuant to Rule 12b-1 for
Fidelity Small Cap Selector.
9. To approve an agreement and plan providing for the reorganization of
Fidelity Small Cap Selector from a separate series of one Massachusetts
business trust to another.
10. To eliminate a fundamental investment policy of Fidelity Intermediate
Bond Fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
11. To amend Fidelity Large Cap Stock Fund's, Fidelity Small Cap
Selector's, and Fidelity Intermediate Bond Fund's fundamental
investment limitation concerning diversification, to exclude securities
of other investment companies from the limitation.
12. To amend Fidelity Intermediate Bond Fund's fundamental investment
limitation concerning the underwriting of securities.
The Board of Trustees has fixed the close of business on July 19, 1999 as
the record date for the determination of the shareholders of each of the funds
entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
<PAGE>
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
July 19, 1999
<PAGE>
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 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
<PAGE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY COMMONWEALTH TRUST:
FIDELITY SMALL CAP STOCK FUND
FIDELITY MID-CAP STOCK FUND
FIDELITY LARGE CAP STOCK FUND
FIDELITY SMALL CAP SELECTOR
FIDELITY INTERMEDIATE BOND FUND
TO BE HELD ON SEPTEMBER 15, 1999
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 Small Cap Stock Fund, Fidelity Mid-Cap Stock Fund, Fidelity Large
Cap Stock Fund, Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund
(the funds) and at any adjournments thereof (the Meeting), to be held on
September 15, 1999 at 9:00 a.m., at 82 Devonshire Street, Boston, Massachusetts
02109, the principal executive office of the trust and Fidelity Management &
Research Company (FMR), the funds' investment adviser. Shareholders of the
trust's other fund (Spartan(R) Market Index Fund) will also participate in the
Meeting and have been mailed a separate notice and proxy statement relating to
proposals to be voted upon by the trust and by the shareholders of that fund.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is being made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about July 19, 1999. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, electronic
means or by personal interview by representatives of the trust. In addition,
Management Information Services Corp. (MIS) and D.F. King & Co., Inc. may be
paid on a per-call basis to solicit shareholders on behalf of the funds at an
anticipated cost of approximately $_____ (Fidelity Small Cap Stock Fund), $_____
(Fidelity Mid-Cap Stock Fund), $_____ (Fidelity Large Cap Stock Fund), $_____
(Fidelity Small Cap Selector), and $_____ (Fidelity Intermediate Bond Fund). For
Fidelity Small Cap Stock Fund, the expenses in connection with preparing this
Proxy Statement and its enclosures and of all solicitations will be paid by the
fund, provided the expenses do not exceed the fund's existing expense cap listed
on page __. Expenses exceeding Fidelity Small Cap Stock Fund's expense cap will
be paid by FMR. For Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund,
Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund, the expenses
in connection with preparing this Proxy Statement and its enclosures and of all
solicitations will be borne by the funds. The funds will reimburse brokerage
firms and others for their reasonable expenses in forwarding solicitation
material to the beneficial owners of shares. The principal business address of
Fidelity Distributors Corporation (FDC), the funds' principal underwriter and
distribution agent, is 82 Devonshire Street, Boston, Massachusetts 02109. The
principal business address of Fidelity Management & Research (U.K.) Inc. (FMR
U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far East),
subadvisers to the funds, is 82 Devonshire Street, Boston, Massachusetts 02109.
The principal business address of Fidelity Investments Money Management, Inc.
(FIMM), subadviser to Fidelity Intermediate Bond Fund, is 1 Spartan Way,
Merrimack, New Hampshire 03054.
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, by the trust's receipt of a
subsequent valid telephonic vote 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 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. Only proxies
that are voted will be counted towards establishing a quorum. Broker non-votes
are not considered voted for this purpose. 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
<PAGE>
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.
The funds may also arrange to have votes recorded by telephone. For Fidelity
Small Cap Stock Fund, the expenses in connection with telephone voting will be
paid by the fund, provided the expenses do not exceed the fund's existing
expense cap listed on page __. Expenses exceeding Fidelity Small Cap Stock
Fund's expense cap will be paid by FMR. For Fidelity Mid-Cap Stock Fund,
Fidelity Large Cap Stock Fund, Fidelity Small Cap Selector, and Fidelity
Intermediate Bond Fund, the expenses in connection with telephone voting will be
borne by the funds. If the funds record votes by telephone, they will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone may be revoked at any time before they are
voted in the same manner that proxies voted by mail may be revoked. D.F. King &
Co., Inc. may be paid on a per-call basis for vote-by-phone solicitations on
behalf of the funds at an anticipated cost of approximately $_____ (Fidelity
Small Cap Stock Fund), $_____ (Fidelity Mid-Cap Stock Fund), $_____ (Fidelity
Large Cap Stock Fund), $_____ (Fidelity Small Cap Selector), and $_____
(Fidelity Intermediate Bond Fund).
If a quorum is not present at the Meeting, or 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 proxy agents 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 proxy agents 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.
Shares of each fund of the trust issued and outstanding as of June 30, 1999
are indicated in the following table:
Fidelity Small Cap Stock Fund
Fidelity Mid-Cap Stock Fund
Fidelity Large Cap Stock Fund
Fidelity Small Cap Selector
Fidelity Intermediate Bond Fund
Spartan Market Index Fund
[To the knowledge of the trust, substantial (5% or more) record or beneficial
ownership of each fund on June 30, 1999 was as follows:]
[FMR has advised the trust that for Proposals __ contained in this Proxy
Statement, it will vote its shares at the Meeting [FOR each Proposal.]] To the
knowledge of the trust, no [other] shareholder owned of record or beneficially
more than 5% of the outstanding shares of each fund on that date.
Shareholders of record at the close of business on July 19, 1999 will be
entitled to vote at the Meeting. Each such shareholder will be entitled to one
vote for each dollar of net asset value held on that date.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED APRIL
30, 1999, CALL 1-800-544-8888 OR WRITE TO FIDELITY DISTRIBUTORS CORPORATION AT
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT TO
APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE APPROPRIATE FUND CAST AT
5
<PAGE>
THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL 2. APPROVAL OF PROPOSAL 3 REQUIRES
THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF THE
ENTIRE TRUST. APPROVAL OF EACH OF PROPOSALS 4 THROUGH 12 REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF THE
APPROPRIATE FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE
VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE
VOTE OF THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE
MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE
THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT
CONSIDERED "PRESENT" FOR THIS PURPOSE.
The following table summarizes the proposals applicable to each fund.
<TABLE>
<CAPTION>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
<S> <C> <C>
1. To elect as Trustees the twelve nominees All
presented in proposal 1.
2. To ratify the selection of Deloitte & All
Touche LLP or PricewaterhouseCoopers LLP
as independent accountants of the funds.
3. To authorize the Trustees to adopt an All
amended and restatedDeclaration of Trust.
4. To approve an amended management contract Fidelity Large Cap Stock Fund
for the fund that would reduce the management Fidelity Small Cap Selector
fee payable to FMR by the fund as FMR's
assets under management increase and
would modify the performance adjustment
calculation to calculate the fund's
investment performance and that of its
comparative index to the nearest 0.01%.
5. To approve an amended management contract Fidelity Intermediate Bond Fund
for the fund that would reduce the management
fee payable to FMR by the fund as FMR's assets
under management increase.
6. To approve an amended sub-advisory agreement Fidelity Mid-Cap Stock Fund
with FMR U.K. to allow FMR, FMR U.K., and the Fidelity Large Cap Stock Fund
trust, on behalf of the fund, to modify the Fidelity Small Cap Selector
agreement subject to the requirements of the Fidelity Intermediate Bond Fund
1940 Act.
7. To approve an amended sub-advisory agreement Fidelity Mid-Cap Stock Fund
with FMR Far East to allow FMR, FMR Far East, Fidelity Large Cap Stock Fund
and the trust, on behalf of the fund, to Fidelity Small Cap Selector
modify the agreement subject to the Fidelity Intermediate Bond Fund
requirements of the 1940 Act.
8. To approve a distribution and service plan Fidelity Small Cap Selector
pursuant to Rule 12b-1 for the fund that
describes all material aspects of the proposed
financing for the distribution of shares of
the fund.
9. REORGANIZATION: To approve an agreement and Fidelity Small Cap Selector
plan providing for the reorganization of
the fund from a separate series of one
Massachusetts business trust to a separate
series of another Massachusetts business trust.
6
<PAGE>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
10. To eliminate a fundamental investment policy Fidelity Intermediate Bond Fund
of the fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
11. DIVERSIFICATION: To amend the fundamental Fidelity Large Cap Stock Fund
diversification limitation to exclude Fidelity Small Cap Selector
"securities of other investment companies" Fidelity Intermediate Bond Fund
from issuer diversification limits.
12. UNDERWRITING: To clarify and standardize the Fidelity Intermediate Bond Fund
language of the fundamental investment
limitation concerning the underwriting of
securities.
</TABLE>
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the Trust.
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.
All nominees named below are currently Trustees of Fidelity Commonwealth
Trust and have served in that capacity continuously since originally elected or
appointed. Robert M. Gates, William O. McCoy, and Robert C. Pozen were selected
by the trust's Nominating and Administration Committee (see page _ ) and were
appointed to the Board in March 1997, January 1997, and August 1997,
respectively. None of the nominees are 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 (FMR, or the Adviser), or the funds' distribution agent, FDC.
The business address of each nominee who is an "interested person" is 82
Devonshire Street, Boston, Massachusetts 02109, and the business address of all
other nominees is Fidelity Investments, P.O. Box 9235, Boston, Massachusetts
02205-9235. Except for Robert M. Gates, William O. McCoy, and Robert C. Pozen,
each of the nominees is currently a Trustee of __ registered investment
companies advised by FMR. Mr. Gates is currently a Trustee of __ registered
investment companies advised by FMR. Mr. McCoy is currently a Trustee of __
registered investment companies advised by FMR. Mr. Pozen is currently a Trustee
of __ registered investment companies 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.
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION ** YEAR OF
(AGE) -------------------- ELECTION OR
----- APPOINTMENT
-----------
<S> <C> <C>
Ralph F. Cox President of RABAR Enterprises (management 1991
consulting-engineering industry, 1994). Prior to
(67) February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and
production). Until March 1990, Mr. Cox was
President and Chief Operating Officer of Union
Pacific Resources Company (exploration and
7
<PAGE>
production). He is a Director of USA Waste
Services, Inc. (non-hazardous waste, 1993), CH2M
Hill Companies (engineering), Rio Grande, Inc.
(oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer).
In addition, he is a member of advisory boards
of Texas A&M University and the University of
Texas at Austin.
Phyllis Burke Davis Prior to her retirement in September 1991, Mrs. 1992
Davis was the Senior Vice President of Corporate
(67) 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), and previously served as a
Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she is a
member of the President's Advisory Council of
The University of Vermont School of Business
Administration.
Robert M. Gates Consultant, author, and lecturer (1993). Mr. 1997
Gates was Director of the Central Intelligence
(55) Agency (CIA) from 1991-1993. From 1989 to 1991,
Mr. Gates served as Assistant to the President
of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of
LucasVarity PLC (automotive components and
diesel engines), Charles Stark Draper Laboratory
(non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (original equipment
and replacement products). Mr. Gates also is a
Trustee of the Forum for International Policy
and of the Endowment Association of the College
of William and Mary. In addition, he is a member
of the National Executive Board of the Boy
Scouts of America.
*Edward C. Johnson 3d President, is Chairman, Chief Executive Officer 1974
and a Director of FMR Corp.; a Director and
(69) Chairman of the Board and of the Executive
Committee of FMR; Chairman and a Director of
Fidelity Investments Money Management, Inc.
(1998), Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far
East) Inc.; and a Director of FDC.
E. Bradley Jones Prior to his retirement in 1984, Mr. Jones was 1990
Chairman and Chief Executive Officer of LTV
(71) Steel Company. He is a Director of TRW Inc.
(original equipment and replacement products),
Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of
chemical products), and he previously served as
a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials
Handling, Inc. (1985-1995), and Cleveland-Cliffs
Inc (mining), and as a Trustee of First Union
Real Estate Investments. In addition, he serves
as a Trustee of the Cleveland Clinic Foundation,
where he has also been a member of the Executive
Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive
8
<PAGE>
Committee of University School (Cleveland), and
a Trustee of Cleveland Clinic Florida.
Donald J. Kirk Executive-in-Residence (1995) at Columbia 1987
University Graduate School of Business and a
(66) financial consultant. From 1987 to January
1995, Mr. Kirk was a Professor at Columbia
University Graduate School of Business. Prior
to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk
previously served as a Director of General Re
Corporation (reinsurance, 1987-1998) and
Valuation Research Corp. (appraisals and
valuations, 1993-1995). He serves as Chairman
of the Board of Directors of National Arts
Stabilization Inc., Chairman of the Board of
Trustees of the Greenwich Hospital
Association, Director of the Yale-New Haven
Health Services Corp. (1998), a Member of the
Public Oversight Board of the American
Institute of Certified Public Accountants' SEC
Practice Section (1995), and as a Public
Governor of the National Association of
Securities Dealers, Inc. (1996).
*Peter S. Lynch Vice Chairman and Director of FMR. Prior to May 1990
31, 1990, he was a Director of FMR and Executive
(56) Vice President of FMR (a position he held until
March 31, 1991); Vice President of Fidelity
Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was
also Vice President of Fidelity Investments
Corporate Services (1991-1992). 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.
William O. McCoy Vice President of Finance for the University of 1997
North Carolina (16-school system, 1995). Prior
(65) to his retirement in December 1994, Mr. McCoy
was Vice Chairman of the Board of BellSouth
Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is
currently a Director of Liberty Corporation
(holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and
Light Company (electric utility, 1996) and the
Kenan Transport Co. (1996). Previously, he was a
Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr.
McCoy serves as a member of the Board of
Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager
Business School (University of North Carolina at
Chapel Hill, 1988).
Gerald C. McDonough Chairman of G.M. Management Group (strategic 1989
advisory services). Mr. McDonough is a
(71) Director of York International Corp. (air
conditioning and refrigeration), Commercial
Intertech Corp. (hydraulic systems, building
systems, and metal products, 1992), CUNO, Inc.
(liquid and gas filtration products, 1996),
9
<PAGE>
and Associated Estates Realty Corporation (a
real estate investment trust, 1993). Mr.
McDonough served as a Director of
ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products)
from 1987-1996 and Brush-Wellman Inc. (metal
refining) from 1983-1997.
Marvin L. Mann Chairman of the Board of Lexmark International, 1993
Inc. (office machines, 1991). Prior to 1991, he
(66) held the 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 Imation Corp. (imaging and information
storage, 1997).
*Robert C. Pozen Senior Vice President, is also President and a 1997
Director of FMR (1997); and President and a
(53) Director of Fidelity Investments Money
Management, Inc. (1998), Fidelity Management &
Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997).
Previously, Mr. Pozen served as General Counsel,
Managing Director, and Senior Vice President of
FMR Corp.
Thomas R. Williams President of The Wales Group, Inc. (management 1989
and financial advisory services). Prior to
(71) retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia
Corporation (bank holding company), and Chairman
and Chief Executive Officer of The First
National Bank of Atlanta and First Atlanta
Corporation (bank holding company). He is
currently a Director of ConAgra, Inc.
(agricultural products), Georgia Power Company
(electric utility), National Life Insurance
Company of Vermont, American Software, Inc., 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 June 30, 1999, the nominees, Trustees and officers of the Trust and
the funds owned, in the aggregate, less than 1% of the funds' 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 shareholders' 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 nine
non-interested Trustees, met eleven times during the twelve months ended April
30, 1999. It is expected that the Trustees will meet at least ten times a year
at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, FMR or its affiliates and normally meets four
10
<PAGE>
times a year, or as required, prior to meetings of the Board of Trustees.
Currently, Messrs. Kirk (Chairman), Gates and McCoy, and Mrs. Davis are members
of the Committee. The committee oversees and monitors the trust's internal
control structure, its auditing function and its financial reporting process,
including the resolution of material reporting issues. The committee recommends
to the Board of Trustees the appointment of auditors for the trust. It reviews
audit plans, fees and other material arrangements in respect of the engagement
of auditors, including non-audit services to be performed. It reviews the
qualifications of key personnel involved in the foregoing activities. The
committee plays an oversight role in respect of the trust's investment
compliance procedures and the code of ethics. During the twelve months ended
April 30, 1999, the committee held 6 meetings.
The trust's Nominating and Administration Committee is currently composed of
Messrs. McDonough (Chairman), Jones, Mann and Williams. The committee members
confer periodically and hold meetings as required. The committee makes
nominations for independent trustees, and for membership on committees. The
committee periodically reviews procedures and policies of the Board of Trustees
and committees. It acts as the administrative committee under the Retirement
Plan for non-interested trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and the
independent trustees. The committee in the first instance monitors compliance
with, and acts as the administrator of the provisions of the code of ethics
applicable to the independent trustees. During the twelve months ended April 30,
1999, the committee held 1 meeting. 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.
The following table sets forth information describing the compensation of
each Trustee and Member of the Advisory Board of each fund for his or her
services for the fiscal year ended April 30, 1999, or calendar year ended
December 31, 1998, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE Edward Ralph F. Phyllis Robert J. Gary E. Donald
COMPENSATION FROM A C. Cox Burke M. Burkhead** Bradley J.
FUND Johnson --- Davis Gates -------- Jones Kirk
3d** ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity Small Cap $0 $191 $188 $192 $0 $190 $193
Stock Fund B
Fidelity Mid-Cap $0 $573 $562 $574 $0 $569 $578
Stock Fund B
Fidelity Large Cap $0 $81 $80 $81 $0 $81 $82
Stock Fund B
Fidelity Small Cap $0 $245 $241 $246 $0 $244 $248
Selector B
Fidelity $0 $1,114 $1,091 $1,113 $0 $1,105 $1,122
Intermediate Bond
Fund B, C, D
TOTAL COMPENSATION $0 $223,500 $220,500 $223,500 $0 $222,000 $226,500
FROM THE FUND
COMPLEX*, A
AGGREGATE COMPENSATION FROM Peter William Gerald C. Marvin L. Robert Thomas R.
A FUND S. Lynch O. McCoy McDonough Mann C. Williams
----- ----- --------- ---- Pozen** --------
** -----
Fidelity Small Cap Stock Fund B $0 $192 $235 $192 $0 $192
Fidelity Mid-Cap Stock Fund B $0 $574 $702 $574 $0 $574
Fidelity Large Cap Stock Fund $0 $81 $100 $81 $0 $81
B
Fidelity Small Cap Selector B $0 $246 $301 $246 $0 $246
11
<PAGE>
Fidelity Intermediate Bond $0 $1,113 $1,361 $1,113 $0 $1,113
Fund B, C, D
TOTAL COMPENSATION FROM THE $0 $223,500 $273,500 $220,500 $0 $223,500
FUND COMPLEX*, A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237 funds in
the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated by FMR.
A Compensation figures include cash, amounts required to be deferred, and may
include amounts deferred at the election of Trustees. For the calendar year
ended December 31, 1998, the Trustees accrued required deferred compensation
from the funds as follows: Ralph F. Cox, $75,000; Phyllis Burke Davis,
$75,000; Robert M. Gates, $75,000; E. Bradley Jones, $75,000; Donald J. Kirk,
$75,000; William O. McCoy, $75,000; Gerald C. McDonough, $87,500; Marvin L.
Mann, $75,000; and Thomas R. Williams, $75,000. Certain of the non-interested
Trustees elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; William O. McCoy, $55,039; Marvin L. Mann,
$55,039; and Thomas R. Williams, $63,433.
B Compensation figures include cash, and may include amounts required to be
deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each non-interested
Trustee, most of which is subject to vesting: Ralph F. Cox, $500; Phyllis
Burke Davis, $500; Robert M. Gates, $500; E. Bradley Jones, $500; Donald J.
Kirk, $500; William O. McCoy, $500; Gerald C. McDonough, $584; Marvin L.
Mann, $500; and Thomas R. Williams, $500.
D For the fiscal year ended April 30, 1999, certain of the non-interested
Trustees' aggregate compensation from the fund includes accrued voluntary
deferred compensation as follows: Ralph F. Cox, $423; William O.
McCoy, $423; Marvin L. Mann, $290; Thomas R. Williams, $423.
Under a deferred compensation plan adopted in September 1995 and amended in
November 1996 (the Plan), non-interested Trustees must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of, their
annual fees. Amounts deferred under the Plan are subject to vesting and are
treated as though equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds including funds in each major investment
discipline and representing a majority of Fidelity's assets under management
(the Reference Funds). The amounts ultimately received by the Trustees under the
Plan will be directly linked to the investment performance of the Reference
Funds. Deferral of fees in accordance with the Plan will have a negligible
effect on a fund's assets, liabilities, and net income per share, and will not
obligate a fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the Reference Funds
under the Plan without shareholder approval.
2. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP OR PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firms of Deloitte & Touche LLP
(Fidelity Small Cap Stock Fund, Fidelity Large Cap Stock Fund, Fidelity Small
Cap Selector, and Fidelity Intermediate Bond Fund) and PricewaterhouseCoopers
LLP (Fidelity Mid-Cap Stock Fund) have been selected as independent accountants
for the funds to sign or certify any financial statements of the funds 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
each fund, by vote of a majority of its outstanding voting securities at any
meeting called for the purpose of voting on such action, to terminate such
employment without penalty. Each of Deloitte & Touche LLP and
PricewaterhouseCoopers LLP has advised the funds that it has no direct or
material indirect ownership interest in the funds.
12
<PAGE>
For each fund's fiscal years ended April 30, 1997 (except Fidelity Small Cap
Stock Fund, which commenced operations on March 12, 1998) and April 30, 1998,
the firm of Coopers & Lybrand L.L.P. acted as the fund's independent
accountants. Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price
Waterhouse LLP combined their businesses and practices and began doing business
as PricewaterhouseCoopers LLP. Effective February 18, 1999, the non-interested
Trustees selected the firm of Deloitte & Touche LLP as the independent
accountants for Fidelity Small Cap Stock Fund, Fidelity Large Cap Stock Fund,
Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund beginning with
each fund's fiscal year ended April 30, 1999, upon the recommendation of the
funds' Audit Committee.
The independent accountants' audit reports for the fiscal years ended April
30, 1997, 1998 and [1999] did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty, audit
scope, or accounting principles. Further, there were no disagreements between
the funds and the independent accountants on accounting principles or practices,
financial statement disclosures, or audit scope or procedures, which if not
resolved to the satisfaction of the independent accountants would have caused
them to make reference to the subject matter of the disagreements in connection
with their reports on the financial statements for such years.
The independent accountants examine annual financial statements for the funds
and provide other audit and tax-related services. In recommending the selection
of the funds' 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 Deloitte & Touche LLP and PricewaterhouseCoopers LLP 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 AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED DECLARATION OF
TRUST.
The Board of Trustees has approved and recommends that the shareholders of
the trust authorize them to adopt and execute an Amended and Restated
Declaration of Trust for the trust and the funds of the trust in the form
attached to this Proxy Statement as Exhibit 1 (New Declaration of Trust). The
attached New Declaration of Trust has been marked to show changes from the
trust's existing Declaration of Trust (Current Declaration of Trust). The New
Declaration of Trust is a more modern form of trust instrument for a
Massachusetts business trust, and, going forward, will be used as the standard
Declaration of Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and, subject
to applicable requirements of the 1940 Act and Massachusetts law, broader
authority to act. This increased flexibility may allow the Trustees to react
more quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the funds to operate in a more efficient and economical
manner. ADOPTION OF THE NEW DECLARATION OF TRUST WILL NOT ALTER IN ANY WAY THE
TRUSTEES' EXISTING FIDUCIARY OBLIGATIONS TO ACT WITH DUE CARE AND IN THE
SHAREHOLDERS' INTERESTS. BEFORE UTILIZING ANY NEW FLEXIBILITY THAT THE NEW
DECLARATION OF TRUST MAY AFFORD, THE TRUSTEES MUST FIRST CONSIDER THE
SHAREHOLDERS' INTERESTS AND THEN ACT IN ACCORDANCE WITH SUCH INTERESTS.
Adoption of the New Declaration of Trust will NOT result in any changes in
the funds' Trustees or officers or in the investment policies and shareholder
services described in the funds' current prospectuses.
Generally, a majority of the Trustees may amend the Current Declaration of
Trust when authorized by a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the trust. On October 16, 1997, the Trustees
approved the form of the New Declaration of Trust. On December 18, 1997, the
Board approved several additional changes to the form of the New Declaration of
Trust, which changes have been incorporated into the form attached to this Proxy
Statement. On May 20, 1999, the Board authorized the submission of the New
Declaration of Trust to the trust's shareholders for their authorization at this
Meeting.
The New Declaration of Trust amends the Current Declaration of Trust in a
number of significant ways. The following discussion summarizes some of the more
significant amendments to the Current Declaration of Trust effected by the New
Declaration of Trust.
13
<PAGE>
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER SUBSTANTIVE AND
STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF TRUST AND THE CURRENT
DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE NEW DECLARATION OF TRUST ITSELF, WHICH IS ATTACHED AS EXHIBIT 1
TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES. Unlike the Current
Declaration of Trust, the New Declaration of Trust generally permits the
Trustees, subject to applicable Federal and state law, to reorganize or
terminate the trust or any of its series. The Current Declaration of Trust
requires shareholder approval in order to reorganize or terminate the trust or
any of its series.
Under certain circumstances, it may not be in the shareholders' interest to
require a shareholder meeting to permit the trust or a fund to reorganize into
another entity. For example, in order to reduce the cost and scope of state
regulatory constraints or to take advantage of a more favorable tax treatment
offered by another state, the Trustees may determine that it would be in the
shareholders' interests to reorganize a fund to domicile it in another state or
to change its legal form. Under the Current Declaration of Trust, the Trustees
cannot effectuate such a potentially beneficial reorganization without first
conducting a shareholder meeting and incurring the attendant costs and delays.
In contrast, the New Declaration of Trust gives the Trustees the flexibility to
reorganize the trust or any of its series and achieve potential shareholder
benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust and its
funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the Trustees to terminate a
fund. For example, a fund may have insufficient assets to invest effectively or
excessively high expense levels due to operational needs. Under such
circumstances, absent viable alternatives, the Trustees may determine that
terminating the fund is in the shareholders' interest and the only appropriate
course of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the fund's
liquidation and termination and, in general, will increase the costs associated
with the termination. In such a case, it may be in the shareholders' interest to
permit fund termination without incurring the costs and delays of a shareholder
meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have a
fiduciary responsibility to first determine that the proposed transaction is in
the shareholders' interest. Any exercise of the Trustees' increased authority
under the New Declaration of Trust is also subject to any applicable
requirements of the 1940 Act and Massachusetts law. Of course, in all cases, the
New Declaration of Trust would require that shareholders receive written
notification of any proposed transaction.
The New Declaration of Trust does NOT give the Trustees the authority to
merge a fund with another operating mutual fund or sell all of a fund's assets
to another operating mutual fund without first seeking shareholder approval.
Under the New Declaration of Trust, shareholder approval is still required for
these transactions.
FUTURE AMENDMENTS OF THE DECLARATION OF TRUST. The New Declaration of Trust
permits the Trustees, with certain exceptions, to amend the Declaration of Trust
without shareholder approval. Under the New Declaration of Trust, shareholders
generally have the right to vote on any amendment affecting their right to vote,
on any amendment altering the maximum number of permitted Trustees, on any
amendment affecting the New Declaration of Trust's amendment provisions, on any
amendment required by law or the trust's registration statement, and on any
matter submitted to shareholders by the Trustees. The Current Declaration of
Trust, on the other hand, generally gives shareholders the exclusive power to
amend the Declaration of Trust. By allowing amendment of the Declaration of
Trust without shareholder approval, the New Declaration of Trust gives the
Trustees the necessary authority to react quickly to future contingencies. As
mentioned above, such increased authority remains subordinate to the Trustees'
continuing fiduciary obligations to act with due care and in the shareholders'
interest.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of Trust
modifies the Current Declaration of Trust in a number of important ways,
including the following:
14
<PAGE>
1. The New Declaration of Trust modifies the Current Declaration of Trust to
allow FMR and the trust, on behalf of each fund, to amend the fund's respective
Management Contract subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the SEC. In contrast, the Current Declaration of
Trust explicitly requires the vote of a majority of the outstanding voting
securities of a fund to authorize all such amendments. A corresponding change is
also proposed for certain of the funds' Management Contracts. For more
information on this topic generally, see "Modification of Management Contract
Amendment Provisions" on pages __ and __.
2. The New Declaration of Trust clarifies that the Trustees may impose other
fees (for example, purchase fees) in addition to sales charges upon investment
in a fund and clarifies that deferred sales charges and other fees (for example,
redemption fees) may be imposed upon redemption of a fund's shares.
3. The New Declaration of Trust confirms and clarifies various existing
Trustee powers. For example, the New Declaration of Trust clarifies that the
Trustees, in addition to banks and trust companies, may employ as fund
custodians companies that are members of a national securities exchange or other
entities permitted under the 1940 Act; delegate authority to investment advisers
and other agents; adopt and offer dividend reinvestment and related plans;
operate and carry on the business of an investment company; and interpret the
investment policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a trust
series shall have a claim on the assets of another series and further clarifies
that, by virtue of investing in a fund, a shareholder is deemed to have assented
to and agreed to be bound by the terms of the New Declaration of Trust.
5. The New Declaration of Trust deletes various technical and/or antiquated
requirements from the Current Declaration of Trust, including existing
requirements that a Trustee vacancy be deemed to occur when a Trustee is absent
from his or her state of residence, that Trustee vacancies must be filled within
six calendar months, and that portfolio securities be held pursuant to
safeguards prescribed by usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the Current
Declaration of Trust to incorporate appropriate references to classes of shares.
7. Lastly, the New Declaration of Trust generally expands various 1940 Act
defined terms to encompass SEC modifications and interpretations. Specific
references to discrete sections of the 1940 Act that are contained in the New
Declaration of Trust have likewise been expanded to include SEC modifications
and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed adoption of
the New Declaration of Trust is in the best interests of the trust's
shareholders. Accordingly, the Trustees unanimously recommend that the
shareholders vote FOR the proposal to authorize them to adopt and execute the
New Declaration of Trust. If the proposal is not approved, the Current
Declaration of Trust will remain unchanged and in effect.
4. TO APPROVE AMENDED MANAGEMENT CONTRACTS FOR FIDELITY LARGE CAP STOCK FUND AND
FIDELITY SMALL CAP SELECTOR.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of each fund approve, a proposal to adopt an
amended management contract with FMR (the Amended Contract). Each fund's Amended
Contract modifies several aspects of the management fee that FMR receives from
the fund for managing its investments and business affairs. In addition, each
fund's Amended Contract allows FMR and the Trust, on behalf of the fund, to
modify the Management Contract subject to the requirements of the 1940 Act. Each
fund's existing Management Contract currently requires the vote of a majority of
the fund's outstanding voting securities to authorize all amendments. See
"Modification of Management Contract Amendment Provisions" on page __ for more
details. (For information on FMR, see the section entitled "Activities and
Management of FMR," on page __.)
CURRENT MANAGEMENT FEE. Each fund's management fee is calculated and paid
monthly, and is normally expressed as an annual percentage of the fund's average
net assets. Each fund's fee has two components: a Basic Fee and a Performance
Adjustment. The Basic Fee is an annual percentage of a fund's average net assets
15
<PAGE>
for the current month. The Basic Fee rate is the sum of a Group Fee rate, which
declines as FMR's fund assets under management increase, and a fixed individual
fund fee rate of 0.30% for Fidelity Large Cap Stock Fund and 0.35% for Fidelity
Small Cap Selector. The Basic Fee rate for Fidelity Large Cap Stock Fund's
fiscal year ended April 30, 1999 (not including the fee amendments discussed
below) was 0.5923%. The Basic Fee rate for Fidelity Small Cap Selector's fiscal
year ended April 30, 1999 (not including the fee amendments discussed below) was
0.6434%.
Each fund's Performance Adjustment is a positive or negative dollar amount
based on the fund's performance and assets for the most recent 36 months. If
Fidelity Large Cap Stock Fund outperforms the Standard & Poor's 500(R) Index
(its Index) over 36 months, FMR receives a positive Performance Adjustment, and
if the fund underperforms its Index, its management fee is reduced by a negative
Performance Adjustment. Likewise, if Fidelity Small Cap Selector outperforms the
Russell 2000(R) Index (its Index) over 36 months, FMR receives a positive
Performance Adjustment, and if the fund underperforms its Index, its management
fee is reduced by a negative Performance Adjustment. Each fund's Performance
Adjustment is an annual percentage of the fund's average net assets over the
36-month performance period. Each fund's Performance Adjustment rate is 0.02%
for each percentage point of outperformance or underperformance, subject to a
maximum of 0.20% if the fund outperforms or underperforms its Index by more than
ten percentage points. The performance of each fund and the performance of its
Index are rounded to the nearest whole percentage point for purposes of the
calculation.
PROPOSED MANAGEMENT FEE AMENDMENTS. Each fund's Amended Contract would (1)
reduce the Group Fee rate further if FMR's assets under management remain over
$426 billion, (2) modify the Performance Adjustment calculation to round the
performance of the fund and its Index to the nearest 0.01%, rather than the
nearest 1.00%, and (3) allow FMR and the Trust, on behalf of the fund, to modify
the Management Contract subject to the requirements of the 1940 Act. Each fund's
existing Management Contract currently requires the vote of a majority of the
fund's outstanding voting securities to authorize all amendments. See
"Modification of Management Contract Amendment Provisions" on page __ for more
details.
IMPACT OF GROUP FEE RATE REDUCTION. At FMR's current level of assets under
management (approximately $748 billion as of April 1999), the changes to the
Group Fee rate reduce the management fee. FMR has voluntarily implemented the
Group Fee reductions pending shareholder approval, and each fund has paid lower
management fees as a result. For Fidelity Large Cap Stock Fund's fiscal year
ended April 30, 1999, the management fee using the proposed Group Fee reductions
(including the Performance Adjustment) was 0.5353% of the fund's average net
assets. The Group Fee reductions lowered Fidelity Large Cap Stock Fund's
management fee rate by 0.0058% compared to the rate FMR was entitled to receive
under the Present Contract (0.5411%). For Fidelity Small Cap Selector's fiscal
year ended April 30, 1999, the management fee using the proposed Group Fee
reductions (including the Performance Adjustment) was 0.5286% of the fund's
average net assets. The Group Fee reductions lowered Fidelity Small Cap
Selector's management fee rate by 0.0053% compared to the rate FMR was entitled
to receive under the Present Contract (0.5339%).
IMPACT OF PERFORMANCE ADJUSTMENT CHANGES. The more precise rounding method
for the Performance Adjustment would have increased Fidelity Large Cap Stock
Fund's management fee rate for the fiscal year ended April 30, 1999 by 0.0004%
of the fund's average net assets for the year. The more precise rounding method
for the Performance Adjustment would have decreased Fidelity Small Cap
Selector's management fee rate for the fiscal year ended April 30, 1999 by
0.0013% of the fund's average net assets for the year.
COMBINED EFFECT OF FEE CHANGES. In the fiscal year ended April 30, 1999, the
Group Fee reductions and the changes to the Performance Adjustment would have
resulted in a 0.0054% reduction in Fidelity Large Cap Stock Fund's total
management fee. In the fiscal year ended April 30, 1999, the Group Fee
reductions and the changes to the Performance Adjustment would have resulted in
a 0.0066% reduction in Fidelity Small Cap Selector's total management fee. The
future impact will depend on many different factors, and may represent an
increase or decrease from the management fee under each fund's Present Contract.
The Group Fee rate reductions will either reduce the management fee or leave it
16
<PAGE>
unchanged, depending on the level of FMR's assets under management. Calculating
performance to the nearest 0.01% may increase or decrease the Performance
Adjustment, depending on whether performance would have been rounded up or down.
Copies of the forms of Amended Contracts, marked to indicate the proposed
amendments, are supplied as Exhibit 2 on page __ (for Fidelity Large Cap Stock
Fund) and Exhibit 3 on page __ (for Fidelity Small Cap Selector). Except for the
modifications discussed above, each fund's Amended Contract is substantially
identical to the fund's Present Contract with FMR. (For a detailed discussion of
each fund's Present Contract, refer to the section entitled "Present Management
Contracts," on page __.) If approved by a fund's shareholders, the fund's
Amended Contract will take effect on the first day of the first month following
approval and will remain in effect through July 31, 2000, and thereafter, but
only as long as its continuance is approved at least annually by (i) the vote,
cast in person at a meeting called for the purpose, of a majority of the
Independent Trustees and (ii) the vote of either a majority of the Trustees or a
majority of the outstanding shares of the fund. If a fund's Amended Contract is
not approved, the fund's Present Contract will continue in effect through July
31, 2000, and thereafter only as long as its continuance is approved at least
annually as described above.
MODIFICATION TO GROUP FEE RATE. The Group Fee rate varies based on the
aggregate net assets of all registered investment companies having management
contracts with FMR (group assets). As group assets increase, the Group Fee rate
declines. Each fund's Amended Contract would not change the Group Fee rate if
group assets are $426 billion or less. Above $426 billion in group assets, each
fund's Group Fee rate declines under both the Present and the Amended Contracts,
but under the Amended Contract, it declines faster.
Each fund's Group Fee rate is calculated according to a graduated schedule
providing for different rates for different levels of group assets. The rate at
which the Group Fee rate declines is determined by fee "breakpoints" that
provide for lower fee rates when group assets increase. Each fund's Amended
Contract would add four new, lower breakpoints applicable when group assets are
above $426 billion, as illustrated in the following table. (For an explanation
of how the Group Fee rate is used to calculate the management fee see the
section entitled "Present Management Contracts" on page __.)
GROUP FEE RATE BREAKPOINTS
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
Over 390 .2700% 390-426 .2700%
426-462 .2650%
462-498 .2600%
498-534 .2550%
Over 534 .2500%
The resulting Group Fee rates at various levels of group assets are indicated
below. (For an explanation of how the breakpoints are combined to arrive at the
Group Fee rate, see "Present Management Contracts" on page __.)
EFFECTIVE GROUP FEE RATES
GROUP NET PRESENT AMENDED
ASSETS CONTRACT CONTRACT
($ BILLIONS)
150 .3371% .3371%
200 .3284% .3284%
250 .3219% .3219%
300 .3163% .3163%
350 .3113% .3113%
400 .3067% .3067%
17
<PAGE>
450 .3026% .3024%
500 .2994% .2982%
550 .2987% .2942%
FMR voluntarily adopted various additional Group Fee breakpoints for group
assets over $390 billion in 1996. Although the new fee breakpoints have not been
added to a fund's management contract pending shareholder approval, FMR has
voluntarily based its management fee on the Group Fee schedule contained in the
Amended Contract since January 1, 1996. Group assets for April 1999 were
approximately $748 billion.
MODIFICATIONS TO PERFORMANCE ADJUSTMENT - ROUNDING METHOD. Each fund's annual
Performance Adjustment rate equals 0.02% for each percentage point by which the
fund outperforms or underperforms its Index over a 36-month performance period.
Under each fund's Present Contract, the investment performance of both the fund
and its Index are rounded to the nearest full percentage point (for example,
15.5123% is rounded to 16%). Rounding to full percentage points results in the
Performance Adjustment rate being applied in 0.02% increments. In comparison,
under each fund's Amended Contract, the investment performance of both the fund
and its Index are rounded to the nearest 0.01% (using the prior example,
15.5123% is rounded to 15.51%) prior to calculating the difference in investment
performance. The more precise rounding method results in a more accurate measure
of the difference in investment performance and allows for the Performance
Adjustment to be applied in 0.0002% increments. This reduces the chance of minor
changes in performance resulting in significant changes to the Performance
Adjustment, and ultimately each fund's management fee.
During the fiscal year ended April 30, 1999, using the more precise rounding
methodology, the aggregate impact was a 0.0004% increase in Fidelity Large Cap
Stock Fund's management fee. During the fiscal year ended April 30, 1999, using
the more precise rounding methodology, the aggregate impact was a 0.0013%
decrease in Fidelity Small Cap Selector's management fee.
COMPARISON OF MANAGEMENT FEES. The following tables compare each fund's
management fee as calculated under the terms of the Present Contract (not
including FMR's voluntary implementation of the Group Fee reductions) for the
fiscal year ended April 30, 1999, to the management fee each fund would have
incurred if the Amended Contract had been in effect. Each fund's management fees
are expressed in dollars and as percentages of the fund's average net assets for
the year.
FIDELITY LARGE CAP STOCK FUND
<TABLE>
<CAPTION>
Present Contract Amended Contract Difference
---------------- ---------------- ----------
$ % $ % $ %
<S> <C> <C> <C>
Basic Fee 1,695,037 .5923 1,678,444 .5865 (16,593) (.0058)
Performance Adjustment (146,444) (.0512) (145,349) (.0508) 1,095 .0004
---------- -------- ------------------- -------- -----
Total Management Fee 1,548,593 .5411 1,533,095 .5357 15,498 (.0054)
FIDELITY SMALL CAP SELECTOR
Present Contract Amended Contract Difference
---------------- ---------------- ----------
$ % $ % $ %
<S> <C> <C> <C>
Basic Fee 4,528,526 .6434 4,491,377 .6381 (37,149) (.0053)
Performance Adjustment (770,621) (.1095) (779,916) (.1108) (9,295) (.0013)
--------- ------ -------- ------- ------ -------
Total Management Fee 3,757,905 .5339 3,711,461 .5273 (46,444) (.0066)
</TABLE>
The following tables provide data concerning each fund's management fees and
expenses as a percentage of its average net assets for the fiscal year ended
April 30, 1999 under the Present Contract (not including FMR's voluntary
18
<PAGE>
implementation of the Group Fee reductions) and if the Amended Contract had been
in effect during the same period.
The following figures for each fund are based on historical expenses adjusted
to reflect current fees of the fund and are calculated as a percentage of the
fund's average net assets.
COMPARATIVE FEE TABLES
Annual Fund Operating Expenses (as a percentage of average net assets)
FIDELITY LARGE CAP STOCK FUND
PRESENT CONTRACT AMENDED
---------------- CONTRACT
--------
Management Fee .5411% .5357%
12b-1 Fee none none
Other Expenses .3900% .3900%
Total Fund Operating Expenses .9311% .9257%
FIDELITY SMALL CAP SELECTOR
PRESENT CONTRACT AMENDED
---------------- CONTRACT
--------
Management Fee .5339% .5273%
12b-1 Fee none none
Other Expenses .3564% .3564%
Total Fund Operating Expenses .8903% .8837%
A portion of the brokerage commissions that each fund pays is used to reduce
that fund's expenses. Each fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce custodian and transfer agent expenses. Including
these reductions, the total operating expenses presented in the table would have
been 0.9061% under the Present Contract and 0.9007% under the Amended Contract
for Fidelity Large Cap Stock Fund, and 0.8536% under the Present Contract and
0.8470% under the Amended Contract for Fidelity Small Cap Selector.
EXAMPLE: The following illustrates the expenses on a $10,000 investment under
the fees and expenses stated above, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
FIDELITY LARGE CAP STOCK FUND
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present Contract $95 $296 $515 $1,143
Amended Contract $95 $296 $515 $1,143
FIDELITY SMALL CAP SELECTOR
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present Contract $91 $284 $493 $1,096
Amended Contract $90 $281 $489 $1,087
The purpose of this example and the tables is to assist investors in
understanding the various costs and expenses of investing in shares of the
funds. The example above should not be considered a representation of past or
future expenses of the funds. Actual expenses may vary from year to year and may
be higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. Each fund's Amended
Contract allows FMR and the Trust, on behalf of the fund, to amend the
19
<PAGE>
Management Contract subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the Securities and Exchange Commission. In contrast,
each fund's Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to each fund's Present Contract's amendment
provisions will allow FMR and the Trust, on behalf of the fund, to amend the
Management Contract without shareholder vote IF THE 1940 ACT PERMITS THEM TO DO
SO. For example, under current interpretations of Section 15 of the 1940 Act,
the Amended Contract would give FMR and the Trust the ability to amend the
Management Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the proposed
modification gives FMR and the Trust added flexibility to amend the Management
Contract subject to 1940 Act constraints. Of course, any future amendments to
each fund's Management Contract would require the approval of the fund's Board
of Trustees.
MATTERS CONSIDERED BY THE BOARD. The mutual funds for which the members of
the Board of Trustees serve as Trustees are referred to herein as the "Fidelity
funds." The Board of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on the
appropriateness of each fund's management fees are considered at most, if not
all, of their meetings. While the full Board of Trustees or the Independent
Trustees, as appropriate, act on all major matters, a significant portion of the
activities of the Board of Trustees (including certain of those described
herein) is conducted through committees. The Independent Trustees meet
frequently in executive session and are advised by independent legal counsel
selected by the Independent Trustees.
The proposal to present the Amended Contracts to shareholders was approved by
the Board of Trustees of each fund, including all of the Independent Trustees,
on May 20, 1999. The Board of Trustees considered and approved the modifications
to the Group Fee Rate schedule during the two month period from November to
December 1995, and the modifications to the Performance Adjustment calculation
during the period from June to July 1995. The Board of Trustees received
materials relating to the Amended Contracts in advance of the meeting at which
the Amended Contracts were considered, and had the opportunity to ask questions
and request further information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with their
monthly meetings, the Trustees received materials specifically relating to the
Amended Contracts. These materials included: (i) information on the investment
performance of each fund, a peer group of funds and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of each fund,
and (iii) the economic outlook and the general investment outlook in the markets
in which each fund invests. The Board of Trustees and the Independent Trustees
also consider periodically other material facts such as (1) FMR's results and
financial condition, (2) arrangements in respect of the distribution of each
fund's shares, (3) the procedures employed to determine the value of each fund's
assets, (4) the allocation of each fund's brokerage, if any, including
allocations to brokers affiliated with FMR and the use of "soft" commission
dollars to pay fund expenses and to pay for research and other similar services,
(5) FMR's management of the relationships with each fund's custodian and
subcustodians, (6) the resources devoted to and the record of compliance with
each fund's investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost, and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information on
and analysis of (a) the overall organization of FMR, (b) the impact of
performance adjustments to management fees, (c) the choice of performance
indices and benchmarks, (d) the composition of peer groups of funds, (e)
transfer agency and bookkeeping fees paid to affiliates of FMR, (f) investment
performance, (g) investment management staffing, (h) the potential for achieving
further economies of scale, (i) operating expenses paid to third parties, and
(j) the information furnished to investors, including each fund's shareholders.
In considering the Amended Contracts, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all of the matters
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contracts include the
following:
20
<PAGE>
BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent Trustees
considered the benefit to shareholders of investing in a fund that is part of a
large family of funds offering a variety of investment disciplines and providing
for a large variety of fund and shareholder services. With regard to the
proposed modification to each fund's Present Contract's amendment provisions,
the Board of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within 1940 Act
constraints) to amend the Management Contract without the delays and potential
costs of a proxy solicitation.
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether each fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly each fund's investment performance as
well as the performance of a peer group of mutual funds, and the performance of
an appropriate index or combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees review at least annually the background of each fund's portfolio
manager, and each fund's investment objective and discipline. The Independent
Trustees have also had discussions with senior management of FMR responsible for
investment operations, and the senior management of Fidelity's equity group.
Among other things, they considered the size, education and experience of FMR's
investment staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory and
management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, under both the Present Contracts and the Amended Contracts and under
separate agreements covering transfer agency functions and pricing, bookkeeping
and securities lending services, if any. The Board of Trustees and the
Independent Trustees have also considered the nature and extent of FMR's
supervision of third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered each
fund's expense ratio and the expense ratios of a peer group of funds. They also
considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees considered
the level of FMR's profits in respect of the management of the Fidelity funds,
including each fund. This consideration included an extensive review of FMR's
methodology in allocating its costs to the management of each fund. The Board of
Trustees and the Independent Trustees have concluded that the cost allocation
methodology employed by FMR has a reasonable basis and is appropriate in light
of all of the circumstances. They considered the profits realized by FMR in
connection with the operation of each fund and whether the amount of profit is a
fair entrepreneurial profit for the management of each fund. They also
considered the profits realized from non-fund businesses which may benefit from
or be related to each fund's business. The Board of Trustees and the Independent
Trustees also considered FMR's profit margins in comparison with available
industry data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including the
fund) have appropriately benefited from any economies of scale, and whether
there is potential for realization of any further economies of scale. The Board
of Trustees and the Independent Trustees have concluded that FMR's mutual fund
business presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and FMR in an
appropriate manner. The Independent Trustees have also concluded that the
existing group fee structure should be continued but determined that it would be
appropriate to change the group fee structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent Trustees
also considered the character and amount of fees paid by each fund and each
fund's shareholders for services provided by FMR and its affiliates, including
fees for services like transfer agency, fund accounting and direct shareholder
services. They also considered the allocation of fund brokerage to brokers
affiliated with FMR and the receipt of sales loads and payments under Rule 12b-1
21
<PAGE>
plans in respect of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of FMR
businesses other than its mutual fund business, including FMR's retail
brokerage, correspondent brokerage, capital markets, trust, investment advisory,
pension record keeping, insurance, publishing, real estate, international
research and investment funds, and others. The Board of Trustees and the
Independent Trustees considered the intangible benefits that accrue to FMR and
its affiliates by virtue of their relationship with each fund.
CONCLUSION. In considering the Amended Contracts, the Board of Trustees and
the Independent Trustees did not identify any single factor as all-important or
controlling, and the foregoing summary does not detail all of the matters
considered. Based on their evaluation of all material factors and assisted by
the advice of independent counsel, the Trustees concluded (i) that the existing
management fee structure is fair and reasonable and (ii) that the proposed
modifications to the management fee rates, that is the reduction of the Group
Fee Rate schedule and the modifications to the performance adjustment
calculation, and the proposed modification to the Present Contract's amendment
provisions, are in the best interest of each fund's shareholders The Board of
Trustees, including the Independent Trustees, voted to approve the submission of
each fund's Amended Contract to shareholders of the fund and recommends that
shareholders of each fund vote FOR its Amended Contract.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY INTERMEDIATE BOND
FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of the fund approve, a proposal to adopt an amended
management contract with FMR (the Amended Contract). The Amended Contract
modifies the management fee that FMR receives from the fund to provide for lower
fees when FMR's assets under management exceed certain levels. In addition, the
Amended Contract allows FMR and the Trust, on behalf of the fund, to modify the
Management Contract subject to the requirements of the 1940 Act. The existing
Management Contract (Present Contract) currently requires the vote of a majority
of the fund's outstanding voting securities to authorize all amendments. See
"Modification of Management Contract Amendment Provisions" on page ___ for more
details. THE AMENDED CONTRACT WILL RESULT IN A MANAGEMENT FEE THAT IS THE SAME
AS, OR LOWER THAN, THE FEE PAYABLE UNDER THE PRESENT CONTRACT. (For information
on FMR, see the section entitled "Activities and Management of FMR" on page
___.)
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of the form
of Amended Contract, marked to indicate the proposed amendments, is supplied as
Exhibit 4 on page ___. Except for the modifications discussed above, it is
substantially identical to the Present Contract. (For a detailed discussion of
the fund's Present Contract, refer to the section entitled "Present Management
Contracts" beginning on page ___.) If approved by shareholders, the Amended
Contract will take effect on October 1, 1999 (or, if later, the first day of the
first month following approval) and will remain in effect through June 30, 2000
and thereafter, but only as long as its continuance is approved at least
annually by (i) the vote, cast in person at a meeting called for the purpose, of
a majority of the Independent Trustees and (ii) the vote of either a majority of
the Trustees or a majority of the outstanding shares of the fund. If the Amended
Contract is not approved, the Present Contract will continue in effect through
June 30, 2000, and thereafter only as long as its continuance is approved at
least annually as above.
The management fee is an annual percentage of the fund's average net assets
(the management fee rate), calculated and paid monthly. The management fee rate
is the sum of two components: a Group Fee Rate, which varies according to assets
under management by FMR, and a fixed Individual Fund Fee Rate. The Amended
Contract modifies the Group Fee Rate by providing for lower fee rates if FMR's
assets under management remain above $408 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon the
monthly average of the aggregate net assets of all registered investment
companies having management contracts with FMR (assets under management by FMR).
For example, as assets under management by FMR increase, the Group Fee Rate
declines. The Amended Contract would not change the group fee calculation for
assets under management by FMR of $408 billion or less. Above $408 billion in
22
<PAGE>
assets under FMR's management, the Group Fee Rate declines under both the
Present Contract and the Amended Contract, but under the Amended Contract, it
declines faster. Group Fee Rates that are lower than those contained in the
fund's Present Contract have been voluntarily implemented by FMR on January 1,
1996.
The Group Fee Rate is calculated according to a graduated schedule providing
for different rates for different levels of assets under management by FMR. The
rate at which the Group Fee Rate declines is determined by fee "breakpoints"
that provide for lower fee rates when assets increase. The Amended Contract adds
four new fee breakpoints for assets under FMR's management above $408 billion,
as illustrated in the following table. (For an explanation of how the Group Fee
Rate is used to calculate the management fee, see the section entitled "Present
Management Contracts" beginning on page ___.)
<TABLE>
<CAPTION>
GROUP FEE RATE BREAKPOINTS
AVERAGE AVERAGE
GROUP ASSETS PRESENT GROUP ASSETS AMENDED
($ BILLIONS) CONTRACT ($ BILLIONS) CONTRACT
------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Over 372 .1200% 372 - 408 .1200%
408 - 444 .1175%
444 - 480 .1150%
480 - 516 .1125%
Over 516 .1100%
</TABLE>
The result at various levels of group net assets is illustrated by the
table below.
<TABLE>
<CAPTION>
EFFECTIVE GROUP FEE RATES
GROUP NET
ASSETS PRESENT CONTRACT* AMENDED CONTRACT
($BILLIONS) ------------------ ----------------
-----------
<S> <C> <C> <C>
150 .1736% .1736%
200 .1652% .1652%
250 .1587% .1587%
300 .1536% .1536%
350 .1494% .1494%
400 .1459% .1459%
450 .1430% .1427%
500 .1407% .1399%
550 .1388% .1372%
</TABLE>
*Does not reflect voluntary adoption of extended group fee rate schedules by FMR
on January 1, 1996.
Average assets under FMR's management for the month ended April 30, 1999 were
approximately $748 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended April 30, 1999, average
assets under management by FMR were approximately $748 billion. The fund's
management fee rate under the Amended Contract for the month ended April 30,
1999, would have been 0.4300%, compared to 0.4338% under the Present Contract.
The management fee rate remains the same under both the Present Contract and the
Amended Contract until assets under FMR's management exceed $408 billion, at
which point the management fee rate under the Amended Contract begins to decline
relative to the Present Contract.
The following chart compares the fund's management fee as calculated under
the terms of the Present Contract for the fiscal year ended April 30, 1999, to
the management fee the fund would have incurred if the Amended Contract had been
in effect.
<TABLE>
<CAPTION>
Present Contract Amended Contract
Management Management Percentage
Fee* Fee Difference
--- --- ----------
<S> <C> <C> <C>
$14,543,000 $14,446,000 (.0067%)
</TABLE>
23
<PAGE>
*Does not reflect voluntary adoption of extended group fee rate schedules by FMR
on January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the Trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the Securities and Exchange Commission. In contrast,
the Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Contract's amendment
provisions will allow FMR and the Trust, on behalf of the fund, to amend the
Management Contract without shareholder vote IF THE 1940 ACT PERMITS THEM TO DO
SO. For example, under current interpretations of Section 15 of the 1940 Act,
the Amended Contract would give FMR and the Trust the ability to amend the
Management Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the proposed
modification gives FMR and the Trust added flexibility to amend the Management
Contract subject to 1940 Act constraints. Of course, any future amendments to
the Management Contract would require the approval of the fund's Board of
Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve as
Trustees are referred to herein as the "Fidelity funds." The Board of Trustees
meets eleven times a year. The Board of Trustees, including the Independent
Trustees, believe that matters bearing on the appropriateness of the fund's
management fees are considered at most, if not all, of their meetings. While the
full Board of Trustees or the Independent Trustees, as appropriate, act on all
major matters, a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through committees.
The Independent Trustees meet frequently in executive session and are advised by
independent legal counsel selected by the Independent Trustees.
The proposal to present the Amended Contract to shareholders was approved by
the Board of Trustees of the fund, including all of the Independent Trustees, on
May 20, 1999. The Board of Trustees considered and approved the modifications to
the Group Fee Rate schedule during the two-month period from November to
December 1995. The Board of Trustees received materials relating to the Amended
Contract in advance of the meeting at which the Amended Contract was considered,
and had the opportunity to ask questions and request further information in
connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with their
meetings the Trustees received materials specifically relating to the Amended
Contract. These materials included (i) information on the investment performance
of the fund, a peer group of funds and an appropriate index or combination of
indices, (ii) sales and redemption data in respect of the fund, and (iii) the
economic outlook and the general investment outlook in the markets in which the
fund invests. The Board of Trustees and the Independent Trustees also consider
periodically other material facts such as (1) FMR's results and financial
condition, (2) arrangements in respect of the distribution of the fund's shares,
(3) the procedures employed to determine the value of the fund's assets, (4) the
allocation of the fund's brokerage, if any, including allocations to brokers
affiliated with FMR, (5) FMR's management of the relationships with the fund's
custodian and subcustodians, (6) the resources devoted to and the record of
compliance with the fund's investment policies and restrictions and with
policies on personal securities transactions, and (7) the nature, cost and
character of non-investment management services provided by FMR and its
affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information on
and analysis of (a) the overall organization of FMR, (b) the choice of
performance indices and benchmarks, (c) the composition of peer groups of funds,
(d) transfer agency and bookkeeping fees paid to affiliates of FMR, (e)
investment performance, (f) investment management staffing, (g) the potential
for achieving further economies of scale, (h) operating expenses paid to third
parties, and (i) the information furnished to investors, including the fund's
shareholders.
24
<PAGE>
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all the matters
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contract include the
following:
BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent Trustees
considered the benefit to shareholders of investing in a fund that is part of a
large family of funds offering a variety of investment disciplines and providing
for a large variety of fund and shareholder services. With regard to the
proposed modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to shareholders
of FMR's and the trust's increased flexibility (within 1940 Act constraints) to
amend the Management Contract without the delays and potential costs of a proxy
solicitation.
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly the fund's investment performance as
well as the performance of a peer group of mutual funds, and the performance of
an appropriate index or combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees review at least annually the background of the fund's portfolio manager
and the fund's investment objective and discipline. The Independent Trustees
have also had discussions with senior management of FMR responsible for
investment operations and the senior management of Fidelity's fixed-income
group. Among other things, they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory and
management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Present Contract and the Amended Contract and under
separate agreements covering transfer agency functions and pricing, bookkeeping
and securities lending services, if any. The Board of Trustees and the
Independent Trustees have also considered the nature and extent of FMR's
supervision of third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered the
fund's expense ratio and the expense ratios of a peer group of funds. They also
considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees considered
the level of FMR's profits in respect of the management of the Fidelity funds,
including the fund. This consideration included an extensive review of FMR's
methodology in allocating its costs to the management of the fund. The Board of
Trustees and the Independent Trustees have concluded that the cost allocation
methodology employed by FMR has a reasonable basis and is appropriate in light
of all of the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of profit is a
fair entrepreneurial profit for the management of the fund. They also considered
the profits realized from non-fund businesses which may benefit from or be
related to the fund's business. The Board of Trustees and the Independent
Trustees also considered FMR's profit margins in comparison with available
industry data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including the
fund) have appropriately benefited from any economies of scale, and whether
there is potential for realization of any further economies of scale. The Board
of Trustees and the Independent Trustees have concluded that FMR's mutual fund
business presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and FMR in an
appropriate manner. The Independent Trustees have also concluded that the
existing group fee structure should be continued but determined that it would be
appropriate to change the group fee structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent Trustees
also considered the character and amount of fees paid by the fund and the fund's
shareholders for services provided by FMR and its affiliates, including fees for
25
<PAGE>
services like transfer agency, fund accounting and direct shareholder services.
They also considered the allocation of fund brokerage to brokers affiliated with
FMR and the receipt of sales loads and payments under Rule 12b-1 plans in
respect of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of FMR
businesses other than its mutual fund business, including FMR's retail
brokerage, correspondent brokerage, capital markets, trust, investment advisory,
pension record keeping, insurance, publishing, real estate, international
research and investment funds, and others. The Board of Trustees and the
Independent Trustees considered the intangible benefits that accrue to FMR and
its affiliates by virtue of their relationship with the fund.
CONCLUSION. Based on their evaluation of all material factors and assisted
by the advice of independent counsel, the Trustees concluded (i) that the
existing management fee structure is fair and reasonable and (ii) that the
proposed modifications to the management fee structure, that is the reduction of
the Group Fee Rate schedule and the proposed modification to the Present
Contract's amendment provisions, are in the best interest of the fund's
shareholders. The Board of Trustees, including the Independent Trustees, voted
to approve the submission of the Amended Contract to shareholders of the fund
and recommends that shareholders of the fund vote FOR the Amended Contract. If
approved, the Amended Contract will take effect on the first day of the first
month following shareholder approval.
6. TO APPROVE AMENDED SUB-ADVISORY AGREEMENTS WITH FMR U.K. FOR FIDELITY
MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, FIDELITY SMALL CAP
SELECTOR, AND FIDELITY INTERMEDIATE BOND FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of each fund approve, a proposal to adopt an
amended sub-advisory agreement between FMR and FMR U.K. with respect to the fund
(the Amended Agreement). Each fund's Amended Agreement would allow FMR, FMR
U.K., and the trust, on behalf of the fund, to modify the Amended Agreement
subject to the requirements of the 1940 Act. Each fund's existing sub-advisory
agreement (the Present Agreement) requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments. FMR PAYS ALL OF FMR
U.K.'S FEES UNDER EACH FUND'S AMENDED AGREEMENT. EACH FUND'S AMENDED AGREEMENT
WOULD NOT AFFECT THE FEES THAT THE FUND PAYS TO FMR UNDER ITS PRESENT MANAGEMENT
CONTRACT.
PRESENT AGREEMENTS. Under each fund's Present Agreement, FMR U.K. acts as an
investment consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests on behalf
of the fund. FMR U.K. provides investment advice and research services with
respect to issuers located outside of the United States, focusing primarily on
companies based in Europe. Under each fund's Present Agreement with FMR U.K.,
FMR, NOT THE FUND, pays FMR U.K. a fee equal to 110% of FMR U.K.'s costs
incurred in connection with providing investment advice and research services.
Furthermore, under each fund's Present Agreement, FMR may grant FMR U.K.
investment management authority with respect to all or a portion of the fund's
assets, as well as the authority to buy and sell stocks, bonds, and other
securities for the fund, subject to the overall supervision of FMR and the Board
of Trustees. To the extent that FMR grants FMR U.K. investment management
authority under each fund's Present Agreement, FMR, NOT THE FUND, pays FMR U.K.
a fee equal to 50% of FMR's monthly management fee (including any performance
adjustment for Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and
Fidelity Small Cap Selector) with respect to the fund's average net assets
managed by FMR U.K. on a discretionary basis.
Each fund's Present Agreement requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments.
PROPOSED AMENDMENTS TO THE PRESENT AGREEMENTS. Each fund's Amended Agreement
would allow FMR, FMR U.K., and the trust, on behalf of the fund, to amend the
Proposed Agreement subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the Securities and Exchange Commission. In contrast,
each fund's Present Agreement explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Agreement's amendment
26
<PAGE>
provisions would allow amendment of the Amended Agreement without shareholder
vote ONLY IF THE 1940 ACT SO PERMITS. In short, the proposed modification gives
FMR, FMR U.K., and the trust added flexibility to amend the Amended Agreement
subject to 1940 Act constraints. Of course, any future amendments to the Amended
Agreement would require the approval of the Board of Trustees.
On May 20, 1999, the Board of Trustees agreed to submit the Amended Agreement
to shareholders of each fund pursuant to a unanimous vote of both the full Board
of Trustees and the Independent Trustees. The Trustees considered the benefit to
shareholders of FMR's, FMR U.K.'s, and the trust's increased flexibility (within
1940 Act constraints) to amend the Amended Agreement without the delays and
potential costs of a proxy solicitation.
A corresponding modification is also proposed to the amendment provisions in
Fidelity Large Cap Stock Fund's, Fidelity Small Cap Selector's, and Fidelity
Intermediate Bond Fund's present management contracts. (Fidelity Mid-Cap Stock
Fund's present management contract contains the modified amendment provision.)
See "Modification of Management Contract Amendment Provisions" on pages __ and
__.
A copy of the form of Amended Agreement for each fund, marked to indicate the
proposed amendments, is supplied as Exhibit 5 on page _. Except for the
modifications discussed above, Fidelity Mid-Cap Stock Fund's, Fidelity Large Cap
Stock Fund's, and Fidelity Intermediate Bond Fund's Amended Agreements are
substantially identical to their Present Agreements. Except for the
modifications discussed above (and certain other minor modifications to make the
fund's Amended Agreement conform to the "standard" sub-advisory agreement with
FMR U.K. for the Fidelity funds), Fidelity Small Cap Selector's Amended
Agreement is substantially identical to its Present Agreement. (For a detailed
discussion of each fund's Present Agreement, refer to the section entitled
"Sub-Advisory Agreements" beginning on page _.) If approved by shareholders,
each fund's Amended Agreement will take effect on October 1, 1999 (or the first
day of the first month following approval) and will remain in effect through
July 31, 2000 (in the case of Fidelity Mid-Cap Stock Fund, Fidelity Large Cap
Stock Fund, and Fidelity Small Cap Selector) or June 30, 2000 (in the case of
Fidelity Intermediate Bond Fund) and from year to year thereafter, but only as
long as its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the Independent
Trustees and (ii) the vote of either a majority of the Trustees or a majority of
the outstanding shares of the fund. Each fund's Amended Agreement would be
terminable on 60 days' written notice by either party to the agreement and the
Amended Agreement would terminate automatically in the event of its assignment.
If a fund's Amended Agreement is not approved, its Present Agreement will
continue in effect through July 31, 2000 (in the case of Fidelity Mid-Cap Stock
Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap Selector) or June
30, 2000 (in the case of Fidelity Intermediate Bond Fund) and thereafter only as
long as its continuance is approved at least annually as above.
FMR would continue to pay all of FMR U.K.'s fees under each fund's Amended
Agreement. If shareholders approve the Amended Agreement, FMR could, in the
future and subject to the approval of the Board of Trustees, further amend the
Amended Agreements to change the fees FMR pays to FMR U.K. for providing the
services described above. IF SHAREHOLDERS APPROVE THE AMENDED AGREEMENT, FMR
COULD NOT, HOWEVER, IN THE FUTURE AMEND A FUND'S PRESENT MANAGEMENT CONTRACT TO
INCREASE THE FUND'S MANAGEMENT FEE RATE PAYABLE TO FMR THEREUNDER WITHOUT
SHAREHOLDER APPROVAL.
FMR U.K., with its principal office in London, England, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR with
respect to foreign securities. This research complements other research on
foreign securities produced by FMR's U.S.-based research analysts and portfolio
managers, or obtained from broker-dealers or other sources.
FMR U.K. may also provide investment advisory services to FMR with respect to
other investment companies for which FMR serves as investment adviser, and to
other clients. Currently, FMR U.K.'s only client other than FMR is Fidelity
International Limited (FIL), an affiliate of FMR organized under the laws of
Bermuda. FIL provides investment advisory services to non-U.S. investment
companies and institutional investors investing in securities of issuers
throughout the world. Edward C. Johnson 3d, President and a Trustee of the
trust, is Chairman and a Director of FMR U.K., Chairman and a Director of FIL,
and a principal stockholder of both FIL and FMR. For more information on FMR
U.K., see the section entitled "Activities and Management of FMR U.K. and FMR
Far East" on page __.
27
<PAGE>
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. With respect to each fund, if the Amended Agreement is approved by
shareholders, the Amended Agreement will take effect on the first day of the
first month following approval. If the Amended Agreement is not approved by
shareholders, FMR will continue to manage that fund under its present management
contract and the Present Agreement with FMR U.K. will remain in effect.
7. TO APPROVE AMENDED SUB-ADVISORY AGREEMENTS WITH FMR FAR EAST FOR FIDELITY
MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, FIDELITY SMALL CAP SELECTOR,
AND FIDELITY INTERMEDIATE BOND FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of each fund approve, a proposal to adopt an
amended sub-advisory agreement between FMR and FMR Far East with respect to the
fund (the Amended Agreement). Each fund's Amended Agreement would allow FMR, FMR
Far East, and the trust, on behalf of the fund, to modify the Amended Agreement
subject to the requirements of the 1940 Act. Each fund's existing sub-advisory
agreement (the Present Agreement) requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments. FMR PAYS ALL OF FMR
FAR EAST'S FEES UNDER EACH FUND'S AMENDED AGREEMENT. EACH FUND'S AMENDED
AGREEMENT WOULD NOT AFFECT THE FEES THAT THE FUND PAYS TO FMR UNDER ITS PRESENT
MANAGEMENT CONTRACT.
PRESENT AGREEMENTS. Under each fund's Present Agreement, FMR Far East acts as
an investment consultant to FMR and supplies FMR with investment research
information and portfolio management advice as FMR reasonably requests on behalf
of the fund. FMR Far East provides investment advice and research services with
respect to issuers located outside of the United States, focusing primarily on
companies based in the Far East. Under each fund's Present Agreement with FMR
Far East, FMR, NOT THE FUND, pays FMR Far East a fee equal to 105% of FMR Far
East's costs incurred in connection with providing investment advice and
research services.
Furthermore, under each fund's Present Agreement, FMR may grant FMR Far East
investment management authority with respect to all or a portion of the fund's
assets, as well as the authority to buy and sell stocks, bonds, and other
securities for the fund, subject to the overall supervision of FMR and the Board
of Trustees. To the extent that FMR grants FMR Far East investment management
authority under each fund's Present Agreement, FMR, NOT THE FUND, pays FMR Far
East a fee equal to 50% of FMR's monthly management fee (including any
performance adjustment for Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock
Fund, and Fidelity Small Cap Selector) with respect to the fund's average net
assets managed by FMR Far East on a discretionary basis.
Each fund's Present Agreement requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments.
PROPOSED AMENDMENTS TO THE PRESENT AGREEMENTS. Each fund's Amended Agreement
would allow FMR, FMR Far East, and the trust, on behalf of the fund, to amend
the Proposed Agreement subject to the provisions of Section 15 of the 1940 Act,
as modified or interpreted by the Securities and Exchange Commission. In
contrast, each fund's Present Agreement explicitly requires the vote of a
majority of the outstanding voting securities of the fund to authorize all
amendments. Generally, the proposed modification to the Present Agreement's
amendment provisions would allow amendment of the Amended Agreement without
shareholder vote ONLY IF THE 1940 ACT SO PERMITS. In short, the proposed
modification gives FMR, FMR Far East, and the trust added flexibility to amend
the Amended Agreement subject to 1940 Act constraints. Of course, any future
amendments to the Amended Agreement would require the approval of the Board of
Trustees.
On May 20, 1999, the Board of Trustees agreed to submit the Amended Agreement
to shareholders of each fund pursuant to a unanimous vote of both the full Board
of Trustees and the Independent Trustees. The Trustees considered the benefit to
shareholders of FMR's, FMR Far East's, and the trust's increased flexibility
(within 1940 Act constraints) to amend the Amended Agreement without the delays
and potential costs of a proxy solicitation.
A corresponding modification is also proposed to the amendment provisions in
Fidelity Large Cap Stock Fund's, Fidelity Small Cap Selector's, and Fidelity
Intermediate Bond Fund's present management contracts. (Fidelity Mid-Cap Stock
28
<PAGE>
Fund's present management contract contains the modified amendment provision.)
See "Modification of Management Contract Amendment Provisions" on pages __ and
__.
A copy of the form of Amended Agreement for each fund, marked to indicate the
proposed amendments, is supplied as Exhibit 6 on page _. Except for the
modifications discussed above, Fidelity Mid-Cap Stock Fund's, Fidelity Large Cap
Stock Fund's, and Fidelity Intermediate Bond Fund's Amended Agreements are
substantially identical to their Present Agreements. Except for the
modifications discussed above (and certain other minor modifications to make the
fund's Amended Agreement conform to the "standard" sub-advisory agreement with
FMR Far East for the Fidelity funds), Fidelity Small Cap Selector's Amended
Agreement is substantially identical to its Present Agreement. (For a detailed
discussion of each fund's Present Agreement, refer to the section entitled
"Sub-Advisory Agreements" beginning on page _.) If approved by shareholders,
each fund's Amended Agreement will take effect on October 1, 1999 (or the first
day of the first month following approval) and will remain in effect through
July 31, 2000 (in the case of Fidelity Mid-Cap Stock Fund, Fidelity Large Cap
Stock Fund, and Fidelity Small Cap Selector) or June 30, 2000 (in the case of
Fidelity Intermediate Bond Fund) and from year to year thereafter, but only as
long as its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the Independent
Trustees and (ii) the vote of either a majority of the Trustees or a majority of
the outstanding shares of the fund. Each fund's Amended Agreement would be
terminable on 60 days' written notice by either party to the agreement and the
Amended Agreement would terminate automatically in the event of its assignment.
If a fund's Amended Agreement is not approved, its Present Agreement will
continue in effect through July 31, 2000 (in the case of Fidelity Mid-Cap Stock
Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap Selector) or June
30, 2000 (in the case of Fidelity Intermediate Bond Fund) and thereafter only as
long as its continuance is approved at least annually as above.
FMR would continue to pay all of FMR Far East's fees under each fund's
Amended Agreement. If shareholders approve the Amended Agreement, FMR could, in
the future and subject to the approval of the Board of Trustees, further amend
the Amended Agreements to change the fees FMR pays to FMR Far East for providing
the services described above. IF SHAREHOLDERS APPROVE THE AMENDED AGREEMENT, FMR
COULD NOT, HOWEVER, IN THE FUTURE AMEND A FUND'S PRESENT MANAGEMENT CONTRACT TO
INCREASE THE FUND'S MANAGEMENT FEE RATE PAYABLE TO FMR THEREUNDER WITHOUT
SHAREHOLDER APPROVAL.
FMR Far East, with its principal office in Tokyo, Japan, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR with
respect to foreign securities. This research complements other research on
foreign securities produced by FMR's U.S.-based research analysts and portfolio
managers, or obtained from broker-dealers or other sources.
FMR Far East may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR Far East's only client other than
FMR is Fidelity International Limited (FIL), an affiliate of FMR organized under
the laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee of
the trust, is Chairman and a Director of FMR Far East, Chairman and a Director
of FIL, and a principal stockholder of both FIL and FMR. For more information on
FMR Far East, see the section entitled "Activities and Management of FMR U.K.
and FMR Far East" on page __.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. With respect to each fund, if the Amended Agreement is approved by
shareholders, the Amended Agreement will take effect on the first day of the
first month following approval. If the Amended Agreement is not approved by
shareholders, FMR will continue to manage that fund under its present management
contract and the Present Agreement with FMR Far East will remain in effect.
29
<PAGE>
8. TO APPROVE A DISTRIBUTION AND SERVICE PLAN PURSUANT TO RULE 12B-1 FOR
FIDELITY SMALL CAP SELECTOR.
The Board of Trustees has approved, and recommends that shareholders of
Fidelity Small Cap Selector approve, a Distribution and Service Plan (the Plan)
for the fund. A copy of the form of Plan is attached to this Proxy Statement as
Exhibit 7.
THE PLAN. The Plan was approved by the Board as provided for by Rule 12b-1
(the Rule) promulgated by the Securities and Exchange Commission (SEC) under the
1940 Act. The Rule provides that, an investment company (e.g., a mutual fund)
acting as a distributor of its shares must do so pursuant to a written Plan
"describing all material aspects of the proposed financing of distribution."
Under the Rule, an investment company is deemed to be acting as a distributor of
its shares if it engages "directly or indirectly in financing any activity which
is primarily intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature."
The Plan is designed to avoid legal uncertainties which may arise from the
ambiguity of the phrase "primarily intended to result in the sale of shares" and
from the term "indirectly" as used in the Rule. The SEC has neither approved nor
disapproved the Plan.
The Plan contemplates that all expenses relating to the distribution of fund
shares shall be paid for by FMR, or Fidelity Distributors Corporation (FDC), a
wholly owned subsidiary of FMR Corp., out of past profits and other resources,
including management fees paid by the fund to FMR. The Plan also recognizes that
FMR, either directly or through FDC, may make payments from these sources to
securities dealers and to other third parties who engage in the sale of fund
shares or who render shareholder services. The Plan provides that, to the extent
that the fund's payment of management fees to FMR might be considered to
constitute the "indirect" financing of activities "primarily intended to result
in the sale of shares," such payment is expressly authorized. THE PLAN DOES NOT
AUTHORIZE PAYMENTS BY THE FUND OTHER THAN THOSE THAT ARE TO BE MADE TO FMR UNDER
ITS MANAGEMENT CONTRACT.
The fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plan. No
preference for the instruments of such depository institutions will be shown in
the selection of investments.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any specific type
of distribution activity or to incur any specific level of expense for such
activities.
The Plan contains a number of provisions relating to reporting obligations
and to its amendment and termination as required by the Rule. If approved by
shareholders, the Plan will continue in effect as long as its continuance is
specifically approved at least annually by a majority of the Board of Trustees,
including a majority of the Trustees who are not "interested persons" of the
trust and who have no direct or indirect financial interest in the operation of
the Plan or any agreement related to the Plan (the non-interested Trustees),
cast in person at a meeting called for the purpose of voting on the Plan. The
Plan may be amended at any time by the Trustees, except that it may not be
amended to authorize direct payments by the fund to finance any activity
primarily intended to result in the sale of shares issued by the fund or to
increase materially the amount spent by the fund for distribution without the
approval of a majority of the outstanding shares of the fund and the Trustees.
All material amendments to the Plan must be approved by a majority of the
non-interested Trustees. The Plan, and any agreements related to the Plan, may
be terminated at any time by a vote of the majority of the non-interested
Trustees or by a vote of the majority of the outstanding shares of the fund. The
Plan requires that the Trustees receive, at least quarterly, a written report as
to the amounts expended during the quarter by FMR, or FDC, in connection with
financing any activity primarily intended to result in the sale of shares issued
by the fund, and the purposes for which such expenditures were made. As required
by the Rule, while the Plan is in effect, the selection and nomination of those
Trustees who are not "interested persons" shall be committed to the discretion
of the non-interested Trustees then in office.
30
<PAGE>
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the Plan,
the Board considered a variety of factors and was advised by counsel who are not
counsel to FMR or FDC. The Trustees believe that the fees paid by the fund to
FMR under the Management Contract are fair and reasonable, that the services
provided thereunder are necessary and appropriate for the fund and its
shareholders, and that the fund does not indirectly finance the distribution of
its shares in contravention of the Rule. Nonetheless, the Trustees concluded
that adoption of the Plan would avoid legal uncertainties which might arise as a
result of what they and FMR believe to be potentially subjective and ambiguous
language contained in the Rule and in public releases issued by the SEC in
connection with the proposal and adoption of the Rule (SEC Releases). The
Trustees believe that the adoption of the Plan is advisable to minimize such
legal uncertainties and to provide other benefits to the fund and its
shareholders.
The Trustees noted that the fund's Plan does not involve any direct payment
by the fund to finance any activity primarily intended to result in the sale of
shares issued by the fund, and that any amendment of the fund's Management
Contract with FMR to increase the amount paid by the fund thereunder would
require approval of both the Trustees and the fund's shareholders. The Trustees
also considered the factors suggested in the SEC Releases including: the need
for independent counsel or experts to assist the Trustees in reaching a
determination; the nature and causes of the problems and circumstances which
made consideration of a Plan appropriate; the way in which a Plan would resolve
or alleviate the problems, including the nature and approximate amount of the
expenditures contemplated by the Plan; the merits of possible alternatives to
the Plan; the interrelationship between the Plan and the activities of FMR in
financing the distribution of the fund's shares; the possible benefits of the
Plan to FMR and its affiliates relative to those expected to accrue to the fund;
and consequently the effects of the Plan on existing shareholders.
The reduction in legal uncertainties arising from the potentially subjective
and ambiguous language that appears in the Rule and in the SEC Releases enables
the Trustees, in connection with their review of the fund's Management Contract
with FMR, to consider the full range of services provided by FMR and FDC,
including services which may be related to the distribution of the fund's
shares. In addition, the Board of Trustees considered alternatives to the Plan,
including direct payments by the fund to FDC and/or third parties and the
implementation of a sales load. The Trustees believe it is appropriate to ensure
that FMR and FDC have the flexibility to direct their distribution activities in
a manner consistent with prevailing market conditions by using, subject to
approval of the Trustees, their resources, including the current management fee,
to make payments to third parties. To the extent that FMR has greater
flexibility under the Plan, additional sales of the fund's shares may result.
The Trustees believe that this flexibility has the potential to benefit the fund
by reducing the possibility that the fund would experience net redemptions,
which might require the liquidation of portfolio securities in amounts and at
times that could be disadvantageous for investment purposes. Of course, there
can be no assurance that these events will occur.
The Board of Trustees recognized that a greater level of fund assets benefits
FMR by increasing its management fee revenues. The Board noted the high quality
of investment management services and the expansion of, and many innovations in,
investor services that have been provided by FMR over the years. The Board
believes that revenues received by FMR contribute to its continuing ability to
attract and retain a high caliber of investment and other personnel and to
develop and implement new systems for providing services and information to
shareholders. The Board considers this ability to be an important benefit to the
fund and its shareholders.
CONCLUSION. For the reasons stated above, the members of the Board of
Trustees unanimously concluded in the exercise of their business judgment and in
light of their fiduciary duties under state law and the 1940 Act that there is a
reasonable likelihood that the Plan will benefit the fund and its shareholders.
The Trustees recommend that shareholders of the fund vote FOR approval of the
Plan. With respect to the fund, if the Plan is not approved, the Board and FMR
will consider alternative means of obtaining the services that are to be
provided under the Plan.
31
<PAGE>
9. TO APPROVE AN AGREEMENT AND PLAN PROVIDING FOR THE REORGANIZATION OF FIDELITY
SMALL CAP SELECTOR FROM A SEPARATE SERIES OF ONE MASSACHUSETTS BUSINESS TRUST TO
ANOTHER.
The Board of Trustees has approved an Agreement and Plan of Reorganization
(the Plan of Reorganization) in the form attached to this Proxy Statement as
Exhibit 8. The Plan of Reorganization provides for the reorganization of
Fidelity Small Cap Selector (the Fund) from a separate series of Fidelity
Commonwealth Trust (the Trust), a Massachusetts business trust, to a
newly-established, separate series of Fidelity Capital Trust (Capital Trust),
also a Massachusetts business trust (the Reorganization).
The investment objective, policies, and limitations of the Fund will not
change, except as approved by shareholders and as described in this proxy
statement. A separate series of Capital Trust will carry on the business of the
Fund following the Reorganization (the Series). The Series, which has not yet
commenced business operations, will have an investment objective, policies, and
limitations identical to those of the Fund (except as they may be modified
pursuant to a vote of the shareholders as proposed in this proxy statement).
Both the Trust and Capital Trust are Massachusetts business trusts and
currently have substantially similar Declarations of Trust. The Trust is
currently seeking, and Capital Trust is currently expected to seek, shareholder
authorization to amend and restate its current Declaration of Trust. The Trust
is currently seeking to adopt, and Capital Trust is currently expected to seek
to adopt, the form of New Declaration of Trust that is described in Proposal 3
in this proxy statement. If neither trust adopts the New Declaration of Trust,
the rights of the Fund's shareholders under state law and the Fund's governing
documents would be unaffected by the Reorganization. If both trusts adopt the
New Declaration of Trust, the rights of the Fund's shareholders under state law
and the Fund's governing documents would, likewise, be unaffected by the
Reorganization. If only one trust adopts the New Declaration of Trust, the
Trustees of the adopting trust would enjoy greater flexibility and, subject to
applicable requirements of the 1940 Act and Massachusetts law, broader authority
to act. See Proposal 3 for more information on the changes effected by the New
Declaration of Trust.
The Reorganization will not affect the operation of the Fund in a material
manner. The same individuals serve as Trustees of both trusts. Both trusts are
authorized to issue an unlimited number of shares of beneficial interest, and
each Declaration of Trust permits the Trustees to create one or more additional
series or funds.
In connection with the Reorganization, the Fund's fiscal year end will change
from April to October. The Trustees may change the fiscal year end of the Fund
at their discretion in the future.
FMR, the Fund's investment adviser, will be responsible for the investment
management of the Series, subject to the supervision of the Board of Trustees,
under a management contract substantively identical to the contract in effect
between FMR and the Fund immediately prior to the Closing Date (including as it
may be modified pursuant to a vote of shareholders of the Fund as proposed in
this proxy statement) (the New Management Contract); similarly, Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management & Research
(Far East) Inc. (FMR Far East), the Fund's sub-advisers, will have primary
responsibility for providing investment advice and research services outside the
United States or investment management authority under sub-advisory agreements
substantively identical to the agreements in effect between FMR and FMR U.K. or
FMR Far East immediately prior to the Closing Date (including as each may be
modified pursuant to a vote of shareholders of the Fund as proposed in this
proxy statement) (the New Sub-Advisory Agreements).
The Fund's distribution agent, Fidelity Distributors Corporation (FDC), will
distribute shares of the Series under a General Distribution Agreement
substantively identical to the contract in effect between FDC and the Fund
immediately prior to the Closing Date.
REASON FOR THE PROPOSED REORGANIZATION. The Fund is presently organized as a
series of the Trust, which has six series of shares or funds. The Board of
Trustees unanimously recommends reorganization of the Fund to a separate series
of Capital Trust (i.e., into the Series), which will succeed to the business of
the Fund. Moving the Fund from the Trust to Capital Trust will consolidate and
streamline the production and mailing of certain [financial reports and] legal
documents. THE PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS OR
THE MANAGEMENT OF THE FUND.
The proposal to present the Plan of Reorganization to shareholders was
32
<PAGE>
approved by the Board of Trustees of the Trust, including all of the Trustees
who are not interested persons of FMR, on May 20, 1999. The Board of Trustees
recommends that Fund shareholders vote FOR the approval of the Plan of
Reorganization described below. Such a vote encompasses approval of the
reorganization of the Fund to a separate series of Capital Trust; temporary
waiver of certain investment limitations of the Fund to permit the
Reorganization (see "Temporary Waiver of Investment Restrictions" on page __);
and authorization of the Trust, as sole shareholder of the Series, to approve
(i) the New Management Contract, and (ii) the New Sub-Advisory Agreements. Such
a vote also encompasses authorization of the Trust, as sole shareholder of the
Series, to approve (iii) a Distribution and Service Plan for the Series under
Rule 12b-1, as described below (the New Plan). If the Fund's shareholders
approve the Distribution and Service Plan under Rule 12b-1 as proposed in
Proposal 8 in this proxy statement (the Proposed Plan), then the Trust, as sole
shareholder of the Series, will approve a Distribution and Service Plan for the
Series substantively identical to the Plan in effect with respect to the Fund
immediately prior to the Closing Date. If the Fund's shareholders do not approve
the Proposed Plan and, therefore, no Plan is in effect with respect to the Fund
immediately prior to the Closing Date, then the Trust, as sole shareholder of
the Series, will approve a Distribution and Service Plan for the Series
substantively identical to the Proposed Plan. If shareholders of the Fund do not
approve the Plan of Reorganization, the Fund will continue to operate as a
series of the Trust.
SUMMARY OF THE PLAN OF REORGANIZATION. The following discussion summarizes
the important terms of the Plan of Reorganization. This summary is qualified in
its entirety by reference to the Plan of Reorganization itself.
On the Closing Date (defined below) of the Reorganization, the Fund will
transfer all of its assets to the Series, a series of shares of Capital Trust
established for the purpose of effecting the Reorganization, in exchange for the
assumption by the Series of all of the liabilities of the Fund and the issuance
of shares of beneficial interest in the Series (Series Shares) equal to the
number of Fund shares outstanding on the Closing Date. Immediately thereafter,
the Fund will distribute one Series Share for each Fund share (the Fund Shares)
held by the shareholder on the Closing Date to each Fund shareholder, in
exchange for such Fund Shares. Immediately after this distribution of the Series
Shares, the Fund will be terminated and, as soon as practicable thereafter, will
be wound up and liquidated. UPON COMPLETION OF THE REORGANIZATION, EACH FUND
SHAREHOLDER WILL BE THE OWNER OF FULL AND FRACTIONAL SERIES SHARES EQUAL IN
NUMBER, DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR HER FUND SHARES.
The Plan of Reorganization authorizes the Trust as the then sole initial
shareholder of the Series to approve (i) the New Management Contract, (ii) the
New Sub-Advisory Agreements, and (iii) the New Plan.
Capital Trust's Board of Trustees will hold office without time limits,
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 removal; (c) any Trustee who requests to be retired by written instrument
signed by a majority of the other Trustees or who is unable to serve due to
physical or mental incapacity by reason of disease or otherwise, death, or for
any other reason, may be retired; and (d) a Trustee may be removed at any
Special Meeting of the shareholders by a vote of two-thirds of the outstanding
shares of Capital 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 shareholders, the Trustees then in
office will promptly call a shareholders' 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 New Management Contract, the New Sub-Advisory Agreements, and the New
Plan will take effect on the Closing Date. The New Management Contract and the
New Sub-Advisory Agreements will continue in force until July 31, 2000. The New
Plan will continue in force until April 30, 2000. The New Management Contract
and the New Sub-Advisory Agreements will continue in force thereafter from year
to year so long as their continuance is approved at least annually by (i) the
vote of a majority of the Trustees who are not "interested persons" of Capital
Trust, FMR, or, in the case of the New Sub-Advisory Agreements, FMR U.K. or FMR
Far East, cast in person at a meeting called for the purpose of voting on such
33
<PAGE>
approval, and (ii) by the vote of a majority of the Trustees or by the vote
of a majority of the outstanding shares of the Series. The New Plan will
continue in effect only if approved annually by a vote of the Trustees and of
those Trustees who are not interested persons, cast in person at a meeting
called for that purpose. The New Management Contract and the New Sub-Advisory
Agreements will be terminable without penalty on sixty days' written notice
either by Capital Trust, FMR, FMR U.K. or FMR Far East, as the case may be, and
will terminate automatically in the event of assignment. The New Plan may be
terminable at any time, without the payment of any penalty, by a vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Series.
Assuming the Plan of Reorganization is approved, it is currently contemplated
that the Reorganization will become effective at the close of business on
December __, 1999 (the Closing Date). However, the Reorganization may become
effective at such other date as the parties may agree in writing.
The obligations of the Trust and Capital Trust under the Plan of
Reorganization are subject to various conditions as stated therein.
Notwithstanding the approval of the Plan of Reorganization by Fund shareholders,
the Plan of Reorganization may be terminated or amended at any time prior to the
Reorganization by action of the Trustees to provide against unforeseen events,
if (1) there is a material breach by the other party of any representation,
warranty, or agreement contained in the Plan of Reorganization to be performed
at or prior to the Closing Date or (2) it reasonably appears that a party will
not or cannot meet a condition of the Plan of Reorganization. Generally, either
party may at any time waive the other party's compliance with any of the
covenants and conditions contained in, or both parties may amend, the Plan of
Reorganization, provided that such waiver or amendment does not materially
adversely affect the interests of Fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. Capital Trust's transfer
agent will establish an account for the Series' shareholders containing the
appropriate number and denominations of Series Shares to be received by each
holder of Fund Shares under the Plan of Reorganization. Such accounts will be
identical in all material respects to the accounts currently maintained by the
Fund's transfer agent for the Fund's shareholders. Fund shareholders who are
receiving payment under a withdrawal plan with respect to Fund Shares will
retain the same rights and privileges as to Series Shares under the Plan of
Reorganization. Similarly, no further action will be necessary in order to
continue any automatic investment plan or retirement plan currently maintained
by a Fund shareholder with respect to Fund Shares.
EXPENSES. The Fund and the Series shall each be responsible for all of their
respective expenses of the Reorganization, estimated at $________ in the
aggregate.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS. Certain fundamental investment
restrictions of the Fund, which prohibit the Fund from acquiring more than a
stated percentage of ownership of another company, might be construed as
restricting the Fund's ability to carry out the Reorganization. By approving the
Plan of Reorganization, Fund shareholders will be agreeing to waive, only for
the purpose of the Reorganization, those fundamental investment restrictions
that could prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE REORGANIZATION. Each trust will receive an opinion
from their counsel, Kirkpatrick & Lockhart LLP, that the Reorganization will
constitute a tax-free reorganization within the meaning of Section 368(a)(1)(F)
of the Internal Revenue Code of 1986, as amended. Accordingly, no gain or loss
will be recognized for federal income tax purposes by the Fund, the Series, or
the Fund's shareholders upon (1) the transfer of the Fund's assets in exchange
solely for the Series Shares and the assumption by Capital Trust on behalf of
the Series of the Fund's liabilities or (2) the distribution of Series Shares to
the Fund's shareholders in exchange for their Fund Shares. The opinion further
provides, among other things, that (a) the basis for federal income tax purposes
of the Series Shares to be received by each Fund shareholder will be the same as
that of his or her Fund Shares immediately prior to the Reorganization; and (b)
each Fund shareholder's holding period for his or her Series Shares will include
the Fund shareholder's holding period for his or her Fund Shares, provided that
said Fund Shares were held as capital assets on the date of the exchange.
CONCLUSION. The Board of Trustees has concluded that the proposed Plan of
Reorganization to reorganize the Fund into a separate series of a Massachusetts
business trust is in the best interest of the Fund's shareholders. The Trustees
recommend that the Fund's shareholders vote FOR the approval of the Plan of
Reorganization as described above. Such a vote encompasses approval of the
34
<PAGE>
reorganization of the Fund to a separate series of a Massachusetts business
trust; temporary waiver of certain investment limitations of the Fund to permit
the Reorganization (see "Temporary Waiver of Investment Restrictions" on page
__); authorization of the Trust, as sole shareholder of the Series, to approve
(i) the New Management Contract, (ii) the New Sub-Advisory Agreements for the
Series between FMR and FMR U.K. and FMR Far East, and (iii) the New Plan. If
approved, the Plan of Reorganization will take effect on the Closing Date. If
the Plan of Reorganization is not approved, the Fund will continue to operate as
a series of the Trust.
10. TO ELIMINATE A FUNDAMENTAL INVESTMENT POLICY OF FIDELITY INTERMEDIATE BOND
FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal that would eliminate a fundamental investment
policy. The elimination of this policy will allow the fund to more clearly
communicate its investment objective and strategies in conformity with the
requirements of revised Form N-1A (the form used by open-end investment
companies like the fund to register under the Investment Company Act of 1940 and
the Securities Act of 1933).
DISCUSSION OF PROPOSED MODIFICATION. The fund's investment objective and
an investment policy currently read as follows:
"The fund seeks a high level of current income by investing primarily in
investment-grade, fixed-income obligations."
Because this investment policy is fundamental, it cannot be eliminated
without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment objective
would remain unchanged, but the fundamental investment policy would be
eliminated as follows (deleted language is [bracketed]):
"The fund seeks a high level of current income [by investing primarily
in investment-grade, fixed-income obligations]."
As indicated above, if the proposal is approved, the fund's fundamental
investment objective of seeking a high level of current income would not change.
However, the fundamental investment policy of investing primarily in
investment-grade, fixed-income obligations would be eliminated. The eliminated
policy is currently described elsewhere in the fund's disclosure. Eliminating
the policy is not expected to materially affect the way the fund is managed.
Eliminating the policy will allow the fund to comply with the requirements of
revised Form N-1A for concise, understandable descriptions of its investment
objective and strategies, and will allow the fund to more clearly communicate
its investment objective and strategies to shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policy is in the best
interest of the fund and its shareholders. The Trustees recommend voting FOR the
proposal. If approved by shareholders, the proposal will become effective when
disclosure is revised to reflect the change. If the proposal is not approved by
the fund's shareholders, the fund's current fundamental investment policy will
remain unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 11 and 12 is to revise certain of the funds'
investment limitations to conform to limitations which are standard 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
35
<PAGE>
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 approval. 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 called for these purposes are
generally borne by a fund and its shareholders.
It is not anticipated that these proposals will substantially affect the way
a 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 a fund, it will contribute to the overall
objectives of standardization.
11. TO AMEND FIDELITY LARGE CAP STOCK FUND'S, FIDELITY SMALL CAP SELECTOR'S, AND
FIDELITY INTERMEDIATE BOND FUND'S FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION.
Each fund's current fundamental investment limitation concerning
diversification is as follows:
"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 {FOR FIDELITY INTERMEDIATE BOND FUND: 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 Trustees recommend that shareholders of each fund vote to replace that
fund's current fundamental investment limitation with the following amended
fundamental investment limitation governing diversification (additional language
is ((UNDERLINED))):
"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. ((G))overnment {FOR FIDELITY INTERMEDIATE BOND FUND:
Government} or any of its agencies or instrumentalities((, OR SECURITIES
OF OTHER INVESTMENT COMPANIES))) 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 percentage limits in the proposed fundamental limitation concerning
diversification are the percentage limitations imposed by the 1940 Act for
diversified investment companies. The amended fundamental diversification
limitation makes one change from the current limitation: subject to applicable
1940 Act requirements, it would permit each fund to invest without limit in the
securities of other investment companies. Pursuant to an order of exemption
granted by the SEC, each fund may invest up to 25% of total assets in
non-publicly offered money market or short-term bond funds (the Central Funds)
managed by FMR or an affiliate of FMR. The Central Funds do not currently bear
the cost of investment advisory, management, or transfer agent fees, although
they may do so subject to the conditions of the SEC order and Board approval.
The Central Funds pay minimal fees for services, such as custodian, auditor, and
Independent Trustees fees. FMR anticipates that making use of the Central Funds
will benefit each fund by enhancing the efficiency of cash management and by
providing increased short-term investment opportunities. If the proposal is
approved, the Central Funds are expected to serve as a principal option for cash
investment for each fund.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed amendment
will benefit each fund and its shareholders. The Trustees recommend voting FOR
the proposal. The amended fundamental diversification limitation, upon
shareholder approval, will become effective when the disclosure is revised to
reflect the changes. If the proposal is not approved by the shareholders of a
fund, that fund's current fundamental diversification limitation will remain
unchanged.
36
<PAGE>
12. TO AMEND FIDELITY INTERMEDIATE BOND FUND'S FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING THE UNDERWRITING OF SECURITIES.
The fund's current fundamental investment limitation concerning underwriting
states:
"The fund may not act as underwriter (except as it may be deemed such in a
sale of restricted securities)."
The trustees recommend that shareholders of the fund vote to replace this
limitation with the following fundamental limitation governing underwriting:
"The fund may not underwrite securities issued by others, except to the
extent that the fund may be considered an underwriter within the meaning
of the Securities Act of 1933 in the disposition of restricted
securities."
The primary purpose of the proposed amendment is to clarify the fund's
fundamental policy with respect to underwriting. The proposal also serves to
conform the fund's fundamental investment limitation concerning underwriting to
a limitation which is expected to become standard for all funds managed by FMR.
(See "Adoption of Standardized Investment Limitations" on page __.) If the
proposal is approved, the new limitation may not be changed without the approval
of shareholders.
Adoption of the proposed limitation concerning underwriting 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 has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the amended fundamental limitation will
become effective when disclosure is revised to reflect the changes. If the
proposal is not approved by the 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. Information concerning the advisory fees and
average net assets of funds with investment objectives similar to Fidelity
Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap
Selector and advised by FMR is contained in the Table of Average Net Assets and
Expense Ratios in Exhibit 9 beginning on page __. Information concerning the
advisory fees and average net assets of funds with investment objectives similar
to Fidelity Intermediate Bond Fund and advised by FMR is contained in the Table
of Average Net Assets and Expense Ratios in Exhibit 10 beginning on page __.
FMR, its officers and directors, its affiliated companies, 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 that 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 Directors of FMR are Edward C. Johnson 3d, Chairman of the Board and of
the Executive Committee; Robert C. Pozen, President; and Peter S. Lynch, Vice
Chairman. Each of the Directors is also a Trustee of the trust. Messrs. Johnson
3d, Pozen, J. Gary Burkhead, John H. Costello, Matthew N. Karstetter, Eric D.
Roiter, Richard A. Silver, Leonard M. Rush, Robert A. Lawrence, Abigail Johnson,
Dwight D. Churchill, Fred L. Henning, Jr., Bradford L. Lewis, Thomas J. Simpson,
and Stanley N. Griffith are currently officers of the trust and officers or
employees of FMR or FMR Corp. With the exception of Mr. Costello[,/and] Mr.
Karstetter [, Mr. Lewis, and Mr. Simpson], all of these persons hold or have
options to acquire stock of FMR Corp. The principal business address of each of
the Directors of FMR is 82 Devonshire Street, Boston, Massachusetts 02109.
37
<PAGE>
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on October
31, 1972. Members of Mr. Edward C. Johnson 3d's family are the predominant
owners of a class of shares of common stock, representing approximately 49% of
the voting power of FMR Corp., and, therefore, under the 1940 Act may be deemed
to form a controlling group with respect to FMR Corp.
During the period May 1, 1998, through May 31, 1999, [the following
transactions/no transactions] were entered into by Trustees and nominees as
Trustee of the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed in 1986
to provide research and investment advice with respect to companies based
outside the United States for certain funds for which FMR acts as investment
adviser. FMR may also grant the sub-advisers investment management authority as
well as authority to buy and sell securities for certain of the funds for which
it acts as investment adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Fidelity Mid-Cap Stock Fund,
Fidelity Large Cap Stock Fund, and Fidelity Small Cap Selector managed by FMR
with respect to which FMR currently has sub-advisory agreements with either FMR
U.K. or FMR Far East, and the net assets of each of these funds, are indicated
in the Table of Average Net Assets and Expense Ratios in Exhibit 9 beginning on
page __. Funds with investment objectives similar to Fidelity Intermediate Bond
Fund managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of each of
these funds, are indicated in the Table of Average Net Assets and Expense Ratios
in Exhibit 10 beginning on page __.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is President and a
Trustee of the trust and other funds advised by FMR; Chairman and a Director of
FIMM; Chairman, Chief Executive Officer, President, and a Director of FMR Corp.,
and a Director and Chairman of the Board and of the Executive Committee of FMR.
In addition, Mr. Pozen is Senior Vice President and a Trustee of the trust and
of other funds advised by FMR; President and a Director of FMR; and President
and a Director of FIMM. Each of the Directors is a stock holder of FMR Corp. The
principal business address of the Directors is 82 Devonshire Street, Boston,
Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FIMM
FIMM is a wholly owned subsidiary of FMR formed in 1997 to provide portfolio
management services to certain Fidelity funds and investment advice with respect
to fixed-income instruments.
Funds with investment objectives similar to Fidelity Intermediate Bond Fund
for which FMR has entered into a sub-advisory agreement with FIMM, and the net
assets of each of these funds, are indicated in the Table of Average Net Assets
and Expense Ratios in Exhibit 10 beginning on page __.
The Directors of FIMM are Edward C. Johnson 3d, Chairman, and Robert C.
Pozen, President. Mr. Johnson 3d also is President and a Trustee of the trust
and of other funds advised by FMR; Chairman, Chief Executive Officer, President,
and a Director of FMR Corp.; Chairman of the Board and of the Executive
Committee of FMR; a Director of FMR; and Chairman and Director of FMR U.K. and
FMR Far East. In addition, Mr. Pozen is Senior Vice President and a Trustee of
the trust and of other funds advised by FMR; a Director of FMR Corp.; Director
of FMR; and President and Director of FMR U.K. and FMR Far East. Each of the
Directors is a stockholder of FMR Corp. The principal business address of the
Directors is 82 Devonshire Street, Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACTS
(FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND,
FIDELITY SMALL CAP SELECTOR, AND FIDELITY INTERMEDIATE BOND FUND)
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment adviser
38
<PAGE>
and, subject to the supervision of the Board of Trustees, directs the
investments of each fund in accordance with its investment objective, policies,
and limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing each fund's investments, compensates all
officers of each fund and all Trustees who are "interested persons" of the trust
or of FMR, and all personnel of each fund 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 each fund. These services include providing facilities for
maintaining each fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters, and other persons
dealing with each fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal and state laws; developing
management and shareholder services for each fund; and furnishing reports,
evaluations, and analyses on a variety of subjects to the Trustees. Services
provided by affiliates of FMR will continue under the proposed management
contracts described in Proposals 4 and 5.
In addition to the management fee payable to FMR, each fund pays transfer
agent and pricing and bookkeeping fees to Fidelity Service Company, Inc. (FSC),
an affiliate of FMR, its transfer, dividend disbursing, and shareholder
servicing agent. Although each fund's current management contract provides that
the fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to shareholders, the
trust, on behalf of each fund has entered into a revised transfer agent
agreement with FSC, pursuant to which FSC bears the costs of providing these
services to existing shareholders. Other expenses paid by each fund include
interest, taxes, brokerage commissions, and the fund's proportionate share of
insurance premiums and Investment Company Institute dues. Each fund is also
liable for such non-recurring 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 its officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including reimbursement
for out-of-pocket expenses, paid to FSC by the funds for the fiscal year ended
April 30, 1999 amounted to the following:
<TABLE>
<CAPTION>
Pricing and
Fund Transfer Agent Fees Bookkeeping Fees
- ---- ------------------- ----------------
<S> <C> <C>
Fidelity Mid-Cap Stock Fund $ $
Fidelity Large Cap Stock Fund $ $
Fidelity Small Cap Selector $ $
Fidelity Intermediate Bond Fund $ $
</TABLE>
FSC also received fees for administering each fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. Securities lending fees for the fiscal year ended
April 30, 1999 were as follows:
Fund Securities Lending Fees
---- -----------------------
Fidelity Mid-Cap Stock Fund $
Fidelity Large Cap Stock Fund $
Fidelity Small Cap Selector $
Fidelity Intermediate Bond Fund $
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. Each 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 per share.
Promotional and administrative expenses in connection with the offer and sale of
shares are paid by FMR.
39
<PAGE>
For Fidelity Small Cap Selector, sales charge revenue paid to, and retained
by, FDC for the fiscal year ended April 30, 1999 amounted to $__________ and
$__________, respectively. On September 30, 1999, Fidelity Small Cap Selector's
3.00% sales charge was eliminated.
FMR is Fidelity Mid-Cap Stock Fund's manager pursuant to a management
contract dated June _, 1999, which was last approved by Fidelity Devonshire
Trust, as the then sole shareholder of the fund, on June _, 1999, pursuant to an
Agreement and Plan of Reorganization approved by shareholders of the fund on
November 18, 1998. The terms of Fidelity Mid-Cap Stock Fund's present management
contract duplicate those of the contract approved by shareholders of the fund on
November 18, 1998. At that time, Fidelity Mid-Cap Stock Fund's shareholders
approved a proposal to modify the group fee portion of the management fee to
provide for lower fee rates if FMR's assets under management remained above $210
billion; to modify the performance adjustment calculation to round the
performance of the fund and its comparative index to the nearest 0.01%, rather
than the nearest 1.00%; and to amend the management contract to allow FMR and
the trust, on behalf of the fund, to modify the contract subject to the
requirements of the 1940 Act. FMR is Fidelity Large Cap Stock Fund's manager
pursuant to a management contract dated May 18, 1995, which was approved by FMR,
as the then sole shareholder of the fund, on June 5, 1995. FMR is Fidelity Small
Cap Selector's manager pursuant to a management contract dated November 1, 1994,
which was last approved by shareholders on October 26, 1994. At that time,
Fidelity Small Cap Selector's shareholders approved a proposal to modify the
group fee portion of the management fee to provide for lower fee rates if FMR's
assets under management remained above $210 billion. FMR is Fidelity
Intermediate Bond Fund's manager pursuant to a management contract dated
December 1, 1994, which was last approved by shareholders on November 16, 1994.
At that time, Fidelity Intermediate Bond Fund's shareholders approved a proposal
to modify the group fee portion of the management fee to provide for lower fee
rates if FMR's assets under management remained above $156 billion; and to
increase the individual fund fee rate from 0.15% to 0.30%.
For the services of FMR under Fidelity Intermediate Bond Fund's management
contract, the fund pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
For the services of FMR under Fidelity Mid-Cap Stock Fund's, Fidelity Large
Cap Stock Fund's, and Fidelity Small Cap Selector's management contracts, each
fund pays FMR a monthly management fee which has two components: a basic fee,
which is the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of Fidelity Mid-Cap Stock Fund's
performance to that of the Standard & Poor's MidCap 400(R) Index (S&P MidCap
400), Fidelity Large Cap Stock Fund's performance to that of the Standard &
Poor's 500 Index (S&P 500), and Fidelity Small Cap Selector's performance to
that of the Russell 2000 Index (Russell 2000).
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and is
calculated on a cumulative basis pursuant to the graduated fee rate schedules
shown below on the left. The schedules below on the right show the effective
annual group fee rate at various asset levels, which is the result of
cumulatively applying the annualized rates on the left. For example, the
effective annual fee rates at $748 billion of group net assets - the approximate
level for April 1999 - were .2824% (for Fidelity Mid-Cap Stock Fund, Fidelity
Large Cap Stock Fund, and Fidelity Small Cap Selector) and .1300% (for Fidelity
Intermediate Bond Fund), which are the weighted averages of the respective fee
rates for each level of group net assets up to $748 billion.
On January 1, 1996, for Fidelity Large Cap Stock Fund, Fidelity Small Cap
Selector, and Fidelity Intermediate Bond Fund, FMR voluntarily modified the
breakpoints in the group fee rate schedules. The revised group fee rate
schedules, depicted below, provide for lower management fee rates as FMR's
assets under management increase. Fidelity Mid-Cap Stock Fund's current
management contract reflects the revised group fee rate schedule below.
FIDELITY INTERMEDIATE BOND FUND
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
----------------------- --------------------------
Average Group Annualized Group Net Effective
Assets Rate Assets Annual
40
<PAGE>
Fee Rate
0 - $3 billion .3700% $0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY SMALL
CAP SELECTOR
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
----------------------- --------------------------
Average Group Annualized Group Net Effective
Assets Rate Assets Annual
------ ---- ------ Fee Rate
--------
0 - $3 billion .5200% $0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
41
<PAGE>
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
Each fund's individual fund fee rate is stated below.
Fund Individual Fund Fee Rate
- ---- ------------------------
Fidelity Mid-Cap Stock Fund 0.30%
Fidelity Large Cap Stock Fund 0.30%
Fidelity Small Cap Selector 0.35%
Fidelity Intermediate Bond Fund 0.30%
Based on the average group net assets of the funds advised by FMR for April
1999, Fidelity Intermediate Bond Fund's annual management fee rate would be
calculated as follows:
Individual Fund Management Fee Rate
Group Fee Rate Fee Rate -------------------
- ---------------------- ---------------
0.1300% + 0.30% = 0.4300%
Based on the average group net assets of the funds advised by FMR for April
1999, Fidelity Mid-Cap Stock Fund's, Fidelity Large Cap Stock Fund's, and
Fidelity Small Cap Selector's annual basic fee rate would be calculated as
follows:
<TABLE>
<CAPTION>
Individual Fund
Fund Group Fee Rate Fee Rate Basic Fee Rate
---- -------------- ---------------- --------------
<S> <C> <C> <C>
Fidelity Mid-Cap Stock Fund 0.2824% + 0.30% = 0.5824%
Fidelity Large Cap Stock Fund 0.2824% + 0.30% = 0.5824%
Fidelity Small Cap Selector 0.2824% + 0.35% = 0.6324%
</TABLE>
One-twelfth of this annual management fee rate for Fidelity Intermediate Bond
Fund, and annual basic fee rate for Fidelity Mid-Cap Stock Fund, Fidelity Large
Cap Stock Fund, and Fidelity Small Cap Selector, is applied to each fund's net
assets averaged for the most recent month, giving a dollar amount, which is the
fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each of Fidelity
Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap
Selector is subject to upward or downward adjustment, depending upon whether,
and to what extent, the fund's investment performance for the performance period
exceeds, or is exceeded by, the record of the S&P MidCap 400, S&P 500, and
Russell 2000, respectively, (the Index) over the same period. The performance
period consists of the most recent month plus the previous 35 months. For
Fidelity Large Cap Stock Fund and Fidelity Small Cap Selector, each percentage
point of difference, calculated to the nearest 1.00%, (up to a maximum
42
<PAGE>
difference of +/-10.00) is multiplied by a performance adjustment rate of 0.02%.
Thus, the maximum annualized adjustment rate is +/-0.20%. For Fidelity Mid-Cap
Stock Fund, each percentage point of difference, calculated to the nearest
0.01%, (up to a maximum difference of +/-10.00) is multiplied by a performance
adjustment rate of 0.02%. Thus, the maximum annualized adjustment rate is
+/-0.20%. This performance comparison is made at the end of each month.
One-twelfth (1/12) of this rate is then applied to each fund's average net
assets for the entire performance period, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
Fidelity Mid-Cap Stock Fund's, Fidelity Large Cap Stock Fund's, and Fidelity
Small Cap Selector's performance is calculated based on change in net asset
value (NAV). For purposes of calculating the performance adjustment, any
dividends or capital gain distributions paid by each fund are treated as if
reinvested in fund shares at the NAV as of the record date for payment. The
record of the Index is based on change in value and is adjusted for any cash
distributions from the companies whose securities compose the Index.
Because the adjustment to the basic fee for each of Fidelity Mid-Cap Stock
Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap Selector is based on
the fund's performance compared to the investment record of its respective
Index, the controlling factor is not whether the fund's performance is up or
down per se, but whether it is up or down more or less than the record of its
respective Index. Moreover, the comparative investment performance of each of
Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity Small
Cap Selector is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
During the fiscal year ended April 30, 1999, for its services as investment
adviser to the funds, FMR received fees (including the group fee breakpoints
voluntarily adopted by FMR and the amount of any performance adjustment) as
follows:
<TABLE>
<CAPTION>
Management Fee as
a Percentage of
Fund Management Fee Performance Adjustment Average Net Assets
- ----------------------------------- -------------- ---------------------- ------------------
<S> <C> <C> <C>
Fidelity Mid-Cap Stock Fund $8,369,000 $(1,558,000) .4961%
Fidelity Large Cap Stock Fund $1,531,999 $(146,444) .5353%
Fidelity Small Cap Selector $3,720,757 $(770,621) .5286%
Fidelity Intermediate Bond Fund $14,446,000 N/A .4330%
</TABLE>
FMR may, from time to time, agree to reimburse all or a portion of each
fund's total operating expenses (exclusive of interest, taxes, securities
lending fees, brokerage commissions, and extraordinary expenses). FMR retains
the ability to be repaid for these expense reimbursements in the amount that
expenses fall below the limit prior to the end of the fiscal year.
Effective March __, 1998, FMR has voluntarily agreed to reimburse Fidelity
Small Cap Stock Fund to the extent that total operating expenses (excluding
interest, taxes, securities lending fees, brokerage commissions and
extraordinary expenses), as a percentage of its average net assets, exceed
1.50%. This arrangement can be terminated by FMR at any time.
SUB-ADVISORY AGREEMENTS
(FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND,
FIDELITY SMALL CAP SELECTOR, AND FIDELITY INTERMEDIATE BOND FUND)
On behalf of Fidelity Intermediate Bond Fund, FMR has entered into a
sub-advisory agreement with Fidelity Investments Money Management, Inc. (FIMM),
pursuant to which FIMM has primary responsibility for providing portfolio
investment management services to the fund. Under the sub-advisory agreement,
dated January 1, 1999, FMR pays FIMM fees equal to 50% of the management fee
payable to FMR under its management contract with Fidelity Intermediate Bond
Fund. The fees paid to FIMM are not reduced by any voluntary or mandatory
expense reimbursements that may be in effect from time to time. For the fiscal
year ended April 30, 1999, FMR paid FIMM fees of $_____.
On behalf of Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund,
43
<PAGE>
Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund, FMR has
entered into sub-advisory agreements with FMR U.K. and FMR Far East. Pursuant to
the sub-advisory agreements, FMR may receive investment advice and research
services outside the United States from the sub-advisers. On behalf of each
fund, FMR may also grant FMR U.K. and FMR Far East investment management
authority, as well as the authority to buy and sell securities if FMR believes
it would be beneficial to the funds. Fidelity Mid-Cap Stock Fund's sub-advisory
agreements, dated June _, 1999, were last approved by Fidelity Devonshire Trust,
as the then sole shareholder of the fund, on June _, 1999, pursuant to an
Agreement and Plan of Reorganization approved by shareholders of the fund on
November 18, 1998. The terms of Fidelity Mid-Cap Stock Fund's current
sub-advisory agreements duplicate those of the sub-advisory agreements approved
by shareholders of the fund on November 18, 1998. Fidelity Large Cap Stock
Fund's sub-advisory agreements, dated May 18, 1995, were approved by FMR, as the
then sole shareholder of the fund, on June 5, 1995. Fidelity Small Cap
Selector's sub-advisory agreements, dated June 17, 1993, were approved by FMR,
as the then sole shareholder of the fund, on June _, 1993. Fidelity Intermediate
Bond Fund's sub-advisory agreements, dated December 1, 1994, were last approved
by shareholders on November 16, 1994. At that time, Fidelity Intermediate Bond
Fund's shareholders approved new sub-advisory agreements that not only allowed
FMR to receive investment advice and research services from the sub-advisers,
but also permitted FMR to grant the sub-advisers investment management
authority, as well as the authority to buy and sell securities if FMR believed
it would be beneficial to the fund.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries other
than the United States such as those in Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly owned
subsidiaries of FMR. Under the sub-advisory agreements, FMR pays the fees of FMR
U.K. and FMR Far East. For providing non-discretionary investment advice and
research services, FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advice and research services.
On behalf of Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund,
Fidelity Small Cap Selector, and Fidelity Intermediate Bond Fund, for providing
discretionary investment management and executing portfolio transactions, FMR
pays FMR U.K. and FMR Far East a fee equal to 50% of its monthly management fee
rate (including any performance adjustment for Fidelity Mid-Cap Stock Fund,
Fidelity Large Cap Stock Fund, and Fidelity Small Cap Selector) with respect to
each fund's average net assets managed by the sub-adviser on a discretionary
basis.
For providing investment advice and research services, on behalf of Fidelity
Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity Small Cap
Selector, the fees paid to the sub-advisers for the fiscal year ended April 30,
1999 were as follows:
FMR U.K. FMR Far East
-------- ------------
Fidelity Mid-Cap Stock Fund $6,746 $4,372
Fidelity Large Cap Stock Fund $12,628 $9,120
Fidelity Small Cap Selector $15,506 $12,001
For providing discretionary investment management and executing portfolio
transactions, on behalf of Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock
Fund, and Fidelity Small Cap Selector, [the/no] fees [were] paid by FMR to FMR
U.K. and FMR Far East for the fiscal year ended April 30, 1999 [were as
follows:]/[.]
FMR U.K. FMR Far East
-------- ------------
Fidelity Mid-Cap Stock Fund $ $
Fidelity Large Cap Stock Fund $ $
Fidelity Small Cap Selector $ $
44
<PAGE>
For the fiscal year ended April 30, 1999, no fees were paid by FMR to FMR
U.K. and FMR Far East on behalf of Fidelity Intermediate Bond Fund.
PORTFOLIO TRANSACTIONS
(FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND,
FIDELITY SMALL CAP SELECTOR, AND FIDELITY INTERMEDIATE BOND FUND)
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the fund's
management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC (FBSJ), indirect
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage firms
for similar services. [Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage Services
(FBS), an indirect subsidiary of FMR Corp.]
The brokerage commissions paid to NFSC [and/,] [FBS] [and FBSJ] by [each
fund]/[Fidelity Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity
Small Cap Selector] for the fiscal year ended April 30, 1999 are listed in the
following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Brokerage % of Aggregate Brokerage % of Aggregate
Commissions Commissions Commissions paid Commissions
paid to NFSC paid to NFSC to [____] paid to [____]
Fidelity Mid-Cap Stock
Fund
Fidelity Large Cap
Stock Fund
Fidelity Small Cap
Selector
Fidelity Intermediate
Bond Fund
</TABLE>
[For the fiscal year ended April 30, 1999, Fidelity Intermediate Bond Fund
paid no brokerage commissions to affiliated brokers.]
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 _______, 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 Annual Report you wish to
receive in order to supply copies to the beneficial owners of the respective
shares.
45
<PAGE>
EXHIBIT 1
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
The language to be added to the current Declaration of Trust is ((UNDERLINED)),
and the language to be deleted is set forth in [brackets]. Headings that were
underlined in the trust's current Declaration of Trust remain underlined in this
Exhibit.
((AMENDED AND)) RESTATED DECLARATION OF TRUST, made [June 16, 1994 ]
((______, 1999)) by each of the Trustees whose signature is affixed hereto (the
"Trustees")((.))
WHEREAS, the Trustees desire to ((AMEND AND)) restate this Declaration of
Trust for the sole purpose of supplementing the Declaration of Trust to
incorporate amendments duly adopted; and
WHEREAS, this Trust was initially made on November 8, 1974 by Edward C.
Johnson 3d, Caleb Loring, Jr., George K. McKenzie and William R. Spaulding in
order to establish a trust fund for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[T]((T))rust under this(( AMENDED AND )) [r]((R))estated Declaration of Trust as
herein set forth below.
-------------------------------------------------
ARTICLE I
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as [the] "Fidelity Commonwealth
Trust."
DEFINITIONS
SECTION 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The [T]((T))erms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote" (the 67% or
50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable)((,)) and "Principal Underwriter" shall have
the meanings given them in the 1940 Act, as [amended from time to time]
((MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF THE
COMMISSION OR ANY RULES OR REGULATIONS ADOPTED OR INTERPRETATIVE RELEASES
OF THE COMMISSION THEREUNDER));
(b) (("BYLAWS" SHALL MEAN THE BYLAWS OF THE TRUST, IF ANY, AS
AMENDED FROM TIME TO TIME;))
(c) (("CLASS" REFERS TO THE CLASS OF SHARES OF A SERIES OF THE TRUST
ESTABLISHED IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE III;))
(d) (("DECLARATION OF TRUST" MEANS THIS AMENDED AND RESTATED
DECLARATION OF TRUST, AS FURTHER AMENDED OR RESTATED, FROM TIME TO TIME;))
<PAGE>
[(c)] (((E)))"Net Asset Value" means the net asset value of each
Series of the Trust ((OR CLASS THEREOF)) determined in the manner provided
in Article X, Section 3;
[(d)] (((F)))"Shareholder" means a record owner of Shares of the
Trust;
[(f)] (((G)))"Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of the Trust or each
Series shall be divided from time to time, including such [c]((C))lass or
[c]((C))lasses of Shares as the Trustees may from time to time create and
establish and including fractions of [s]((S))hares as well as whole
[s]((S))hares ((AS)) consistent with the requirements of Federal and/or
state securities laws;
(h) "Series" refers to ((ANY)) series of Shares of the Trust
established in accordance with the provisions of Article III[.]((;))
[(b)] (((I))) [The] "Trust" refers to Fidelity Commonwealth Trust
((AND REFERENCE TO THE TRUST, WHEN APPLICABLE TO ONE OR MORE SERIES OF THE
TRUST, SHALL REFER TO ANY SUCH SERIES));
[(e)] (((J))) [The] "Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their successor or
successors for the time being in office as such trustee or trustees;
((AND))
[(g)] (((K))) [The] "1940 Act" refers to the Investment Company Act
of 1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
SECTION 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series or
[c]((C))lasses ((OF SERIES)) as the Trustees shall((,)) from time to time((,))
create and establish. The number of ((AUTHORIZED)) Shares ((OF EACH SERIES, AND
CLASS THEREOF,)) is unlimited((.)) [and] [e]((E))ach Share shall be without par
value and shall be fully paid and nonassessable. The Trustees shall have full
power and authority, in their sole discretion, and without obtaining any prior
authorization or vote of the Shareholders [or] of any Series or [c]((C))lass of
[Shareholders of] the Trust [,] (((A))) to create and establish (and to change
in any manner) Shares or any Series or [c]((C))lasses thereof with such
preferences, voting powers, rights, and privileges as the Trustees may((,)) from
time to time((,)) determine[,] ((; (B))) to divide or combine the Shares or any
Series or [c]((C))lasses thereof into a greater or lesser number[,] ((; (C))) to
classify or reclassify any issued Shares into one or more Series or
[c]((C))lasses of Shares[,] ((; (D))) to abolish any one or more Series or
Classes of Shares; and (((E))) to take such other action with respect to the
Shares as the Trustees may deem desirable.
[ESTABLISHMENT OF SERIES]
((ESTABLISHMENT OF SERIES AND CLASSES))
2
<PAGE>
SECTION 2. The establishment of any Series ((OR CLASS THEREOF)) shall be
effective upon the adoption of a resolution by a majority of the then Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series ((OR CLASS)). At any time that there
are no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may by a majority vote abolish [that]
((SUCH))Series ((OR CLASS)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
SECTION 3. The ownership of Shares shall be recorded in the books of the
Trust ((OR A TRANSFER OR SIMILAR AGENT)). The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar matters. The
record books of the Trust ((AS KEPT BY THE TRUST OR BY ANY TRANSFER OR SIMILAR
AGENT, AS THE CASE MAY BE,)) shall be conclusive as to who are the holders of
Shares and as to the number of Shares held from time to time by each
Shareholder.
INVESTMENT IN THE TRUST
SECTION 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may((,))from time to time((,)) authorize. Such
investments may be in the form of cash [or]((,)) securities((,))((OR OTHER
PROPERTY)) in which the appropriate Series is authorized to invest, valued as
provided in Article X, Section 3. After the date of the initial contribution of
capital, the number of Shares to represent the initial contribution may in the
Trustees' discretion be considered as outstanding((,)) and the amount received
by the Trustees on [the] account of the contribution shall be treated as an
asset of the Trust. Subsequent investments in the Trust shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received; provided, however, that
the Trustees may, in their sole discretion [,] (a) impose a sales charge ((OR
OTHER FEE)) upon investments in the Trust ((OR SERIES OR ANY CLASSES THEREOF,))
and (b) issue fractional Shares.
[ASSETS AND LIABILITIES OF SERIES]
((ASSETS AND LIABILITIES OF SERIES AND CLASSES))
SECTION 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange, or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds, or payments [which]
((THAT)) are not readily identifiable as belonging to any particular Series ((OR
CLASS)), shall be allocated by the Trustees between and among one or more of the
Series ((OR CLASSES)) in such manner as they, in their sole discretion, deem
fair and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series ((OR CLASSES)) for all purposes[,] and shall be
referred to as assets belonging to that Series ((OR CLASS)). The assets
belonging to a particular Series shall be so recorded upon the books of the
Trust[,] ((OR OF ITS AGENT OR AGENTS)) and shall be held by the Trustees in
[T]((T))rust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges((,)) and reserves
attributable to that Series((, EXCEPT THAT LIABILITIES AND EXPENSES MAY, IN THE
TRUSTEES' DISCRETION, BE ALLOCATED SOLELY TO A PARTICULAR CLASS AND, IN WHICH
CASE, SHALL BE BORNE BY THAT CLASS.)) Any general liabilities, expenses, costs,
charges((,)) or reserves of the Trust [which] ((THAT)) are not readily
identifiable as belonging to any particular Series ((OR CLASS)) shall be
allocated and charged by the Trustees between or among any one or more of the
Series ((OR CLASSES)) in such manner as the Trustees((,)) in their sole
discretion((,)) deem fair and equitable[.] ((AND SHALL BE REFERRED TO AS
"LIABILITIES BELONGING TO" THAT SERIES OR CLASS.)) Each such allocation shall be
conclusive and binding upon the Shareholders of all Series ((OR CLASSES)) for
3
<PAGE>
all purposes. Any creditor of any Series may look only to the assets of that
Series to satisfy such creditor's debt. ((NO SHAREHOLDER OR FORMER SHAREHOLDER
OF ANY SERIES SHALL HAVE A CLAIM ON OR ANY RIGHT TO ANY ASSETS ALLOCATED OR
BELONGING TO ANY OTHER SERIES.))
NO PREEMPTIVE RIGHTS
SECTION 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
[LIMITATION OF PERSONAL LIABILITY]
((STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY))
SECTION 7. ((SHARES SHALL BE DEEMED TO BE PERSONAL PROPERTY GIVING ONLY
THE RIGHTS PROVIDED IN THIS INSTRUMENT. EVERY SHAREHOLDER BY VIRTUE OF HAVING
BECOME A SHAREHOLDER SHALL BE HELD TO HAVE EXPRESSLY ASSENTED AND AGREED TO BE
BOUND BY THE TERMS HEREOF. NO SHAREHOLDER OF THE TRUST AND OF EACH SERIES SHALL
BE PERSONALLY LIABLE FOR THE DEBTS, LIABILITIES, OBLIGATIONS, AND EXPENSES
INCURRED BY, CONTRACTED FOR, OR OTHERWISE EXISTING WITH RESPECT TO, THE TRUST OR
BY OR ON BEHALF OF ANY SERIES.)) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder
may((,)) at any time((,)) personally agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract((,)) or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust ((OR TO A
SERIES)) shall include a recitation limiting the obligation represented thereby
to the Trust ((OR TO ONE OR MORE SERIES)) and its ((OR THEIR)) assets (but the
omission of such a recitation shall not operate to bind any Shareholder ((OR
TRUSTEE))).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
SECTION 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility.
[ELECTION: INITIAL TRUSTEES]
((INITIAL TRUSTEES; ELECTION))
SECTION 2. ((THE INITIAL TRUSTEES SHALL BE AT LEAST THREE INDIVIDUALS WHO
SHALL AFFIX THEIR SIGNATURES HERETO.)) On a date fixed by the Trustees, the
Shareholders shall elect not less than three Trustees. A Trustee shall not be
required to be a Shareholder of the Trust. [The initial Trustees shall be Edward
C. Johnson 3d, Caleb Loring, Jr., George K. McKenzie and William R. Spaulding
and such other individuals as the Board of Trustees shall appoint pursuant to
Section 4 of this Article IV.]
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least two-thirds (((2/3))) of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be retired by
4
<PAGE>
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any [S]((S))pecial
[M]((M))eeting of the Trust by a vote of two-thirds (((2/3))) of the outstanding
Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
SECTION 4. In case of the declination, death, resignation, retirement,
((OR)) removal [, incapacity, or inability] of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number[,] ((OF THE TRUSTEES,)) 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. An appointment of a Trustee may be made by the Trustees then in
office 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
[t]((T))rust, the [t]((T))rust 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 ((FOREGOING)) power of
appointment is subject to the provisions of Section 16(a) of the 1940 Act((, AS
MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF THE COMMISSION
OR ANY RULES OR REGULATIONS ADOPTED OR INTERPRETATIVE RELEASES OF THE
COMMISSION)).
[TEMPORARY ABSENCE OF TRUSTEE]
((TEMPORARY ABSENCE OF TRUSTEES))
SECTION 5. Any Trustee may, by power of attorney, delegate his power for a
period not exceeding six (((6))) months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
SECTION 6. The number of Trustees, not less than three (3) nor more than
twelve (12), serving hereunder at any time shall be determined by the Trustees
themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is [absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is] physically or mentally incapacitated by reason of
disease or otherwise, the other Trustees shall have all the powers hereunder and
the certificate of the other Trustees of such vacancy[, absence] or
incapacity[,] shall be conclusive[, provided, however, that no vacancy shall
remain unfilled for a period longer than six calendar months].
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
SECTION 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees or any successor Trustees. All of the assets of the Trust shall
5
<PAGE>
at all times be considered as vested in the Trustees. No Shareholder shall be
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees((,)) in all instances((,)) shall act as
principals[,] and are and shall be free from the control of the Shareholders.
The Trustees shall have full power and authority to do any and all acts and to
make and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
((EXCEPT AS OTHERWISE PROVIDED HEREIN OR IN THE 1940 ACT,)) [T]((T))he Trustees
shall not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments [which] ((THAT)) they, in their [uncontrolled] discretion,
shall deem proper to accomplish the purpose of this Trust. Subject to any
applicable limitation in [the] ((THIS)) Declaration of Trust or the Bylaws of
the Trust, ((IF ANY,)) the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested[,] without((,)) in any event((,)) being bound [by] or
limited by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on((,)) and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ [a] ((ONE OR MORE)) bank((S,)) [or] trust [company]
((COMPANIES, COMPANIES THAT ARE MEMBERS OF A NATIONAL SECURITIES EXCHANGE, OR
OTHER ENTITIES PERMITTED UNDER THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY
ANY APPLICABLE ORDER OR ORDERS OF THE COMMISSION OR ANY RULES OR REGULATIONS
ADOPTED OR INTERPRETATIVE RELEASES OF THE COMMISSION THEREUNDER,)) as
custodian((S)) of any assets of the Trust subject to any conditions set forth in
this Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of interests of the Trust either
through a [P]((P))rincipal [u]((U))nderwriter in the manner hereinafter provided
for or by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any [agent,] ((INVESTMENT ADVISER, MANAGER,)) custodian((,))
[or] UNDERWRITER((, OR OTHER AGENT OR INDEPENDENT CONTRACTOR)).
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XII, Section 4[(b)] hereof.
(j) To vote or give assent[,] or exercise any rights of ownership[,] with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
6
<PAGE>
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered((,)) or other negotiable form; or either in its
own name or in the name of a custodian or a nominee or nominees[, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies].
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III ((AND TO ESTABLISH CLASSES OF SUCH
SERIES HAVING RELATIVE RIGHTS, POWERS, AND DUTIES AS THE TRUSTEES MAY PROVIDE
CONSISTENT WITH APPLICABLE LAWS)).
(n) To allocate assets, liabilities((,)) and expenses of the Trust to a
particular Series ((OR CLASS, AS APPROPRIATE,)) or to apportion the same between
or among two or more Series ((OR CLASSES, AS APPROPRIATE)), provided that any
liabilities or expenses incurred by a particular Series ((OR CLASS))shall be
payable solely out of the assets belonging to that Series as provided for in
Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation((,)) or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay calls
or subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy((,)) including, but not limited
to, claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money((,)) and to pledge, mortgage((,)) or hypothecate the
assets of the Trust((,)) subject to the applicable requirements of the 1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder.
(t) ((TO OPERATE AS AND CARRY ON THE BUSINESS OF AN INVESTMENT COMPANY AND
TO EXERCISE ALL THE POWERS NECESSARY AND APPROPRIATE TO THE CONDUCT OF SUCH
OPERATIONS.))
(((U) TO INTERPRET THE INVESTMENT POLICIES, PRACTICES OR LIMITATIONS OF
ANY SERIES.))
(((V) IN GENERAL TO CARRY ON ANY OTHER BUSINESS IN CONNECTION WITH OR
INCIDENTAL TO ANY OF THE FOREGOING POWERS, TO DO EVERYTHING NECESSARY, SUITABLE
OR PROPER FOR THE ACCOMPLISHMENT OF ANY PURPOSE OR THE ATTAINMENT OF ANY OBJECT
OR THE FURTHERANCE OF ANY POWER HEREINBEFORE SET FORTH, EITHER ALONE OR IN
ASSOCIATION WITH OTHERS, AND TO DO EVERY OTHER ACT OR THING INCIDENTAL OR
APPURTENANT TO OR GROWING OUT OF OR CONNECTED WITH THE AFORESAID BUSINESS OR
PURPOSES, OBJECTS OR POWERS.))
[(t)] (((W))) Notwithstanding any other provision hereof, to invest all of
the assets of any [s]((S))eries 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.
7
<PAGE>
((THE FOREGOING CLAUSES SHALL BE CONSTRUED BOTH AS OBJECTS AND POWERS, AND
THE FOREGOING ENUMERATION OF SPECIFIC POWERS SHALL NOT BE HELD TO LIMIT OR
RESTRICT IN ANY MANNER THE GENERAL POWERS OF THE TRUSTEES. ANY ACTION BY ONE OR
MORE OF THE TRUSTEES IN THEIR CAPACITY AS SUCH HEREUNDER SHALL BE DEEMED AN
ACTION ON BEHALF OF THE TRUST OR THE APPLICABLE SERIES AND NOT AN ACTION IN AN
INDIVIDUAL CAPACITY.))
((THE TRUSTEES SHALL NOT BE LIMITED TO INVESTING IN OBLIGATIONS MATURING
BEFORE THE POSSIBLE TERMINATION OF THE TRUST OR ANY SERIES OR CLASS THEREOF.))
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
SECTION 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such person [or] ((OF)) any firm or
company in which he is interested, subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and all subject to
any restrictions which may be contained in the Bylaws((, IF ANY)).
ACTION BY THE TRUSTEES
SECTION 3. ((EXCEPT AS OTHERWISE PROVIDED HEREIN OR IN THE 1940 ACT,))
[T]((T))he Trustees shall act by majority vote at a meeting duly called or by
unanimous written consent without a meeting or by telephone consent provided a
quorum of Trustees participate in any such telephonic meeting, unless the 1940
Act requires that a particular action be taken only at a meeting [of the] ((AT
WHICH)) the Trustees ((ARE PRESENT IN PERSON)). At any meeting of the Trustees,
a majority of the Trustees shall constitute a quorum. Meetings of the Trustees
may be called orally or in writing by the Chairman of the Trustees or by any two
other Trustees. Notice of the time, date((,)) and place of all meetings of the
Trustees shall be given by the party calling the meeting to each Trustee by
telephone((,)) [or] ((TELEFAX)), telegram((, OR OTHER ELECTRO-MECHANICAL MEANS))
sent to his home or business address at least twenty-four(((24))) hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two(((72))) hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who executes a written waiver of notice with respect to
the meeting. Subject to the requirements of the 1940 Act, the Trustees by
majority vote may delegate to any one of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. ((WRITTEN
CONSENTS OR WAIVERS OF TRUSTEES MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS.
EXECUTION OF A WRITTEN CONSENT OR WAIVER AND DELIVERY THEREOF TO THE TRUST MAY
BE ACCOMPLISHED BY TELEFAX OR OTHER ELECTRO-MECHANICAL MEANS.))
CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by the
Trustees and the administration of the Trust, and may be the chief executive,
financial and accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
8
<PAGE>
SECTION 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, fees and expenses of Trustees who are not Interested Persons of the
Trust[,]((;)) interest expense, taxes, fees and commissions of every
kind[,]((;)) expenses of pricing Trust portfolio securities[,]((;)) expenses of
issue, repurchase and redemption of shares including expenses attributable to a
program of periodic repurchases or redemptions[,]((;)) expenses of registering
and qualifying the Trust and its Shares under Federal and [S]((S))tate laws and
regulations[,]((;)) charges of custodians, transfer agents, and
registrars[,]((;)) expenses of preparing and setting up in type
[P]((P))rospectuses and [S]((S))tatements of [A]((A))dditional
[I]((I))nformation[,]((;)) expenses of printing and distributing
[P]((p))rospectuses sent to existing Shareholders[,]((;)) auditing and legal
expenses[,]((;)) reports to Shareholders[,]((;)) expenses of meetings of
Shareholders and proxy solicitations therefor[,]((;)) insurance expense[,]((;))
association membership dues[,]((;)) and for such non-recurring items as may
arise, including litigation to which the Trust is a party[,]((;)) and for all
losses and liabilities by them incurred in administering the Trust, and for the
payment of such expenses, disbursements, losses, and liabilities the Trustees
shall have a lien on the assets belonging to the appropriate Series prior to any
rights or interests of the Shareholders thereto. This section shall not preclude
the Trust from directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
INVESTMENT ADVISER
SECTION 1. Subject to a Majority Shareholder Vote, the Trustees may((,))
in their discretion ((AND))from time to time((,)) enter into an investment
advisory or management contract(s) with respect to the Trust or any Series
thereof whereby the other party(ies) to such contract(s) shall undertake to
furnish the Trustees such management, investment advisory, statistical((,))and
research facilities and services and such other facilities and services, if any,
and all upon such terms and conditions, as the Trustees may((,)) in their
discretion((,)) determine. Notwithstanding any provisions of this Declaration of
Trust, the Trustees may authorize the investment adviser(s) (subject to such
general or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales((,)) or exchanges of portfolio securities and other
investment instruments of the Trust on behalf of the Trustees or may authorize
any officer, agent, or Trustee to effect such purchases, sales((,)) or exchanges
pursuant to recommendations of the investment adviser (and all without further
action by the Trustees). Any such purchases, sales((,)) and exchanges shall be
deemed to have been authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,(( AS
MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF THE COMMISSION
OR ANY RULES OR REGULATIONS ADOPTED OR INTERPRETATIVE RELEASES OF THE COMMISSION
THEREUNDER,)) including those relating to Shareholder approval, authorize the
investment adviser to employ one or more sub-advisers from time to time to
perform such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
SECTION 2. The Trustees may in their discretion from time to time enter
into [(a)] ((AN EXCLUSIVE OR NON-EXCLUSIVE)) contract(s) ((ON BEHALF OF THE
TRUST OR ANY SERIES OR CLASS THEREOF)) providing for the sale of the Shares,
whereby the Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions as may be prescribed in
the Bylaws, if any, and such further terms and conditions as the Trustees
may((,)) in their discretion((,)) determine not inconsistent with the provisions
of this Article VII or of the Bylaws, if any [; and s] ((S))uch contract may
9
<PAGE>
also provide for the repurchase or sale of Shares by such other party as
principal or as agent of the Trust.
TRANSFER AGENT
SECTION 3. The Trustees may((,)) in their discretion ((AND)) from time to
time((,)) enter into [a] ((ONE OR MORE)) transfer agency and Shareholder service
contract[(s)]((S)) whereby the other party shall undertake to furnish the
Trustees with transfer agency and Shareholder services. [The] ((SUCH)) contracts
shall be on such terms and conditions as the Trustees may((,)) in their
discretion((,)) determine not inconsistent with the provisions of this
Declaration of Trust or of the Bylaws, if any. Such services may be provided by
one or more entities.
PARTIES TO CONTRACT
SECTION 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article VII
or the Bylaws, if any. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to contracts entered
into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may
be financially interested or otherwise affiliated with persons who are parties
to any or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
SECTION 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of Section
15 of the 1940 ACT((, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR
ORDERS OF THE COMMISSION OR ANY RULES OR REGULATIONS ADOPTED OR INTERPRETATIVE
RELEASES OF THE COMMISSION)) ([including any amendments thereof] or other
applicable Act of Congress hereafter enacted)((,)) with respect to its
continuance in effect, ((ITS AMENDMENT,)) its termination, and the method of
authorization and approval of such contract or renewal thereof[, and no
amendment to any contract, entered into pursuant to Section 1 shall be effective
unless assented to by a Majority Shareholder Vote].
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote [(i)](((A))) for the
election of Trustees as provided in Article IV, Section 2[,]((;)) [(ii)](((B)))
for the removal of Trustees as provided in Article IV, Section 3(d)[,]((;))
[(iii)](((C))) with respect to any investment advisory or management contract as
provided in Article VII, Sections 1 and 5[,]((;)) [(iv)](((D) WITH RESPECT TO
ANY TERMINATION, MERGER, CONSOLIDATION, REORGANIZATION, OR SALE OF ASSETS OF THE
TRUST OR ANY OF ITS SERIES OR CLASSES AS PROVIDED IN ARTICLE XII, SECTION 4;
(E))) with respect to the amendment of this Declaration of Trust as provided in
Article XII, Section 7[,]((;)) [(v)](((F))) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or not a
court action, proceeding or claim should be brought or maintained derivatively
10
<PAGE>
or as a class action on behalf of the Trust or the Shareholders, provided,
however, that a Shareholder of a particular Series shall not be entitled to
bring any derivative or class action on behalf of any other Series of the
Trust[,]((;)) and [(vi)](((G))) with respect to such additional matters relating
to the Trust as may be required or authorized by law, by this Declaration of
Trust, or the Bylaws of the Trust, if any, or any registration of the Trust with
the [Securities and Exchange] Commission ["the Commission"] or any [S]((S))tate,
as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall be
voted by individual Series, except ((AS PROVIDED IN THE FOLLOWING SENTENCE AND
EXCEPT)) [(i)](((a))) when required by the 1940 Act, Shares shall be voted in
the aggregate and not by individual Series; and [(ii)](((B))) 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. ((THE TRUSTEES MAY ALSO DETERMINE THAT A MATTER AFFECTS ONLY THE
INTERESTS OF ONE OR MORE CLASSES OF A SERIES, IN WHICH CASE, ANY SUCH MATTER
SHALL BE VOTED ON BY SUCH CLASS OR CLASSES.)) A [s]((S))hareholder of each
Series ((OR CLASS THEREOF)) 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((OR CLASS THEREOF)) on any matter on which such
[s]((S))hareholder 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,(( IF ANY,)) to be taken by
Shareholders.
MEETINGS
SECTION 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other place
as the Trustees may designate. Special meetings of the Shareholders of any
Series may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-tenth (((1/10))) of the
outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting
the qualifications set forth in Section 16(c) of the 1940 Act, [as the same may
be amended from time to time,] ((AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE
ORDER OR ORDERS OF THE COMMISSION OR ANY RULES OR REGULATIONS ADOPTED OR
INTERPRETATIVE RELEASES OF THE COMMISSION,)) seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on such
a request for a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to the list of
the Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record. Shareholders shall be entitled to at least fifteen
(((15))) days' notice of any meeting.
QUORUM AND REQUIRED VOTE
SECTION 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series ((OR CLASS)) shall vote as a Series ((OR
CLASS))[,] then a majority of the aggregate number of Shares of that Series ((OR
CLASS)) entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series ((OR CLASS)). Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original meeting, without
the necessity of further notice. Except when a larger vote is required ((BY
APPLICABLE LAW OR)) by any provision of this Declaration of Trust or the Bylaws,
if any, a majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that the
holders of any Series ((OR CLASS)) shall vote as a Series ((OR Class)), then a
majority of the Shares of that Series ((OR CLASS)) voted on the matter shall
decide that matter insofar as that Series ((OR CLASS)) is concerned.
((SHAREHOLDERS MAY ACT BY UNANIMOUS WRITTEN CONSENT. ACTIONS TAKEN BY A SERIES
OR CLASS MAY BE CONSENTED TO UNANIMOUSLY IN WRITING BY SHAREHOLDERS OF THAT
SERIES OR CLASS.))
11
<PAGE>
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
SECTION 1. The Trustees shall at all times employ a bank((,)) [or] ((A
COMPANY THAT IS A MEMBER OF A NATIONAL SECURITIES EXCHANGE,)) trust company,
((OR OTHER ENTITY PERMITTED UNDER THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY
ANY APPLICABLE ORDER OR ORDERS OF THE COMMISSION OR ANY RULES OR REGULATIONS
ADOPTED OR INTERPRETATIVE RELEASES OF THE COMMISSION THEREUNDER,)) having
capital, surplus((,))and undivided profits of at least two million dollars
($2,000,000), or such other amount [or such other entity] as shall be allowed by
the Commission or by the 1940 Act, as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements, if any, as may
be contained in the Bylaws of the Trust((, IF ANY)):
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust and
the custodian, if such procedures have been authorized in writing by the
Trust;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may
direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so [by the Trustees], the Net Asset
Value of any Series ((OR CLASS THEREOF)) in accordance with the provisions
hereof; all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. [If so directed by a Majority Shareholder
Vote, the custodian shall deliver and pay over all property of the Trust
held by it as specified in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank((,)) [or] ((A COMPANY THAT IS A
MEMBER OF A NATIONAL SECURITIES EXCHANGE,)) trust company [organized under the
laws of the United States or one of the states thereof and]((, OR OTHER ENTITY
PERMITTED UNDER THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE
ORDER OR ORDERS OF THE COMMISSION OR ANY RULES OR REGULATIONS ADOPTED OR
INTERPRETATIVE RELEASES OF THE COMMISSION THEREUNDER,)) having capital((,))
[and] surplus and [individual] ((UNDIVIDED)) profits of at least two million
dollars ($2,000,000)((,)) or such other [person] ((AMOUNT)) as [may] ((SHALL))
be [permitted] ((ALLOWED)) by the Commission [or otherwise in accordance with]
((OR BY)) the 1940 Act [as from time to time amended].
[CENTRAL CERTIFICATE SYSTEM]
((CENTRAL DEPOSITORY SYSTEM))
SECTION 2. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may direct the custodian to deposit all or any part of
the securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
12
<PAGE>
securities association registered with the Commission under the Securities
Exchange Act of 1934[,] or such other person as may be permitted by the
Commission[,] or otherwise in accordance with the 1940 Act [as from time to time
amended], pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities[,]((;)) provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust ((OR ITS CUSTODIAN, SUBCUSTODIANS,
OR OTHER AUTHORIZED AGENTS)).
ARTICLE X
[DISTRIBUTIONS AND REDEMPTIONS]
((DISTRIBUTIONS, REDEMPTIONS AND DETERMINATION OF NET ASSET VALUE))
DISTRIBUTIONS
SECTION 1.
(a) The Trustees may from time to time declare and pay dividends.
The amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have the power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and cause
to be paid dividends on Shares of a particular Series, from the assets
belonging to that Series, which dividends, at the election of the
Trustees, may be paid daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees
may determine, and may be payable in Shares of that Series, ((OR CLASSES
THEREOF,)) at the election of each Shareholder of that Series.
((THE TRUSTEES MAY ADOPT AND OFFER TO SHAREHOLDERS SUCH DIVIDEND
REINVESTMENT PLANS, CASH DIVIDEND PAYOUT PLANS, OR RELATED PLANS AS THE
TRUSTEES SHALL DEEM APPROPRIATE.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((A STOCK DIVIDEND)) pro
rata among the Shareholders of a particular Series((, OR CLASS THEREOF,))
as of the record date of that Series ((OR CLASS)) fixed as provided in
((ARTICLE XII,)) Section 3 [hereof a "stock dividend"].
REDEMPTIONS
SECTION 2. In case any holder of record of Shares of a particular Series
((OR CLASS OF A SERIES)) desires to dispose of his Shares, he may deposit at the
office of the transfer agent or other authorized agent of that Series a written
request or such other form of request as the Trustees may((,)) from time to
time((,)) authorize, requesting that the Series purchase the Shares in
accordance with this Section 2; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or property
from the assets of that Series((,)) and payment for such Shares ((LESS ANY
APPLICABLE DEFERRED SALES CHARGES AND/OR FEES)) shall be made by the Series or
the principal underwriter of the Series to the Shareholder of record within
seven (7) days after the date upon which the request is effective.
13
<PAGE>
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series ((OR CLASS)) shall
mean that amount by which the assets of that Series[,] ((OR CLASS)) exceed its
liabilities, all as determined by or under the direction of the Trustees. Such
value per Share shall be determined separately for each Series ((OR CLASS)) of
Shares and shall be determined on such days and at such times as the Trustees
may determine. Such determination shall be made with respect to securities for
which market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair value
as determined in good faith by the Trustees[;]((,)) provided, however, that the
Trustees, without Shareholder approval, may alter the method of appraising
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations((,)) and interpretations thereof promulgated or issued by the
Commission or insofar as permitted by any [O]((O))rder of the Commission
applicable to the Series. The Trustees may delegate any of their powers and
duties under this Section 3 with respect to appraisal of assets and liabilities.
At any time, the Trustees may cause the value [par] ((PER)) Share last
determined to be determined again in a similar manner and may fix the time when
such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act. Such
suspension shall take effect at such time as the Trustees shall specify((,)) but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment until the Trustees shall declare the suspension at an end. In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the Net Asset
Value per Share existing after the termination of the suspension. ((IN THE EVENT
THAT ANY SERIES IS DIVIDED INTO CLASSES, THE PROVISIONS OF THIS SECTION, TO THE
EXTENT APPLICABLE AS DETERMINED IN THE DISCRETION OF THE TRUSTEES AND CONSISTENT
WITH APPLICABLE LAW, MAY BE EQUALLY APPLIED TO EACH SUCH CLASS.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
SECTION 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of them or any officer, agent, employee((,)) or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of his office.
[INDEMNIFICATION]
((INDEMNIFICATION OF COVERED PERSONS))
SECTION 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit((,)) or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the
settlement thereof;
14
<PAGE>
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office((;)) or (B) not to have acted in good faith in
the reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence((,)) or reckless disregard
of the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[i]((I))nterested [p]((P))ersons of the Trust nor are parties to the
matter based upon a review of readily available facts (as opposed to
a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon
a review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has ceased
to be such Trustee or officer((,)) and shall inure to the benefit of the
heirs, executors, and administrators of such a person. Nothing contained
herein shall affect any rights to indemnification to which Trust
personnel, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of
a defense to any claim, action, suit((,)) or proceeding of the character
described in [p]((P))aragraph (a) of this Section 2 may be paid by the
applicable Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him to the applicable Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 2; provided, however, that either [(a)](((I))) such Covered
Person shall have provided appropriate security for such
undertaking[,]((;)) [(b)](((II))) the Trust is insured against losses
arising out of any such advance payments((;)) or [(c)](((III))) either a
majority of the Trustees who are neither interested persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled
to indemnification under this Section 2.
[SHAREHOLDERS]
((INDEMNIFICATION OF SHAREHOLDERS))
15
<PAGE>
SECTION 3. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators, or other legal representatives or((,)) in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Series shall, upon request by the Shareholder, assume the defense
of any claim made against the Shareholder for any act or obligation of the
Series and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
[TRUST NOT A PARTNERSHIP]
((TRUST NOT A PARTNERSHIP, ETC.))
SECTION 1. It is hereby expressly declared that a trust ((IS CREATED
HEREBY)) and not a partnership [is created hereby]((,)) ((JOINT STOCK
ASSOCIATION, CORPORATION, BAILMENT, OR ANY FORM OF A LEGAL RELATIONSHIP OTHER
THAN A TRUST)). No Trustee hereunder shall have any power to ((PERSONALLY)) bind
[personally] either the Trust's officers or any Shareholder. All persons
extending credit to, contracting with((,)) or having any claim against the Trust
or the Trustees shall look only to the assets of the appropriate Series for
payment under such credit, contract, or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present, or future, shall
be personally liable therefor. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which the Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence((,)) or
reckless disregard of the duties involved in the conduct of the office of
Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Section 1 of this Article XII and to Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1 of this
Article XII and to Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
ESTABLISHMENT OF RECORD DATES
SECTION 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividend((S)), or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment or
16
<PAGE>
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed or aforesaid.
[TERMINATION OF TRUST]
((DURATION; TERMINATION OF TRUST, A SERIES OR A CLASS; MERGERS, ETC.))
[Section 4]
[(a)] ((SECTION 4.1. DURATION)). [This] ((THE)) Trust shall continue
without limitation of time((,)) but subject to the provisions of [sub-section
(b) of this Section 4] ((THIS ARTICLE XII.))
[(b)] [Subject to a Majority Shareholder Vote of each Series affected by
the matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may]
[(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized under the
laws of any state which is a diversified open-end management investment company
as defined in the 1940 Act, for adequate consideration which may include the
assumption of all outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust or any affected Series, and which may include shares
of beneficial interest or stock of such trust, partnership, association or
corporation; or]
[(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.]
[Upon making provision for the payment of such liabilities in either (i) or
(ii), by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds or assets (as the case may be) ratably among the holders of
the Shares of the Trust or any affected Series then outstanding.]
[(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest of
all parties shall be cancelled and discharged.]
((SECTION 4.2. TERMINATION OF THE TRUST, A SERIES OR A CLASS. (A) SUBJECT
TO APPLICABLE FEDERAL AND STATE LAW, THE TRUST OR ANY SERIES OR CLASS THEREOF
MAY BE TERMINATED (I) BY MAJORITY SHAREHOLDER VOTE OF THE TRUST, EACH SERIES
AFFECTED, OR EACH CLASS AFFECTED, AS THE CASE MAY BE; OR (II) WITHOUT THE VOTE
OR CONSENT OF SHAREHOLDERS BY A MAJORITY OF THE TRUSTEES EITHER AT A MEETING OR
BY WRITTEN CONSENT. THE TRUSTEES SHALL PROVIDE WRITTEN NOTICE TO THE AFFECTED
SHAREHOLDERS OF A TERMINATION EFFECTED UNDER CLAUSE (II) ABOVE. UPON THE
TERMINATION OF THE TRUST OR THE SERIES OR CLASS,))
(((I) THE TRUST OR THE SERIES OR CLASS SHALL CARRY ON NO BUSINESS
EXCEPT FOR THE PURPOSE OF WINDING UP ITS AFFAIRS;))
(((II) THE TRUSTEES SHALL PROCEED TO WIND UP THE AFFAIRS OF THE
TRUST OR THE SERIES OR CLASS, AND ALL OF THE POWERS OF THE TRUSTEES UNDER
THIS DECLARATION OF TRUST SHALL CONTINUE UNTIL THE AFFAIRS OF THE TRUST
SHALL HAVE BEEN WOUND UP, INCLUDING THE POWER TO FULFILL OR DISCHARGE THE
CONTRACTS OF THE TRUST OR THE SERIES OR CLASS THEREOF; COLLECT ITS ASSETS;
SELL, CONVEY, ASSIGN, EXCHANGE, TRANSFER, OR OTHERWISE DISPOSE OF ALL OR
ANY PART OF THE REMAINING TRUST PROPERTY OR TRUST PROPERTY ALLOCATED OR
BELONGING TO SUCH SERIES OR CLASS TO ONE OR MORE PERSONS AT PUBLIC OR
PRIVATE SALE FOR CONSIDERATION THAT MAY CONSIST IN WHOLE OR IN PART OF
CASH, SECURITIES, OR OTHER PROPERTY OF ANY KIND; DISCHARGE OR PAY ITS
LIABILITIES; AND DO ALL OTHER ACTS APPROPRIATE TO LIQUIDATE ITS BUSINESS;
PROVIDED THAT ANY SALE, CONVEYANCE, ASSIGNMENT, EXCHANGE, TRANSFER, OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL THE TRUST PROPERTY OR TRUST
PROPERTY ALLOCATED OR BELONGING TO SUCH SERIES OR CLASS (OTHER THAN AS
PROVIDED IN (III) BELOW) SHALL REQUIRE SHAREHOLDER APPROVAL IN ACCORDANCE
WITH SECTION 4.3 BELOW; AND))
17
<PAGE>
(((III) AFTER PAYING OR ADEQUATELY PROVIDING FOR THE PAYMENT OF ALL
LIABILITIES, AND UPON RECEIPT OF SUCH RELEASES, INDEMNITIES, AND REFUNDING
AGREEMENTS AS THEY DEEM NECESSARY FOR THEIR PROTECTION, THE TRUSTEES MAY
DISTRIBUTE THE REMAINING TRUST PROPERTY OR THE REMAINING PROPERTY OF THE
TERMINATED SERIES OR CLASS, IN CASH OR IN KIND OR PARTLY EACH, AMONG THE
SHAREHOLDERS OF THE TRUST OR THE SERIES OR CLASS ACCORDING TO THEIR
RESPECTIVE RIGHTS; AND))
(((B) AFTER TERMINATION OF THE TRUST OR THE SERIES OR CLASS AND
DISTRIBUTION TO THE SHAREHOLDERS AS HEREIN PROVIDED, A MAJORITY OF THE TRUSTEES
SHALL EXECUTE AND LODGE AMONG THE RECORDS OF THE TRUST AND FILE WITH THE
SECRETARY OF THE COMMONWEALTH OF MASSACHUSETTS, AS APPROPRIATE, AN INSTRUMENT IN
WRITING SETTING FORTH THE FACT OF SUCH TERMINATION, AND THE TRUSTEES SHALL
THEREUPON BE DISCHARGED FROM ALL FURTHER LIABILITIES AND DUTIES WITH RESPECT TO
THE TRUST OR THE TERMINATED SERIES OR CLASS, AND THE RIGHTS AND INTERESTS OF ALL
SHAREHOLDERS OF THE TRUST OR THE TERMINATED SERIES OR CLASS SHALL THEREUPON
CEASE.))
((SECTION 4.3. MERGER, CONSOLIDATION, AND SALE OF ASSETS. SUBJECT TO
APPLICABLE FEDERAL AND STATE LAW AND EXCEPT AS OTHERWISE PROVIDED IN SECTION 4.4
BELOW, THE TRUST OR ANY SERIES THEREOF MAY MERGE OR CONSOLIDATE WITH ANY OTHER
CORPORATION, ASSOCIATION, TRUST, OR OTHER ORGANIZATION OR MAY SELL, LEASE, OR
EXCHANGE ALL OR SUBSTANTIALLY ALL OF THE TRUST PROPERTY OR TRUST PROPERTY
ALLOCATED OR BELONGING TO SUCH SERIES, INCLUDING ITS GOOD WILL, UPON SUCH TERMS
AND CONDITIONS AND FOR SUCH CONSIDERATION WHEN AND AS AUTHORIZED AT ANY MEETING
OF SHAREHOLDERS CALLED FOR SUCH PURPOSE BY A MAJORITY SHAREHOLDER VOTE OF THE
TRUST OR AFFECTED SERIES, AS THE CASE MAY BE. ANY SUCH MERGER, CONSOLIDATION,
SALE, LEASE, OR EXCHANGE SHALL BE DEEMED FOR ALL PURPOSES TO HAVE BEEN
ACCOMPLISHED UNDER AND PURSUANT TO MASSACHUSETTS LAW.))
((SECTION 4.4. INCORPORATION; REORGANIZATION. SUBJECT TO APPLICABLE
FEDERAL AND STATE LAW, THE TRUSTEES MAY WITHOUT THE VOTE OR CONSENT OF
SHAREHOLDERS CAUSE TO BE ORGANIZED OR ASSIST IN ORGANIZING A CORPORATION OR
CORPORATIONS UNDER THE LAWS OF ANY JURISDICTION OR ANY OTHER TRUST, PARTNERSHIP,
LIMITED LIABILITY COMPANY, ASSOCIATION, OR OTHER ORGANIZATION TO TAKE OVER ALL
OF THE TRUST PROPERTY OR THE TRUST PROPERTY ALLOCATED OR BELONGING TO SUCH
SERIES OR TO CARRY ON ANY BUSINESS IN WHICH THE TRUST SHALL DIRECTLY OR
INDIRECTLY HAVE ANY INTEREST, AND TO SELL, CONVEY AND TRANSFER THE TRUST
PROPERTY OR THE TRUST PROPERTY ALLOCATED OR BELONGING TO SUCH SERIES TO ANY SUCH
CORPORATION, TRUST, LIMITED LIABILITY COMPANY, PARTNERSHIP, ASSOCIATION, OR
ORGANIZATION IN EXCHANGE FOR THE SHARES OR SECURITIES THEREOF OR OTHERWISE, AND
TO LEND MONEY TO, SUBSCRIBE FOR THE SHARES OR SECURITIES OF, AND ENTER INTO ANY
CONTRACTS WITH ANY SUCH CORPORATION, TRUST, PARTNERSHIP, LIMITED LIABILITY
COMPANY, ASSOCIATION, OR ORGANIZATION, OR ANY CORPORATION, PARTNERSHIP, LIMITED
LIABILITY COMPANY, TRUST, ASSOCIATION, OR ORGANIZATION IN WHICH THE TRUST OR
SUCH SERIES HOLDS OR IS ABOUT TO ACQUIRE SHARES OR ANY OTHER INTEREST. SUBJECT
TO APPLICABLE FEDERAL AND STATE LAW, THE TRUSTEES MAY ALSO CAUSE A MERGER OR
CONSOLIDATION BETWEEN THE TRUST OR ANY SUCCESSOR THERETO AND ANY SUCH
CORPORATION, TRUST, PARTNERSHIP, LIMITED LIABILITY COMPANY, ASSOCIATION, OR
OTHER ORGANIZATION. NOTHING CONTAINED HEREIN SHALL BE CONSTRUED AS REQUIRING
APPROVAL OF SHAREHOLDERS FOR THE TRUSTEES TO ORGANIZE OR ASSIST IN ORGANIZING
ONE OR MORE CORPORATIONS, TRUSTS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES,
ASSOCIATIONS, OR OTHER ORGANIZATIONS AND SELLING, CONVEYING, OR TRANSFERRING THE
TRUST PROPERTY OR A PORTION OF THE TRUST PROPERTY TO SUCH ORGANIZATION OR
ENTITIES; PROVIDED, HOWEVER, THAT THE TRUSTEES SHALL PROVIDE WRITTEN NOTICE TO
THE AFFECTED SHAREHOLDERS OF ANY TRANSACTION WHEREBY, PURSUANT TO THIS SECTION
4.4, THE TRUST OR ANY SERIES THEREOF SELLS, CONVEYS, OR TRANSFERS SUBSTANTIALLY
ALL OF ITS ASSETS TO ANOTHER ENTITY OR MERGES OR CONSOLIDATES WITH ANOTHER
ENTITY.))
FILING OF COPIES, REFERENCES, AND HEADINGS
SECTION 5. The original or a copy of this instrument and of each
[d]((D))eclaration of [t]((T))rust supplemental hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental [d]((D))eclaration of [t]((T))rust shall be
filed by the Trustees with the Secretary of [t]((T))he Commonwealth of
Massachusetts and the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such supplemental [d]((D))eclarations of [t]((T))rust have
been made and as to any matters in connection with the Trust hereunder, and with
the same effect as if it were the original, may rely on a copy certified by an
18
<PAGE>
officer or Trustee of the Trust to be a copy of this instrument or of any such
supplemental [d]((D))eclaration of [t]((T))rust. In this instrument or in any
such supplemental [d]((D))eclaration of [t]((T))rust, references to this
instrument[,] and all expressions like "herein," "hereof" and "hereunder," shall
be deemed to refer to this instrument as amended or affected by any such
supplemental [d]((D))eclaration of [t]((T))rust. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
instrument, rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
APPLICABLE LAW
SECTION 6. The Trust set forth in this instrument is made in [t]((T))he
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust((, AND THE ABSENCE OF A SPECIFIC
REFERENCE HEREIN TO ANY SUCH POWER, PRIVILEGE, OR ACTION SHALL NOT IMPLY THAT
THE TRUST MAY NOT EXERCISE SUCH POWER OR PRIVILEGE OR TAKE SUCH ACTIONS)).
AMENDMENTS
SECTION 7. [If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable law
or this Declaration of Trust in any particular case,] ((EXCEPT AS SPECIFICALLY
PROVIDED HEREIN,)) the Trustees [shall] ((MAY, WITHOUT SHAREHOLDER VOTE,)) amend
or otherwise supplement this [instrument,] ((DECLARATION OF TRUST)) by making
((AN AMENDMENT,)) a [d]((D))eclaration of [t]((T))rust supplemental hereto[,
which thereafter shall form a part hereof, except that an amendment which shall
affect the Shareholders of one or more Series but not the Shareholders of all
outstanding Series shall be authorized by vote of the Shareholders holding a
majority of the Shares entitled to vote of each Series affected and no vote of
Shareholders of a Series not affected shall be required. Amendments having the
purpose of changing the name of the Trust or of supplying any omission, curing
any ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require authorization by
Shareholder vote. Copies of the supplemental declaration of trust shall be filed
as specified in Section 5 of this Article XII.] ((OR AN AMENDED AND RESTATED
DECLARATION OF TRUST. SHAREHOLDERS SHALL HAVE THE RIGHT TO VOTE (A) ON ANY
AMENDMENT THAT WOULD AFFECT THEIR RIGHT TO VOTE GRANTED IN SECTION 1 OF ARTICLE
VIII; (B) ON ANY AMENDMENT THAT WOULD ALTER THE MAXIMUM NUMBER OF TRUSTEES
PERMITTED UNDER SECTION 6 OF ARTICLE IV; (C) ON ANY AMENDMENT TO THIS SECTION 7;
(D) ON ANY AMENDMENT AS MAY BE REQUIRED BY LAW OR BY THE TRUST'S REGISTRATION
STATEMENT FILED WITH THE COMMISSION; AND (E) ON ANY AMENDMENT SUBMITTED TO THEM
BY THE TRUSTEES. ANY AMENDMENT REQUIRED OR PERMITTED TO BE SUBMITTED TO
SHAREHOLDERS THAT, AS THE TRUSTEES DETERMINE, SHALL AFFECT THE SHAREHOLDERS OF
ONE OR MORE SERIES OR CLASSES SHALL BE AUTHORIZED BY VOTE OF THE SHAREHOLDERS OF
EACH SERIES OR CLASS AFFECTED AND NO VOTE OF SHAREHOLDERS OF A SERIES OR CLASS
NOT AFFECTED SHALL BE REQUIRED. NOTWITHSTANDING ANYTHING ELSE HEREIN, ANY
AMENDMENT TO ARTICLE XI SHALL NOT LIMIT THE RIGHTS TO INDEMNIFICATION OR
INSURANCE PROVIDED THEREIN WITH RESPECT TO ACTION OR OMISSION OF COVERED PERSONS
PRIOR TO SUCH AMENDMENT.))
FISCAL YEAR
SECTION 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, if any, provided, however, that the Trustees may,
without Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "FIDELITY"
SECTION 9. Fidelity Management & Research Company ("FMR") has consented to
the use by any Series of the Trust of the identifying word "Fidelity" in the
name of any Series of the Trust at some future date. Such consent is conditioned
upon the employment of FMR ((OR A SUBSIDIARY OR AFFILIATE THEREOF)) as
19
<PAGE>
investment adviser of each Series of the Trust. As between the Trust and itself,
FMR controls the use of the name of the Trust insofar as such name contains the
identifying word "Fidelity". FMR may from time to time use the identifying word
"Fidelity" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations, or
businesses [which] ((THAT)) it may manage, advise, sponsor or own or in which it
may have a financial interest. FMR may require the Trust or any Series thereof
to cease using the identifying word "Fidelity" in the name of the Trust or any
Series thereof if the Trust or any Series thereof ceases to employ FMR or a
subsidiary or affiliate thereof as investment adviser.
PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS
((SECTION 10. (A) THE PROVISIONS OF THIS DECLARATION OF TRUST ARE
SEVERABLE, AND, IF THE TRUSTEES SHALL DETERMINE, WITH THE ADVICE OF COUNSEL,
THAT ANY OF SUCH PROVISIONS IS IN CONFLICT WITH THE 1940 ACT, THE REGULATED
INVESTMENT COMPANY PROVISIONS OF THE INTERNAL REVENUE CODE OR WITH OTHER
APPLICABLE LAWS AND REGULATIONS, THE CONFLICTING PROVISION SHALL BE DEEMED NEVER
TO HAVE CONSTITUTED A PART OF THIS DECLARATION OF TRUST; PROVIDED, HOWEVER, THAT
SUCH DETERMINATION SHALL NOT AFFECT ANY OF THE REMAINING PROVISIONS OF THIS
DECLARATION OF TRUST OR RENDER INVALID OR IMPROPER ANY ACTION TAKEN OR OMITTED
PRIOR TO SUCH DETERMINATION.))
(((B) IF ANY PROVISION OF THIS DECLARATION TRUST SHALL BE HELD INVALID OR
UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL
ATTACH ONLY TO SUCH PROVISION IN SUCH JURISDICTION AND SHALL NOT IN ANY MANNER
AFFECT SUCH PROVISIONS IN ANY OTHER JURISDICTION OR ANY OTHER PROVISION OF THIS
DECLARATION OF TRUST IN ANY JURISDICTION.))
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument [this 16th day of June, 1994] ((AS OF THE
DATE SET FORTH ABOVE)).
[SIGNATURE LINES OMITTED]
20
<PAGE>
EXHIBIT 2
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY COMMONWEALTH TRUST:
FIDELITY LARGE CAP STOCK FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
[AGREEMENT] ((AMENDMENT)) made this [18th day of May 1995] ((___ DAY OF
____ 1999)), by and between Fidelity Commonwealth Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund"), on behalf of Fidelity Large Cap Stock
Fund (hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser") as set
forth in its entirety below.
((REQUIRED AUTHORIZATION AND APPROVAL BY SHAREHOLDERS AND TRUSTEES HAVING
BEEN OBTAINED, THE FUND, ON BEHALF OF THE PORTFOLIO, AND THE ADVISER HEREBY
CONSENT, PURSUANT TO PARAGRAPH 6 OF THE EXISTING MANAGEMENT CONTRACT DATED MAY
18, 1995, TO A MODIFICATION OF SAID CONTRACT IN THE MANNER SET FORTH BELOW. THE
AMENDED MANAGEMENT CONTRACT SHALL, WHEN EXECUTED BY DULY AUTHORIZED OFFICERS OF
THE FUND AND THE ADVISER, TAKE EFFECT ON ______________, 1999.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision of the
Fund's Board of Trustees, direct the investments of the Portfolio in accordance
with the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also furnish for
the use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio; and
shall pay the salaries and fees of all officers of the Fund, of all Trustees of
the Fund who are "interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to the control
and direction of the Fund's Board of Trustees.
b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and administrative services
necessary for the operation of the Fund. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with office
space, equipment and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and pricing
agents, accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder reports;
(iv) conducting shareholder relations; (v) maintaining the Fund's existence and
its records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal and
state law; and (vii) investigating the development of and developing and
implementing, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Portfolio as an investment vehicle.
<PAGE>
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time to
time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund policies,
and shall carry out such policies as are adopted by the Trustees. The Adviser
shall, subject to review by the Board of Trustees, furnish such other services
as the Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated with
the Adviser. The Adviser shall use its best efforts to seek to execute portfolio
transactions at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
to the Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent
contractor. The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are or
may be or become similarly interested in the Fund, and that the Adviser may be
or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a monthly
management fee, payable monthly as soon as practicable after the last day of
each month, composed of a Basic Fee and a Performance Adjustment. The
Performance Adjustment is added to or subtracted from the Basic Fee depending on
whether the Portfolio experienced better or worse performance than the Standard
& Poor's Composite Index of 500 Stocks (the "Index"). The Performance Adjustment
is not cumulative. An increased fee will result even though the performance of
the Portfolio over some period of time shorter than the performance period has
been behind that of the Index, and, conversely, a reduction in the fee will be
made for a month even though the performance of the Portfolio over some period
of time shorter than the performance period has been ahead of that of the Index.
The Basic Fee and the Performance Adjustment will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in the
manner set forth in the fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day throughout
the month. The Group Fee Rate shall be determined on a cumulative basis pursuant
to the following schedule:
2
<PAGE>
AVERAGE NET ASSETS ANNUALIZED FEE RATE (FOR EACH LEVEL)
0 -$3 billion .5200%
3 - 6 .4900[%]
6 - 9 .4600[%]
9 - 12 .4300[%]
12 - 15 .4000[%]
15 - 18 .3850[%]
18 - 21 .3700[%]
21 - 24 .3600[%]
24 - 30 .3500[%]
30 - 36 .3450[%]
36 - 42 .3400[%]
42 - 48 .3350[%]
48 - 66 .3250[%]
66 - 84 .3200[%]
84 - 102 .3150[%]
102 - 138 .3100[%]
138 - 174 .3050[%]
174 - 210 .3000[%]
210 - 246 .2950[%]
246 - 282 .2900[%]
282 - 318 .2850[%]
318 - 354 .2800[%]
354 - 390 .2750[%]
[Over 390] [.2700% ]
((390 - 426)) ((.2700))
((426 - 462)) ((.2650))
((462 - 498)) ((.2600))
((498 - 534)) ((.2550))
((OVER 534)) ((.2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set forth in
the Fund's Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month. The
resulting dollar amount comprises the Basic Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is 0.02%
for each percentage point (the performance of the Portfolio and the Index each
being calculated to the nearest [percentage point] ((.01%)) ) that the
Portfolio's investment performance for the performance period was better or
worse than the record of the Index as then constituted. The maximum performance
adjustment rate is 0.20%.
The performance period will commence with the first day of the first full
month following the Portfolio's commencement of operations. During the first
eleven months of the performance period for the Portfolio, there will be no
performance adjustment. Starting with the twelfth month of the performance
period, the performance adjustment will take effect. Following the twelfth month
a new month will be added to the performance period until the performance period
equals 36 months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first business
day of the performance period with (ii) the closing net asset value of one share
3
<PAGE>
of the Portfolio as of the last business day of such period. In computing the
investment performance of the Portfolio and the investment record of the Index,
distributions of realized capital gains, the value of capital gains taxes per
share paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of investment
income on the part of the Portfolio, and all cash distributions of the
securities included in the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment Advisers Act
of 1940, as the same from time to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration of Trust
or other organizational document) determined as of the close of business on each
business day throughout the month and the performance period.
(e) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect for that month. The Basic Fee Rate
will be computed on the basis of and applied to net assets averaged over that
month ending on the last business day on which this Contract is in effect. The
amount of this Performance Adjustment to the Basic Fee will be computed on the
basis of and applied to net assets averaged over the 36-month period ending on
the last business day on which this Contract is in effect provided that if this
Contract has been in effect less than 36 months, the computation will be made on
the basis of the period of time during which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Trustees other than those who are "interested
persons" of the Fund or the Adviser; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner, with the
Adviser's ability to meet all of its obligations with respect to rendering
services to the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Adviser, the Adviser shall not be subject to liability to the
Portfolio or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security or other
investment instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, [1995]
((2000)) and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
4
<PAGE>
(b) This Contract may be modified by mutual consent [, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((SUBJECT TO THE PROVISIONS OF SECTION 15 OF
THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF
THE SECURITIES AND EXCHANGE COMMISSION ("THE COMMISSION") OR ANY RULES OR
REGULATIONS ADOPTED BY, OR INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract must
have been approved by the vote of a majority of those Trustees of the Fund who
are not parties to the Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any penalty, by
action of its Trustees or Board of Directors, as the case may be, or with
respect to the Portfolio by vote of a majority of the outstanding voting
securities of the Portfolio. This Contract shall terminate automatically in the
event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or other
organizational document and agrees that the obligations assumed by the Fund
pursuant to this Contract shall be limited in all cases to the Portfolio and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser understands
that the rights and obligations of any Portfolio under the Declaration of Trust
or other organizational document are separate and distinct from those of any and
all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
((THE TERMS "VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES,"
"ASSIGNMENT," AND "INTERESTED PERSONS," WHEN USED HEREIN, SHALL HAVE THE
RESPECTIVE MEANINGS SPECIFIED IN THE 1940 ACT, AS NOW IN EFFECT OR AS HEREAFTER
AMENDED, AND SUBJECT TO SUCH ORDERS AS MAY BE GRANTED BY THE COMMISSION.))
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
SIGNATURE LINES OMITTED
5
<PAGE>
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY COMMONWEALTH TRUST:
FIDELITY SMALL CAP [STOCK FUND] ((SELECTOR))
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [1st day of November 1994] ((___
DAY OF ______ 1999)), by and between Fidelity Commonwealth Trust, a
Massachusetts business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Fund"), on behalf of Fidelity Small
Cap [Stock Fund] ((SELECTOR)) (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation (hereinafter called
the "Adviser") ((AS SET FORTH IN ITS ENTIRETY BELOW)).
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract, dated
[June 17, 1993] ((NOVEMBER 1, 1994)), to a modification of said Contract in the
manner set forth below. The [Modified] ((AMENDED)) Management Contract shall,
when executed by duly authorized officers of the Fund and the Adviser, take
effect on [the later of November 1, 1994 or the first day of the month following
approval] ((________, 1999)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as investment
adviser of the Portfolio and shall, subject to the supervision of the Fund's
Board of Trustees, direct the investments of the Portfolio in accordance with
the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also furnish for
the use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio; and
shall pay the salaries and fees of all officers of the Fund, of all Trustees of
the Fund who are "interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to the control
and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and administrative services
necessary for the operation of the Fund. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with office
space, equipment and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and pricing
agents, accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder reports;
(iv) conducting shareholder relations; (v) maintaining the Fund's existence and
its records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal and
state law; and (vii) investigating the development of and developing and
implementing, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Portfolio as an investment vehicle.
<PAGE>
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time to
time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund policies,
and shall carry out such policies as are adopted by the Trustees. The Adviser
shall, subject to review by the Board of Trustees, furnish such other services
as the Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated with
the Adviser. The Adviser shall use its best efforts to seek to execute portfolio
transactions at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
to the Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are or
may be or become similarly interested in the Fund, and that the Adviser may be
or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a monthly
management fee, payable monthly as soon as practicable after the last day of
each month, composed of a Basic Fee and a Performance Adjustment. The
Performance Adjustment is added to or subtracted from the Basic Fee depending on
whether the Portfolio experienced better or worse performance than the Russell
2000 Index (the "Index"). The Performance Adjustment is not cumulative. An
increased fee will result even though the performance of the Portfolio over some
period of time shorter than the performance period has been behind that of the
Index, and, conversely, a reduction in the fee will be made for a month even
though the performance of the Portfolio over some period of time shorter than
the performance period has been ahead of that of the Index. The Basic Fee and
the Performance Adjustment will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in the
manner set forth in the fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day throughout
the month. The Group Fee Rate shall be determined on a cumulative basis pursuant
to the following schedule:
2
<PAGE>
AVERAGE NET ASSETS ANNUALIZED FEE RATE (FOR EACH LEVEL)
0 - $3 billion .5200%
3 - 6 .4900[%]
6 - 9 .4600[%]
9 - 12 .4300[%]
12 - 15 .4000[%]
15 - 18 .3850[%]
18 - 21 .3700[%]
21 - 24 .3600[%]
24 - 30 .3500[%]
30 - 36 .3450[%]
36 - 42 .3400[%]
42 - 48 .3350[%]
48 - 66 .3250[%]
66 - 84 .3200[%]
84 - 102 .3150[%]
102 - 138 .3100[%]
138 - 174 .3050[%]
174 - 210 .3000[%]
210 - 246 .2950[%]
246 - 282 .2900[%]
282 - 318 .2850[%]
318 - 354 .2800[%]
354 - 390 .2750[%]
[Over 390] [.2700%]
((390 - 426)) ((.2700))
((426 - 462)) ((.2650))
((462 - 498)) ((.2600))
((498 - 534)) ((.2550))
((OVER 534)) ((.2500))
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.35%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set forth in
the Fund's Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month. The
resulting dollar amount comprises the Basic Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is 0.02%
for each percentage point (the performance of the Portfolio and the Index each
being calculated to the nearest ((.01%)) [percentage point]) that the
Portfolio's investment performance for the performance period was better or
worse than the record of the Index as then constituted. The maximum performance
adjustment rate is 0.20%.
3
<PAGE>
The performance period will commence with the first day of the first full
month following the Portfolio's commencement of operations. During the first
eleven months of the performance period for the Portfolio, there will be no
performance adjustment. Starting with the twelfth month of the performance
period, the performance adjustment will take effect. Following the twelfth month
a new month will be added to the performance period until the performance period
equals 36 months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first business
day of the performance period with (ii) the closing net asset value of one share
of the Portfolio as of the last business day of such period. In computing the
investment performance of the Portfolio and the investment record of the Index,
distributions of realized capital gains, the value of capital gains taxes per
share paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of investment
income on the part of the Portfolio, and all cash distributions of the
securities included in the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment Advisers Act
of 1940, as the same from time to time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration of Trust
or other organizational document) determined as of the close of business on each
business day throughout the month and the performance period.
(e) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect for that month. The Basic Fee Rate
will be computed on the basis of and applied to net assets averaged over that
month ending on the last business day on which this Contract is in effect. The
amount of this Performance Adjustment to the Basic Fee will be computed on the
basis of and applied to net assets averaged over the 36-month period ending on
the last business day on which this Contract is in effect provided that if this
Contract has been in effect less than 36 months, the computation will be made on
the basis of the period of time during which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Trustees other than those who are "interested
persons" of the Fund or the Adviser; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expense of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner, with the
Adviser's ability to meet all of its obligations with respect to rendering
services to the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
4
<PAGE>
on the part of the Adviser, the Adviser shall not be subject to liability to the
Portfolio or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security ((OR
OTHER INVESTMENT INSTRUMENT)).
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, [1995]
((2000)) and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((SUBJECT TO THE PROVISIONS OF SECTION 15 OF
THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY RULES OR
REGULATIONS ADOPTED BY, OR INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract must
have been approved by the vote of a majority of those Trustees of the Fund who
are not parties to the Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any penalty, by
action of its Trustees or Board of Directors, as the case may be, or with
respect to the Portfolio by vote of a majority of the outstanding voting
securities of the Portfolio. This Contract shall terminate automatically in the
event of its assignment.
(7) The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or other
organizational document and agrees that the obligations assumed by the Fund
pursuant to this Contract shall be limited in all cases to the Portfolio and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser understands
that the rights and obligations of any Portfolio under the Declaration of Trust
or other organizational document are separate and distinct from those of any and
all other Portfolios.
(8) This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as hereafter
amended, and subject to such orders as may be granted by the [Securities and
Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
SIGNATURE LINES OMITTED
5
<PAGE>
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY COMMONWEALTH TRUST:
FIDELITY INTERMEDIATE BOND FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [1st day of December 1994] ((___
DAY OF ______1999)), by and between Fidelity Commonwealth Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund"), on behalf of Fidelity Intermediate
Bond Fund (hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the "Adviser")
((AS SET FORTH IN ITS ENTIRETY BELOW)).
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract [modified
September 1, 1992] ((DATED DECEMBER 1, 1994)), to a modification of said
Contract in the manner set forth below. The [Modified] ((AMENDED)) Management
Contract shall, when executed by duly authorized officers of the Fund and the
Adviser, take effect on [the later of November 1, 1994 or the first day of the
month following approval] ((_________, 1999)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision of the
Fund's Board of Trustees, direct the investments of the Portfolio in accordance
with the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also furnish for
the use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio; and
shall pay the salaries and fees of all officers of the Fund, of all Trustees of
the Fund who are "interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to the control
and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and administrative services
necessary for the operation of the Fund. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with office
space, equipment and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and pricing
agents, accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder reports;
(iv) conducting shareholder relations; (v) maintaining the Fund's existence and
its records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal and
state law; and (vii) investigating the development of and developing and
<PAGE>
implementing, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time to
time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund policies,
and shall carry out such policies as are adopted by the Trustees. The Adviser
shall, subject to review by the Board of Trustees, furnish such other services
as the Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated with
the Adviser. The Adviser shall use its best efforts to seek to execute portfolio
transactions at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
to the Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are or
may be or become similarly interested in the Fund, and that the Adviser may be
or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a monthly
management fee, payable monthly as soon as practicable after the last day of
each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having Advisory
and Service or Management Contracts with the Adviser (computed in the manner set
forth in the fund's Declaration of Trust or other organizational document)
determined as of the close of business on each business day throughout the
month. The Group Fee Rate shall be determined on a cumulative basis pursuant to
the following schedule:
AVERAGE NET ASSETS ANNUALIZED FEE RATE (FOR EACH LEVEL)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
2
<PAGE>
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
[Over 372] [.1200]
((372 - 408)) ((.1200))
((408 - 444)) ((.1175))
((444 - 480)) ((.1150))
((480 - 516)) ((.1125))
((OVER 516)) ((.1100))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the Annual
Management Fee Rate. One-twelfth of the Annual Management Fee Rate shall be
applied to the average of the net assets of the Portfolio (computed in the
manner set forth in the Fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day throughout
the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Trustees other than those who are "interested
persons" of the Fund or the Adviser; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.
3
<PAGE>
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner, with the
Adviser's ability to meet all of its obligations with respect to rendering
services to the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Adviser, the Adviser shall not be subject to liability to the
Portfolio or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security or other
investment instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, [1995]
((2000)) and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((SUBJECT TO THE PROVISIONS OF SECTION 15 OF
THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY RULES OR
REGULATIONS ADOPTED BY, OR INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract must
have been approved by the vote of a majority of those Trustees of the Fund who
are not parties to the Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any penalty, by
action of its Trustees or Board of Directors, as the case may be, or with
respect to the Portfolio by vote of a majority of the outstanding voting
securities of the Portfolio. This Contract shall terminate automatically in the
event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or other
organizational document and agrees that the obligations assumed by the Fund
pursuant to this Contract shall be limited in all cases to the Portfolio and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser understands
that the rights and obligations of any Portfolio under the Declaration of Trust
or other organizational document are separate and distinct from those of any and
all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as hereafter
amended, and subject to such orders as may be granted by the [Securities and
Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all of the date written above.
SIGNATURE LINES OMITTED
4
<PAGE>
EXHIBIT 5
((UNDERLINED)) language will be added; [bracketed] language will be deleted.
The proper name of each fund, Fidelity Mid-Cap Stock Fund, Fidelity Large Cap
Stock Fund, Fidelity Small Cap Selector, or Fidelity Intermediate Bond Fund, as
the case may be, will be inserted in that fund's contract where indicated by
"{NAME OF PORTFOLIO}."
FORM OF
SUB-ADVISORY AGREEMENT
Between
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
and
FIDELITY COMMONWEALTH TRUST ON BEHALF OF
{NAME OF PORTFOLIO}
((AMENDMENT)) [AGREEMENT] made this {FOR FIDELITY MID-CAP STOCK FUND:
[__day of June, 1999]} {FOR FIDELITY LARGE CAP STOCK FUND: [18th day of May
1995]} {FOR FIDELITY SMALL CAP SELECTOR: [17th day of June, 1993]} {FOR FIDELITY
INTERMEDIATE BOND FUND: [1st day of December, 1994]} ((__ DAY OF ______, 1999)),
by {FOR FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY
INTERMEDIATE BOND FUND: and between} {FOR FIDELITY SMALL CAP SELECTOR: ((AND
BETWEEN))} Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research (U.K.) Inc.
(hereinafter called the "Sub-Advisor"); and Fidelity Commonwealth Trust, a
Massachusetts business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Trust") on behalf of {NAME OF
PORTFOLIO}(hereinafter called the "Portfolio").
((REQUIRED AUTHORIZATION AND APPROVAL BY SHAREHOLDERS AND TRUSTEES HAVING
BEEN OBTAINED, THE TRUST, ON BEHALF OF THE PORTFOLIO, THE ADVISOR, AND THE
SUB-ADVISOR HEREBY CONSENT, PURSUANT TO PARAGRAPH 9(B) OF THE EXISTING
SUB-ADVISORY AGREEMENT DATED {FOR FIDELITY MID-CAP STOCK FUND: JUNE __, 1999}
{FOR FIDELITY LARGE CAP STOCK FUND: MAY 18, 1995} {FOR FIDELITY SMALL CAP
SELECTOR: JUNE 17, 1993} {FOR FIDELITY INTERMEDIATE BOND FUND: DECEMBER 1,
1994}, TO A MODIFICATION OF SAID SUB-ADVISORY AGREEMENT IN THE MANNER SET FORTH
BELOW. THE AMENDED SUB-ADVISORY AGREEMENT SHALL, WHEN EXECUTED BY DULY
AUTHORIZED OFFICERS OF THE TRUST, THE ADVISOR, AND THE SUB-ADVISOR, TAKE EFFECT
ON ________, 1999.))
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been formed in
part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, {FOR
FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY
INTERMEDIATE BOND FUND: and securities of } {FOR FIDELITY SMALL CAP SELECTOR:
[including] ((AND))securities ((OF)) [issued in and]} issuers located in such
countries, and providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. DUTIES: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a portion
of the investments of the Portfolio. The services and the portion of the
investments of the Portfolio to be advised or managed by the Sub-Advisor shall
be as agreed upon from time to time by the Advisor and the Sub-Advisor. The
Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor
<PAGE>
performing services for the Portfolio relating to research, statistical and
investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information may
include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 ("1940 Act") and rules thereunder, as
amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of
the services contemplated by this Agreement directly or through such of its
subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. INFORMATION TO BE PROVIDED TO THE TRUST AND THE ADVISOR: The Sub-Advisor
shall furnish such reports, evaluations, information or analyses to the Trust
and the Advisor as the Trust's Board of Trustees or the Advisor may reasonably
request from time to time, or as the Sub-Advisor may deem to be desirable.
3. BROKERAGE: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor {FOR FIDELITY SMALL CAP
SELECTOR: [, at its own expense,]} shall place all orders for the purchase and
sale of portfolio securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers affiliated
with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to
seek to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of l934) to the Portfolio {FOR FIDELITY MID-CAP
STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY INTERMEDIATE BOND FUND:
and/or to the} {FOR FIDELITY SMALL CAP SELECTOR: and((/OR)) to [any] ((the))}
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
the Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
2
<PAGE>
either that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises investment
discretion. The Trustees of the Trust shall periodically review the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Portfolio.
4. COMPENSATION: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph (b)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Investment Management Fee. The Investment Management Fee shall be
equal to: (i) 50% of the monthly management fee rate (including performance
adjustments, if any) that the Portfolio is obligated to pay the Advisor
under its Management Contract with the Advisor, multiplied by: (ii) the
fraction equal to the net assets of the Portfolio as to which the
Sub-Advisor shall have provided investment management services divided by
the net assets of the Portfolio for that month. If in any fiscal year the
aggregate expenses of the Portfolio exceed any applicable expense
limitation imposed by any state or federal securities laws or regulations,
and the Advisor waives all or a portion of its management fee or reimburses
the Portfolio for expenses to the extent required to satisfy such
limitation, the Investment Management Fee paid to the Sub-Advisor will be
reduced by 50% of the amount of such waivers or reimbursements multiplied
by the fraction determined in (ii). If the Sub-Advisor reduces its fees to
reflect such waivers or reimbursements and the Advisor subsequently
recovers all or any portion of such waivers or reimbursements, then the
Sub-Advisor shall be entitled to receive from the Advisor a proportionate
share of the amount recovered. To the extent that waivers and
reimbursements by the Advisor required by such limitations are in excess of
the Advisor's management fee, the Investment Management Fee paid to the
Sub-Advisor will be reduced to zero for that month, but in no event shall
the Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided
both investment advisory services under subparagraph (a) and investment
management services under subparagraph (b) of paragraph 1 for the same
portion of the investments of the Portfolio for the same period, the fees
paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. EXPENSES: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the Portfolio,
which expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Trust's Trustees other than those who are "interested
persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Trust and
the Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefore; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
3
<PAGE>
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Trust's Trustees and officers with
respect thereto.
6. INTERESTED PERSONS: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor or
the Sub-Advisor as directors, officers or otherwise and that directors, officers
and stockholders of the Advisor or the Sub-Advisor are or may be or become
similarly interested in the Trust, and that the Advisor or the Sub-Advisor may
be or become interested in the Trust as a shareholder or otherwise.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS: The services of the Sub-Advisor
to the Advisor are not to be deemed to be exclusive, the Sub-Advisor being free
to render services to others and engage in other activities, provided, however,
that such other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the Sub-Advisor's ability to
meet all of its obligations hereunder. The Sub-Advisor shall for all purposes be
an independent contractor and not an agent or employee of the Advisor or the
Trust.
8. STANDARD OF CARE: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to
the Advisor, the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
9. DURATION AND TERMINATION OF AGREEMENT; AMENDMENTS:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until {FOR
FIDELITY MID-CAP STOCK FUND: July 31, [____] ((2000))} {FOR FIDELITY
LARGE CAP STOCK FUND: July 31, [1995] ((2000))} {FOR FIDELITY SMALL
CAP SELECTOR: July 31, [1993] ((2000))} {FOR FIDELITY INTERMEDIATE
BOND FUND: June 30, [1995] ((2000))} and indefinitely thereafter,
but only so long as the continuance after such period shall be
specifically approved at least annually by vote of the Trust's Board
of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio [, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((SUBJECT TO THE PROVISIONS OF
SECTION 15 OF THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY
APPLICABLE ORDER OR ORDERS OF THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") OR ANY RULES OR REGULATIONS ADOPTED BY, OR
INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio by
vote of a majority of its outstanding voting securities. This Agreement
shall terminate automatically in the event of its assignment.
4
<PAGE>
10. LIMITATION OF LIABILITY: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust {FOR FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK
FUND, AND FIDELITY INTERMEDIATE BOND FUND: or other organizational document}
{FOR FIDELITY SMALL CAP SELECTOR: ((OR OTHER ORGANIZATIONAL DOCUMENT))} of the
Trust and agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the Portfolio
and its assets, and the Sub-Advisor shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio. Nor shall
the Sub-Advisor seek satisfaction of any such obligation from the Trustees or
any individual Trustee.
11. GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts {FOR FIDELITY
MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY INTERMEDIATE
BOND FUND: , without giving effect to the choice of laws provisions thereof}
{FOR FIDELITY SMALL CAP SELECTOR: ((, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAWS PROVISIONS THEREOF))}.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act as now
in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.
SIGNATURE LINES OMITTED
5
<PAGE>
EXHIBIT 6
((UNDERLINED)) language will be added; [bracketed] language will be deleted.
The proper name of each fund, Fidelity Mid-Cap Stock Fund, Fidelity Large Cap
Stock Fund, Fidelity Small Cap Selector, or Fidelity Intermediate Bond Fund, as
the case may be, will be inserted in that fund's contract where indicated by
"{NAME OF PORTFOLIO}."
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY COMMONWEALTH TRUST ON BEHALF OF
{NAME OF PORTFOLIO}
((AMENDMENT)) [AGREEMENT] made this {FOR FIDELITY MID-CAP STOCK FUND:
[___day of June, 1999]} {FOR FIDELITY LARGE CAP STOCK FUND: [18th day of May
1995]} {FOR FIDELITY SMALL CAP SELECTOR: [17th day of June, 1993]} {FOR FIDELITY
INTERMEDIATE BOND FUND: [1st day of December, 1994]} ((__ DAY OF _____, 1999)),
by {FOR FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY
INTERMEDIATE BOND FUND: and between} {FOR FIDELITY SMALL CAP SELECTOR: ((AND
BETWEEN))} Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research (Far East)
Inc. (hereinafter called the "Sub-Advisor"); and Fidelity Commonwealth Trust, a
Massachusetts business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Trust") on behalf of {NAME OF
PORTFOLIO} (hereinafter called the "Portfolio").
((REQUIRED AUTHORIZATION AND APPROVAL BY SHAREHOLDERS AND TRUSTEES HAVING
BEEN OBTAINED, THE TRUST, ON BEHALF OF THE PORTFOLIO, THE ADVISOR, AND THE
SUB-ADVISOR HEREBY CONSENT, PURSUANT TO PARAGRAPH 9(B) OF THE EXISTING
SUB-ADVISORY AGREEMENT DATED {FOR FIDELITY MID-CAP STOCK FUND: JUNE __, 1999}
{FOR FIDELITY LARGE CAP STOCK FUND: MAY 18, 1995} {FOR FIDELITY SMALL CAP
SELECTOR: JUNE 17, 1993} {FOR FIDELITY INTERMEDIATE BOND FUND: DECEMBER 1,
1994}, TO A MODIFICATION OF SAID SUB-ADVISORY AGREEMENT IN THE MANNER SET FORTH
BELOW. THE AMENDED SUB-ADVISORY AGREEMENT SHALL, WHEN EXECUTED BY DULY
AUTHORIZED OFFICERS OF THE TRUST, THE ADVISOR, AND THE SUB-ADVISOR, TAKE EFFECT
ON ________, 1999.))
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been formed in
part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, {FOR
FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY
INTERMEDIATE BOND FUND: and securities of} {FOR FIDELITY SMALL CAP SELECTOR:
[including] ((AND)) securities ((OF)) [issued in and]} issuers located in such
countries, and providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. DUTIES: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a portion
of the investments of the Portfolio. The services and the portion of the
investments of the Portfolio to be advised or managed by the Sub-Advisor shall
be as agreed upon from time to time by the Advisor and the Sub-Advisor. The
Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor
<PAGE>
performing services for the Portfolio relating to research, statistical and
investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with
the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from
time to time, the Investment Company Act of 1940 (the "1940 Act") and
rules thereunder, as amended from time to time, and such other limitations
as the Trust or Advisor may impose with respect to the Portfolio by notice
to the Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all of
the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. INFORMATION TO BE PROVIDED TO THE TRUST AND THE ADVISOR: The
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may
reasonably request from time to time, or as the Sub-Advisor may deem to be
desirable.
3. BROKERAGE: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor {FOR FIDELITY SMALL CAP
SELECTOR: [, at its own expense,]} shall place all orders for the purchase and
sale of portfolio securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers affiliated
with the Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to
seek to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of l934) to the Portfolio {FOR FIDELITY MID-CAP
STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY INTERMEDIATE BOND FUND:
and/or to the} {FOR FIDELITY SMALL CAP SELECTOR: and((/OR)) to [any] ((THE))}
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
the Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
2
<PAGE>
either that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises investment
discretion. The Trustees of the Trust shall periodically review the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Portfolio.
4. COMPENSATION: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to 105% of the Sub-Advisor's costs incurred in connection with
rendering the services referred to in subparagraph (a) of paragraph 1 of
this Agreement. The Sub-Advisory Fee shall not be reduced to reflect
expense reimbursements or fee waivers by the Advisor, if any, in effect
from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by: (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
management services divided by the net assets of the Portfolio for that
month. If in any fiscal year the aggregate expenses of the Portfolio
exceed any applicable expense limitation imposed by any state or federal
securities laws or regulations, and the Advisor waives all or a portion of
its management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all
or a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have provided
both investment advisory services under subparagraph (a) and investment
management services under subparagraph (b) of paragraph 1 for the same
portion of the investments of the Portfolio for the same period, the fees
paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. EXPENSES: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the Portfolio,
which expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Trust's Trustees other than those who are "interested
persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Trust and
the Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefore; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
3
<PAGE>
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Trust's Trustees and officers with
respect thereto.
6. INTERESTED PERSONS: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor or
the Sub-Advisor as directors, officers or otherwise and that directors, officers
and stockholders of the Advisor or the Sub-Advisor are or may be or become
similarly interested in the Trust, and that the Advisor or the Sub-Advisor may
be or become interested in the Trust as a shareholder or otherwise.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor
being free to render services to others and engage in other activities,
provided, however, that such other services and activities do not, during the
term of this Agreement, interfere, in a material manner, with the Sub-Advisor's
ability to meet all of its obligations hereunder. The Sub-Advisor shall for all
purposes be an independent contractor and not an agent or employee of the
Advisor or the Trust.
8. STANDARD OF CARE: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to
the Advisor, the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
9. DURATION AND TERMINATION OF AGREEMENT; AMENDMENTS:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until {FOR
FIDELITY MID-CAP STOCK FUND: July 31, [____] ((2000))} {FOR
FIDELITY LARGE CAP STOCK FUND: July 31, [1995] ((2000))} {FOR
FIDELITY SMALL CAP SELECTOR: July 31, [1993] ((2000))} {FOR
FIDELITY INTERMEDIATE BOND FUND: June 30, [1995] ((2000))} and
indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by
vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio [, such consent on the part of
the Portfolio to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio] ((SUBJECT TO THE
PROVISIONS OF SECTION 15 OF THE 1940 ACT, AS MODIFIED BY OR
INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY RULES OR REGULATIONS
ADOPTED BY, OR INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of
this Agreement must have been approved by the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement
or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action
of its Board of Trustees or Directors, or with respect to the
Portfolio by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the
event of its assignment.
4
<PAGE>
10. LIMITATION OF LIABILITY: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust {FOR FIDELITY MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK
FUND, AND FIDELITY INTERMEDIATE BOND FUND: or other organizational document}
{FOR FIDELITY SMALL CAP SELECTOR: ((OR OTHER ORGANIZATIONAL DOCUMENT))} of the
Trust and agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the Portfolio
and its assets, and the Sub-Advisor shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio. Nor shall
the Sub-Advisor seek satisfaction of any such obligation from the Trustees or
any individual Trustee.
11. GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts {FOR FIDELITY
MID-CAP STOCK FUND, FIDELITY LARGE CAP STOCK FUND, AND FIDELITY INTERMEDIATE
BOND FUND: , without giving effect to the choice of laws provisions thereof}
{FOR FIDELITY SMALL CAP SELECTOR: ((, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAWS PROVISIONS THEREOF))}.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act as now
in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.
SIGNATURE LINES OMITTED
5
<PAGE>
EXHIBIT 7
FORM OF
DISTRIBUTION AND SERVICE PLAN
FIDELITY COMMONWEALTH TRUST: FIDELITY SMALL CAP SELECTOR
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by Rule 12b-1
under the Investment Company Act of 1940 (the "Act") of Fidelity Small Cap
Selector (the "Portfolio"), a series of shares of Fidelity Commonwealth Trust
(the "Fund").
2. The Fund has entered into a General Distribution Agreement with respect
to the Portfolio with Fidelity Distributors Corporation (the "Distributor"), a
wholly-owned subsidiary of Fidelity Management & Research Company (the
"Adviser"), under which the Distributor uses all reasonable efforts, consistent
with its other business, to secure purchasers for the Portfolio's shares of
beneficial interest ("shares"). Under the agreement, the Distributor pays the
expenses of printing and distributing any prospectuses, reports and other
literature used by the Distributor, advertising, and other promotional
activities in connection with the offering of shares of the Portfolio for sale
to the public. It is recognized that the Adviser may use its management fee
revenues as well as past profits or its resources from any other source, to make
payment to the Distributor with respect to any expenses incurred in connection
with the distribution of Portfolio shares, including the activities referred to
above.
3. The Adviser directly, or through the Distributor, may, subject to the
approval of the Trustees, make payments to securities dealers and other third
parties who engage in the sale of shares or who render shareholder support
services, including but not limited to providing office space, equipment and
telephone facilities, answering routine inquiries regarding the Portfolio,
processing shareholder transactions and providing such other shareholder
services as the Fund may reasonably request.
4. The Portfolio will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized that the
Portfolio presently pays, and will continue to pay, a management fee to the
Adviser. To the extent that any payments made by the Portfolio to the Adviser,
including payment of management fees, should be deemed to be indirect financing
of any activity primarily intended to result in the sale of shares of the
Portfolio within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the approval by a vote of at
least a "majority of the outstanding voting securities of the Portfolio" (as
defined in the Act), the plan having been approved by a vote of a majority of
the Trustees of the Fund, including a majority of Trustees who are not
"interested persons" of the Fund (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or in any
agreements related to this Plan (the "Independent Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect from the date specified above until April 30, 2000 and from year to year
thereafter, provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Fund, including a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on this Plan. This Plan may be amended at any time by the
Board of Trustees, provided that (a) any amendment to authorize direct payments
by the Portfolio to finance any activity primarily intended to result in the
sale of shares of the Portfolio, or to increase materially the amount spent by
the Portfolio for distribution, shall be effective only upon approval by a vote
of a majority of the outstanding voting securities of the Portfolio, and (b) any
material amendments of this Plan shall be effective only upon approval in the
manner provided in the first sentence in this paragraph.
<PAGE>
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of a
majority of the outstanding voting securities of the Portfolio.
8. During the existence of this Plan, the Fund shall require the Adviser
and/or Distributor to provide the Fund, for review by the Fund's Board of
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended in connection with financing any activity primarily
intended to result in the sale of shares of the Portfolio (making estimates of
such costs where necessary or desirable) and the purposes for which such
expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific level
of expenses for activities primarily intended to result in the sale of shares of
the Portfolio.
10. Consistent with the limitation of shareholder liability as set forth
in the Fund's Declaration of Trust or other organizational document, any
obligations assumed by the Portfolio pursuant to this Plan and any agreements
related to this Plan shall be limited in all cases to the Portfolio and its
assets, and shall not constitute obligations of any other series of shares of
the Fund.
11. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
2
<PAGE>
EXHIBIT 8
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of the
__ day of ____ 1999, by and between Fidelity Commonwealth Trust (Commonwealth
Trust), on behalf of Fidelity Small Cap Selector (the Fund), a separate series
of Commonwealth Trust, and Fidelity Capital Trust (Capital Trust), each a
business trust duly formed under the laws of the Commonwealth of Massachusetts.
This Agreement is intended to be, and is adopted as, a plan of reorganization
within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended (the Code). The reorganization will comprise (a) the transfer of all
of the assets of the Fund to a series of Capital Trust (the Series) solely in
exchange for shares of beneficial interest of the Series (the Series Shares) and
the assumption by the Series of the Fund's liabilities; and (b) the constructive
distribution of such Series Shares by the Fund to its shareholders (Fund
Shareholder(s)) in complete liquidation and termination of the Fund, in exchange
for all of the Fund's outstanding shares (Fund Shares). The Fund shall receive
shares of the Series equal to the number of Fund Shares on the Closing Date (as
defined below). Immediately thereafter, the Fund shall then distribute to each
Fund Shareholder one Series Share for each Fund Share held by the shareholder on
the Closing Date. The foregoing transactions are referred to herein as the
"Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE FUND
Commonwealth Trust, on behalf of the Fund, represents and warrants as
follows:
(a) The Fund is a series of Commonwealth Trust, a business trust duly formed,
validly existing, and in good standing under the laws of the Commonwealth of
Massachusetts, and has the power to own all of its properties and assets and to
carry out its obligations under this Agreement. It has all necessary federal,
state, and local authorizations to carry out its business as now being conducted
and to carry out this Agreement;
(b) The Fund is a series of Commonwealth Trust, which is duly registered as
an open-end management investment company under the Investment Company Act of
1940 (the 1940 Act), as amended, and such registration is in full force and
effect;
(c) The Fund is not in, and the execution, delivery and performance of this
Agreement will not result in a violation of any provision of the Restated
Declaration of Trust or the Bylaws of Commonwealth Trust, or, to the Fund's
knowledge, of any agreement, indenture, instrument, contract, lease or other
undertaking to which the Fund is a party or by which the Fund is bound or result
in the acceleration of any obligation or the imposition of any penalty under any
agreement, judgment or decree to which the Fund is a party or is bound;
(d) The Fund has no material contracts or other commitments (other than this
Agreement) that will not be terminated without liability to the Fund on or prior
to the Closing Date;
(e) To the Fund's knowledge, no material legal, administrative, or other
proceeding or investigation of, or before, any court or governmental body
presently is pending or threatened against the Fund or any of its properties or
assets that assert liability on the part of the Fund, except as previously
disclosed in writing to Capital Trust. The Fund knows of no facts that might
form the basis for the institution of such proceedings;
(f) The Fund has filed or will file all federal and state tax returns that,
to the knowledge of the Fund's officers, are required to be filed by the Fund
and has paid or will pay all federal and state taxes shown to be due on said
returns or provision shall have been made for the payment thereof, and, to the
best of the Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
<PAGE>
(g) All of the issued and outstanding shares of the Fund are, and at the
Closing Date will be, duly and validly issued and outstanding and fully paid and
nonassessable as a matter of Massachusetts law (except as disclosed in the
Fund's Statement of Additional Information) and have been offered for sale in
conformity with all applicable federal securities laws. All of the issued and
outstanding shares of the Fund will, at the Closing Date, be held by the persons
and in the amounts as certified in accordance with the provisions of this
Agreement;
(h) The information to be furnished by the Fund for use in applications for
orders, registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto;
(i) At both the Valuation Time (as defined in Section 4) and the Closing Date
(as defined in Section 6), the Fund will have the full right, power, and
authority to sell, assign, transfer, and deliver its portfolio securities and
any other assets of the Fund to be transferred to the Series pursuant to this
Agreement. As of the Closing Date, subject only to the delivery of the Fund's
portfolio securities and any such other assets as contemplated by this
Agreement, the Series will acquire the Fund's portfolio securities and any such
other assets subject to no encumbrances, liens, or security interests (except
for those that may arise in the ordinary course and are disclosed to the Series)
and without any restrictions upon the transfer thereof;
(j) The execution, delivery, and performance of this Agreement will have been
duly authorized prior to the Closing Date by all necessary corporate action on
the part of the Fund, and this Agreement constitutes a valid and binding
obligation of the Fund enforceable in accordance with its terms, subject to
shareholder approval;
(k) To the best knowledge of the Fund's management, there is no plan or
intention by any of the Fund's shareholders to sell, exchange or otherwise
dispose of any of the Series Shares to be received in the Reorganization;
(l) The Fund shares are widely held and may be purchased and redeemed upon
request;
(m) Immediately following consummation of the Reorganization, the Fund
Shareholders will own all of the Series Shares and will own such shares solely
by reason of their ownership of the Fund Shares immediately prior to the
Reorganization;
(n) Immediately following the consummation of the Reorganization, Capital
Trust will hold, on behalf of the Series, the same assets and be subject to the
same liabilities that the Fund held or was subject to immediately prior thereto,
except for assets used to pay expenses incurred in connection with the
Reorganization. Assets used to pay expenses and all distributions (except for
distributions and redemptions arising in the ordinary course of the Fund's
business as an open-end investment company) made by the Fund immediately
preceding the Reorganization will, in the aggregate, constitute [Treasurer's
please confirm: less than 1%] of the net assets of the Fund;
(o) At the time of the Reorganization, the Fund will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire shares of beneficial interest in the Fund;
(p) The Fund's liabilities to be assumed by the Series in the Reorganization
were incurred by the Fund in the ordinary course of its business and are
associated with the assets to be transferred;
(q) Fund Shareholders each will pay their own expenses, if any, incurred in
connection with the Reorganization;
(r) The fair market value of the Fund's assets to be transferred by the Fund
to the Series will equal or exceed the Fund's liabilities to be assumed by the
Series plus the liabilities to which the transferred assets are subject;
(s) The Fund is a regulated investment company as defined in Section 851 of
the Code;
(t) The Fund is not under the jurisdiction of a court in a proceeding under
Title 11 of the United States Code or similar case within the meaning of Section
368(a)(3)(A) of the Code;
(u) To the Fund's knowledge, no consent, approval, authorization, or order of
any court or governmental authority is required for the consummation by the Fund
of the transactions contemplated by this Agreement, except such as shall have
2
<PAGE>
been obtained under the Securities Act of 1933 (the 1933 Act), the Securities
Exchange Act of 1934 (the 1934 Act), and the 1940 Act;
(v) The Fund has no known liabilities of a material nature, contingent or
otherwise, other than those shown as belonging to it on its statement of assets
and liabilities as of April 30, 1999 and those incurred in the ordinary course
of the Fund's business as an investment company since same date as determined
above; and
(w) The Fund will be liquidated immediately after the Reorganization.
2. REPRESENTATIONS AND WARRANTIES OF CAPITAL TRUST
Capital Trust represents and warrants as follows:
(a) Capital Trust is a business trust duly formed, validly existing, and in
good standing under the laws of the Commonwealth of Massachusetts. It has all
necessary federal, state, and local authorizations to carry out its business as
now being conducted and to carry out this Agreement;
(b) Capital Trust is duly registered as an open-end management investment
company under the 1940 Act, and the Series is a duly established and designated
series of Capital Trust;
(c) Capital Trust is not in, and the execution, delivery and performance of
this Agreement will not result in a violation of any provision of the Amended
and Restated Declaration of Trust or Capital Trust's Bylaws, or, to Capital
Trust's knowledge, of any agreement, indenture, instrument, contract, lease or
other undertaking to which Capital Trust is a party or by which Capital Trust is
bound or result in the acceleration of any obligation or the imposition of any
penalty under any agreement, judgment or decree to which Capital Trust is a
party or is bound;
(d) To Capital Trust's knowledge, no material legal, administrative, or other
proceeding or investigation of, or before, any court or governmental body
presently is pending or threatened against Capital Trust or any of its
properties or assets that assert liability on the part of Capital Trust, except
as previously disclosed in writing to Capital Trust. Capital Trust knows of no
facts that might form the basis for the institution of such proceedings;
(e) Capital Trust intends for the Series to be a regulated investment company
under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and outstanding
Series Shares or any other securities issued by the Series (except for the one
share that may be issued to FMR); Series Shares issued in connection with the
transactions contemplated herein will be duly and validly issued and
outstanding, fully paid and non-assessable under Massachusetts law on the
Closing Date;
(g) The execution, delivery, and performance of this Agreement will have been
duly authorized prior to the Closing Date by all necessary corporate action on
the part of Capital Trust, and, upon its proper execution, this Agreement will
constitute a valid and binding obligation of Capital Trust enforceable against
the Series in accordance with its terms;
(h) As of the Closing Date, the Series Shares will have been duly authorized
and, when so issued and delivered, will be duly and validly issued shares of the
Series, fully paid and non-assessable under Massachusetts law, except that under
Massachusetts law, shareholders of a Massachusetts business trust, under certain
circumstances, may be held personally liable for obligations of Capital Trust;
(i) The fair market value of the Series Shares to be received by the Fund
Shareholders will be equal to the fair market value of their Fund Shares
surrendered in exchange therefor;
(j) Capital Trust has no plan or intention on behalf of the Series to issue
additional Series Shares following the Reorganization other than in the ordinary
course of the business of the Series as a series of a registered open-end
investment company;
(k) Capital Trust has no plan or intention to redeem or otherwise reacquire
any of the Series Shares issued to the Fund Shareholders pursuant to the
Reorganization other than through redemptions arising in the ordinary course of
the business of the Series as a series of a registered open-end investment
company;
(l) Following the Reorganization, Capital Trust, on behalf of the Series,
will continue the Fund's historic business;
3
<PAGE>
(m) No consideration other than Series Shares will be issued in exchange for
the Fund shares in the Reorganization.
(n) At the time of the Reorganization, there will be no intercompany
indebtedness existing between the Series and the Fund that was issued, acquired,
or that will be settled at a discount.
(o) At the time of the Reorganization, the Series will be a regulated
investment company as defined in section 851 of the Code.
(p) Capital Trust has no plan or intention to sell or otherwise dispose of
any of the Fund's assets to be acquired by the Series in the Reorganization,
except for dispositions made in the ordinary course of its business or
dispositions necessary to maintain the status of the Series as a regulated
investment company under Section 851 of the Code;
(q) The information to be furnished by Capital Trust with respect to the
Series for use in applications for orders, registration statements, proxy
materials and other documents that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and shall comply
in all material respects with federal securities and other laws and regulations
applicable thereto;
(r) Capital Trust, on behalf of the Series, shall use all reasonable efforts
to obtain the approvals and authorizations required by the 1933 Act and the 1940
Act as it may deem appropriate in order to operate after the Closing Date; and
(s) To Capital Trust's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the consummation by
the Series of the transactions contemplated by this Agreement, except such as
shall have been obtained under the 1933 Act, the 1934 Act, and the 1940 Act.
(t) Capital Trust, on behalf of the Series, will use the Employer
Identification Number that was used by the Fund.
3. REORGANIZATION
(a) Subject to the requisite approval of the Fund Shareholders, if
applicable, and to the other terms and conditions contained herein, the Fund
agrees to assign, convey, transfer, and deliver to the Series established by
Capital Trust solely for the purpose of acquiring all of the assets of the Fund
(which Series has not issued any Series Shares (except for one share that may be
issued to FMR) or commenced operations) as of the Closing Date all of the assets
of the Fund of any kind and nature existing on the Closing Date. The Series
agrees in exchange therefor (1) to assume all of the Fund's liabilities existing
on or after the Closing Date, whether or not determinable on the Closing Date,
and (2) to issue and deliver to the Fund the number of full and fractional
Series Shares equal to the value and number of full and fractional shares of the
Fund outstanding at the time of the closing, as described in paragraph 6, as of
the Closing Date provided for in Section 6(a).
(b) The assets of the Fund to be acquired by the Series and allocated thereto
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivables), claims, choses in
action, and other property owned by the Fund, and any deferred or prepaid
expenses shown as an asset on the books of the Fund on the Closing Date. The
Fund will pay or cause to be paid to the Series any dividend or interest
payments received by it on or after the Closing Date with respect to the assets
transferred to the Series hereunder, and the Series will retain any dividend or
interest payments received by it after the Valuation Time (as defined in Section
4) with respect to the assets transferred hereunder without regard to the
payment date thereof. The liabilities of the Fund to be assumed by the Series
and allocated thereto, shall include (except as otherwise provided herein) all
of the Fund's liabilities, debts, obligations, and duties, of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
determinable on the Closing Date, and whether or not specifically referred to in
this Agreement.
(c) Immediately upon delivery to the Fund of the Series Shares, the
individual Trustees of Commonwealth Trust or any officer duly authorized by
them, on the Commonwealth Trust's behalf as the then sole shareholder of the
Series, shall (1) approve (i) a Management Contract between Capital Trust, on
behalf of the Series, and FMR, substantively identical to the contract currently
in effect with respect to the Fund immediately prior to the Closing Date (as
defined below), except as to the parties to such contract, (ii) Sub-Advisory
4
<PAGE>
Agreements between FMR and Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc., substantively identical to the
agreements currently in effect with respect to the Fund immediately prior to the
Closing Date, except as to the parties to such agreements, (iii) the independent
accountants who currently serve in that capacity for the Fund, and (iv) the
adoption of revised fundamental policies described in Proposal 10 of the Proxy
Statement, and (2) approve a Distribution and Service Plan under Rule 12b-1
under the 1940 Act between Capital Trust, on behalf of the Series, and Fidelity
Distributors Corporation (FDC), either (i) substantively identical to the plan
currently in effect with respect to the Fund immediately prior to the Closing
Date, except as to the parties to such plan, if the Fund's shareholders approve
the Distribution and Service Plan described in Proposal 8 of the Proxy Statement
(Proposed Plan), or (ii) substantively identical to the Proposed Plan, if the
Fund's shareholders do not approve the Proposed Plan and, therefore, no plan is
currently in effect with respect to the Fund immediately prior to the Closing
Date.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), the Fund will constructively
distribute to the Fund Shareholders the Series Shares pro rata in proportion to
their respective shares of beneficial interest in the Fund, such Fund
Shareholders being shareholders of record as determined as of the Valuation Time
on the Closing Date in accordance with Commonwealth Trusts's Restated
Declaration of Trust, in liquidation of such Fund. Such distribution will be
accomplished by the Fund's transfer agent opening accounts on the share records
of the Series in the names of such Fund Shareholders and transferring the Series
Shares thereto. Each Fund Shareholder's account shall be credited with the
respective pro rata number of full and fractional (rounded to the third decimal
place) Series Shares due that shareholder. All outstanding Fund Shares,
including any represented by certificates, shall simultaneously be canceled on
the Fund's share transfer records. The Series shall not issue certificates
representing Series Shares in connection with such distribution.
(e) Immediately after the distribution of the Series Shares as set forth in
Section 3(d), the Fund shall be liquidated and terminated, and any such further
actions shall be taken in connection therewith as required by applicable law.
(f) Any transfer taxes payable upon issuance of Series Shares in a name other
than that of the registered holder on the Fund's books of the Fund Shares
constructively exchanged for the Series Shares shall be paid by the person to
whom such Series Shares are to be issued, as a condition of such transfer.
(g) Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the date on which it is
liquidated.
4. VALUATION
(a) The valuation time shall be the close of business of the New York Stock
Exchange on the Closing Date (the Valuation Time).
(b) The value of the Fund's net assets to be acquired by the Series hereunder
shall be the net asset value per share computed as of the Valuation Time, using
the valuation procedures set forth in the Fund's then current Prospectus and
Statement of Additional Information.
(c) The number, value, and denomination of full and fractional Series Shares
to be issued in exchange for the Fund's net assets shall be equal to the number,
value, and denomination of full and fractional Fund Shares outstanding on the
Closing Date.
(d) All computations pursuant to this Section shall be made by Fidelity
Service Company, Inc. (FSC), a wholly-owned subsidiary of FMR Corp., in
accordance with its regular practice as pricing agent for the Fund.
5. FEES; EXPENSES
(a) Capital Trust and the Fund each represents that there is no person who
dealt with it who by reason of such dealings is entitled to any broker's or
finder's fees or commissions arising out of the transactions contemplated
hereby.
(b) The Fund shall be responsible for all expenses, fees and other charges in
connection with the transactions contemplated by the Agreement.
6. CLOSING DATE
5
<PAGE>
(a) The transfer of the Fund's assets in exchange for the assumption by the
Series of the Fund's liabilities and the issuance of Series Shares, as described
above, together with related acts necessary to consummate the same, (the
Closing), unless otherwise provided herein, shall occur at the principal office
of Commonwealth Trust and Capital Trust, 82 Devonshire Street, Boston,
Massachusetts, on December __, 1999, or at such other place or date as the
parties may agree in writing (the Closing Date). All acts taking place at the
Closing shall be deemed to take place simultaneously as of the Valuation Time or
at such other time and/or place as the parties may agree.
(b) In the event that, on the Closing Date (i) any of the markets for
securities held by the Fund are closed to trading, or (ii) trading thereon is
restricted, or (iii) trading or reporting of trading on said markets or
elsewhere is disrupted, all so that accurate appraisal of the total net asset
value of the Fund is impracticable, the Closing Date shall be postponed until
the first business day after the day when such trading shall have been fully
resumed and reporting shall have been restored, or such other date as the
parties may agree.
(c) The Fund shall deliver at the Closing a certificate of an authorized
officer stating that it has notified Brown Brothers Harriman & Co., as custodian
for the Fund, of the Fund's reorganization to a series of Capital Trust.
(d) FSC, as transfer agent for the Fund, shall deliver at the Closing a
certificate as to the conversion on its books and records of each Fund
Shareholder account to an account as a holder of Series Shares. Capital Trust
shall issue and deliver a confirmation to the Fund evidencing the Series Shares
to be credited as of the Closing Date or provide evidence satisfactory to the
Fund that such Series Shares have been credited to the Fund's account on the
books of Capital Trust. At the Closing, each party shall deliver to the other
such bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.
7. SHAREHOLDER MEETING AND TERMINATION OF THE FUND
(a) If required to do so pursuant to the terms of Commonwealth Trust's
Restated Declaration of Trust or otherwise by applicable law, the Fund agrees to
call a meeting of its shareholders (the Shareholder's Meeting) to consider and
act upon this Agreement. The Fund shall take all other action necessary to
obtain approval of the transactions contemplated hereby.
(b) The Fund agrees that as soon as reasonably practicable after distribution
of the Series Shares, the Fund shall be liquidated and terminated as a series of
Commonwealth Trust pursuant to its Restated Declaration of Trust, any further
actions shall be taken in connection therewith as required by applicable law,
and on and after the Closing Date the Fund shall not conduct any business except
in connection with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF CAPITAL TRUST
The obligations of Capital Trust hereunder shall be subject to the following
conditions:
(a) That the Fund furnishes to Capital Trust a statement, dated as of the
Closing Date, signed by an officer of Commonwealth Trust, certifying that as of
the Valuation Time and the Closing Date all representations and warranties of
the Fund made in this Agreement are true and correct in all material respects
and that the Fund has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such dates;
(b) That the Fund furnishes Capital Trust with copies of the resolutions,
certified by an officer of Commonwealth Trust, evidencing the adoption of this
Agreement and, if applicable, the approval of the transactions contemplated
herein by the requisite vote of the holders of the outstanding shares of
beneficial interest of the Fund;
(c) That the Fund shall deliver to Capital Trust at the Closing a statement
of its assets and liabilities, together with a certificate as to the aggregate
asset value of the Fund's portfolio securities, all as of the Valuation Time,
certified on the Fund's behalf by its Treasurer or Assistant Treasurer;
(d) That the Fund's custodian shall deliver to Capital Trust a certificate
identifying the assets of the Fund held by such custodian as of the Valuation
Time on the Closing Date and stating that at the Valuation Time (i) the assets
held by the custodian will be transferred to the Series; (ii) the Fund's assets
have been duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the custodian's
6
<PAGE>
knowledge, all necessary taxes in conjunction with the delivery of the assets,
including all applicable federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made;
(e) That the Fund's transfer agent shall deliver to Capital Trust at the
Closing a certificate setting forth the number of shares of the Fund outstanding
as of the Valuation Time and the name and address of each holder of record of
any such shares and the number of shares held of record by each such
shareholder;
(f) If applicable, that the Fund calls a Shareholder's Meeting to consider
and act upon this Agreement and that the Fund takes all other action necessary
to obtain approval of the transactions contemplated hereby;
(g) That the Fund delivers to Capital Trust a certificate of an officer of
Commonwealth Trust, dated the Closing Date, that there has been no material
adverse change in the Fund's financial position since April 30, 1999, other than
changes in the market value of its portfolio securities, or changes due to net
redemptions of its shares, dividends paid, or losses from operations; and
(h) That all of the issued and outstanding shares of beneficial interest of
the Fund shall have been offered for sale and sold in conformity with all
applicable state securities laws and, to the extent that any audit of the
records of the Fund or its transfer agent by Capital Trust or its agents shall
have revealed otherwise, the Fund shall have taken all actions that in the
opinion of Capital Trust are necessary to remedy any prior failure on the part
of the Fund to have offered for sale and sold such shares in conformity with
such laws.
9. CONDITIONS TO OBLIGATIONS OF THE FUND
The obligations of the Fund hereunder shall be subject to the following
conditions:
(a) That Capital Trust shall have executed and delivered to the Fund an
Assumption of Liabilities, certified by an officer of Capital Trust, dated as of
the Closing Date, pursuant to which Capital Trust, on behalf of the Series, will
assume all of the liabilities of the Fund existing at the Valuation Time in
connection with the transactions contemplated by this Agreement;
(b) That Capital Trust furnishes to the Fund a statement, dated as of the
Closing Date, signed by an officer of Capital Trust, certifying that as of the
Valuation Time and the Closing Date all representations and warranties of the
Series made in this Agreement are true and correct in all material respects, and
Capital Trust has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such dates;
and
(c) That the Fund shall have received an opinion of Kirkpatrick & Lockhart
LLP, counsel to the Fund and Capital Trust, to the effect that the Series Shares
are duly authorized and upon delivery to the Fund as provided in this Agreement
will be validly issued and will be fully paid and nonassessable under
Massachusetts law [, except that under Massachusetts law, shareholders of a
Massachusetts business trust, under certain circumstances, may be held
personally liable for obligations of Capital Trust].
10. CONDITIONS TO OBLIGATIONS OF THE FUND AND CAPITAL TRUST
The obligations of the Fund and Capital Trust hereunder shall be subject to
the following conditions:
(a) If applicable, that this Agreement shall have been adopted and the
transactions contemplated herein shall have been approved by the requisite vote
of the holders of the outstanding shares of beneficial interest of the Fund;
(b) That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including those of
the Securities and Exchange Commission and of state blue sky and securities
authorities, including "no action" positions of such federal or state
authorities) deemed necessary by Capital Trust or the Fund to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of Capital Trust or the Fund, provided that either party
hereto may for itself waive any of such conditions;
(c) That all proceedings taken by either the Fund or the Series in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto shall be satisfactory in form and substance to it and its
counsel, Kirkpatrick & Lockhart LLP;
7
<PAGE>
(d) That Capital Trust shall have taken all necessary action so that the
Series shall be a series of a registered open-end investment company under the
1940 Act immediately after the closing;
(e) That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement; and
(f) That Capital Trust and the Fund shall have received an opinion of
Kirkpatrick & Lockhart LLP satisfactory to Capital Trust and the Fund that for
federal income tax purposes:
(i) The Reorganization will be a reorganization under Section
368(a)(1)(F) of the Code, and the Fund and the Series will each be parties to
the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Fund upon the transfer of
all of its assets to the Series in exchange solely for the Series Shares and the
assumption of the Fund's liabilities followed by the distribution of the Series
Shares to the shareholders of the Fund in liquidation of the Fund;
(iii) No gain or loss will be recognized by the Series on the receipt of
the Fund's assets in exchange solely for the Series Shares and the assumption of
the Fund's liabilities;
(iv) The basis of the Fund's assets in the hands of the Series will be
the same as the basis of such assets in the Fund's hands immediately prior to
the Reorganization;
(v) The Series' holding period in the assets to be received from the Fund
will include the Fund's holding period in such assets;
(vi) A Fund Shareholder will recognize no gain or loss on the exchange of
his or her shares of beneficial interest in the Fund for the Series Shares in
the Reorganization;
(vii) A Fund Shareholder's basis in the Series Shares to be received by
him or her will be the same as his or her basis in the Fund Shares exchanged
therefor;
(viii) A Fund Shareholder's holding period for his or her Series Shares
will include the holding period of the Fund Shares exchanged, provided that
those Fund Shares were held as capital assets on the date of the Reorganization;
and
(ix) The Reorganization will not result in the termination of the Fund's
taxable year, and the Fund's tax attributes enumerated in Section 381(c) of the
Code will be taken into account by the Series as if there had been no
conversion.
Notwithstanding anything herein to the contrary, neither the Fund nor Capital
Trust may waive the conditions set forth in this subsection 10(f).
11. COVENANTS OF THE FUND
(a) The Fund covenants to operate its business in the ordinary course between
the date hereof and the Closing Date, it being understood that such ordinary
course of business will include the payment of customary dividends and
distributions.
(b) The Fund covenants that the Series Shares are not being acquired for the
purpose of making any distribution thereof, other than in accordance with the
terms of this Agreement.
(c) The Fund covenants that it will assist Capital Trust in obtaining such
information as Capital Trust reasonably requests concerning the beneficial
ownership of Fund Shares.
(d) The Fund covenants that its liquidation and termination will be effected
in the manner provided in its Restated Declaration of Trust in accordance with
applicable law and, after the Closing Date, the Fund will not conduct any
business except in connection with its liquidation and termination.
12. TERMINATION; WAIVER
(a) The parties hereto may terminate this Agreement by mutual consent. In
addition, either party may, at its option, terminate this Agreement at or prior
to the Closing Date because
(i) Of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date; or
(ii) A condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it will
not or cannot be met.
(b) In the event of any such termination, there shall be no liability for
damages on the part of Capital Trust or the Fund, or their respective Trustees
or officers.
8
<PAGE>
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may not
be changed except by a letter of agreement signed by each party hereto, and
shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such manner
as may be mutually agreed upon in writing by the appropriate officers of
Commonwealth Trust, Capital Trust, the Fund, or the Series; provided, however,
that following the Shareholders' Meeting, if any, called by the Fund pursuant to
Section 7 of this Agreement, no such amendment may have the effect of changing
the provisions for determining the number of the Series Shares to be received by
the Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
(c) Either party may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on the
interests of Fund Shareholders.
The representations, warranties, and covenants contained in the Agreement, or
in any document delivered pursuant hereto or in connection herewith, shall
survive the consummation of the transactions contemplated hereunder.
14. LIMITATION OF LIABILITY
Copies of the Declarations of Trust of Capital Trust, as amended and
restated, and of Commonwealth Trust, as restated, are on file with the Secretary
of State of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of Capital Trust and
Commonwealth Trust as trustees and not individually and that the obligations of
the Fund and the Series under this instrument are not binding upon any of
Commonwealth Trust's or Capital Trust's Trustees, officers, or shareholders
individually, but are binding only upon the assets and property of such Fund or
Series. The Fund and Capital Trust each agrees that its obligations hereunder
apply only to such Fund and the Series, respectively, and not to its
shareholders individually or to the Trustees of such Fund or Series.
15. ASSIGNMENT
This Agreement shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, but no assignment or transfer of any
rights or obligations hereunder shall be made by any party without the written
consent of the other party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, firm, or corporation other
than the parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer.
SIGNATURE LINES OMITTED
9
<PAGE>
EXHIBIT 9
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (a)
[TO BE UPDATED IN A SUBSEQUENT FILING]
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
GROWTH
Select Portfolios:
Air Transportation (pound) 2/28/99 $ 98.2 0.58%
Automotive (pound) 2/28/99 60.6 0.59
Biotechnology (pound) 2/28/99 574.0 0.59
Brokerage and Investment
Management (pound) 2/28/99 728.9 0.59
Business Services and
Outsourcing (pound) 2/28/99 55.4 0.59
Chemicals (pound) 2/28/99 47.2 0.59
Computers (pound) 2/28/99 1,008.6 0.60
Construction and Housing 2/28/99 83.1 0.59
(pound)
Consumer Industries 2/28/99 77.9 0.59
(pound)
Cyclical Industries 2/28/99 3.9 0.59
(pound)
Defense and Aerospace 2/28/99 53.5 0.58
(pound)
Select Portfolios
(continued)
Developing
Communications (pound) 2/28/99 310.5 0.60
Electronics (pound) 2/28/99 2,259.4 0.59
Energy (pound) 2/28/99 140.5 0.59
Energy Service (pound) 2/28/99 653.1 0.59
Environmental Services 2/28/99 20.8 0.59
(pound)
Financial Services (pound) 2/28/99 624.8 0.59
Food and Agriculture 2/28/99 227.4 0.59
(pound)
Gold (pound) 2/28/99 206.8 0.59
Health Care (pound) 2/28/99 2,518.2 0.59
Home Finance (pound) 2/28/99 1,350.2 0.58
Industrial Equipment 2/28/99 42.5 0.59
(pound)
Industrial Materials 2/28/99 16.1 0.59
(pound)
Insurance (pound) 2/28/99 110.1 0.59
Leisure (pound) 2/28/99 292.2 0.59
Medical Delivery (pound) 2/28/99 155.5 0.59
Medical Equipment and
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Systems (pound) ** 2/28/99 $ 16.1 0.60%+
Multimedia (pound) 2/28/99 130.4 0.59
-2-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Select Portfolios: - continued
Natural Gas (pound) 2/28/99 $ 51.5 0.59%
Natural Resources (pound) 2/28/99 6.5 0.59
Paper and Forest Products 2/28/99 15.0 0.59
(pound)
Precious Metals and
Minerals (pound) 2/28/99 150.1 0.59
Regional Banks (pound) 2/28/99 1,247.4 0.59
Retailing (pound) 2/28/99 282.2 0.59
Software and Computer
Services (pound) 2/28/99 572.6 0.59
Technology (pound) 2/28/99 758.6 0.60
Telecommunications 2/28/99 783.1 0.59
(pound)
Transportation (pound) 2/28/98 24.4 0.58
Utilities Growth (pound) 2/28/98 408.1 0.59
Magellan (pound) 3/31/98 61,521.2 0.43
Large Cap Stock (pound) 4/30/98 133.9 0.45
Mid Cap Stock (pound) 4/30/98 1,579.2 0.60
Small Cap Selector (pound) 4/30/98 727.3 0.67
Small Cap Stock (pound)** 4/30/98 383.2 0.69*(beta)
Contrafund II (pound) 6/30/98 226.3 0.59
Fidelity Fifty (pound) 6/30/98 180.5 0.43
Advisor Focus Funds:
Consumer Industries:
(pound)
Class A 7/31/98 1.3 0.59
Class T 7/31/98 10.7 0.59
Class B 7/31/98 2.2 0.59
Class C 7/31/98 0.5 0.59
Institutional Class 7/31/98 2.7 0.59
Cyclical Industries:
(pound)
Class A 7/31/98 0.4 0.59
Class T 7/31/98 2.7 0.59
Class B 7/31/98 0.5 0.59
Class C 7/31/98 0.1 0.59
Institutional Class 7/31/98 1.5 0.59
-3-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Advisor Focus Funds: -
continued
Financial Services:
(pound)
Class A 7/31/98 $ 12.6 0.59%
Class T 7/31/98 82.7 0.59
Class B 7/31/98 30.1 0.59
Class C 7/31/98 8.3 0.59
Institutional Class 7/31/98 3.9 0.59
Health Care: (pound)
Class A 7/31/98 10.5 0.59
Class T 7/31/98 79.2 0.59
Class B 7/31/98 22.1 0.59
Class C 7/31/98 6.5 0.59
Institutional Class 7/31/98 7.1 0.59
Natural Resources: (pound)
Class A 7/31/98 6.9 0.59
Class T 7/31/98 499.5 0.59
Class B 7/31/98 54.7 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 6.2 0.59
Technology: (pound)
Class A 7/31/98 11.7 0.59
Class T 7/31/98 76.3 0.59
Class B 7/31/98 17.6 0.59
Class C 7/31/98 3.0 0.59
Institutional Class 7/31/98 5.2 0.59
Utilities Growth: (pound)
Class A 7/31/98 1.4 0.59
Class T 7/31/98 13.9 0.59
Class B 7/31/98 5.9 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 3.7 0.59
Blue Chip Growth (pound) 7/31/98 14,487.5 0.47
Dividend Growth (pound) 7/31/98 5,316.4 0.65
Low-Priced Stock (pound) 7/31/98 10,834.5 0.74
OTC Portfolio (pound) 7/31/98 4,213.9 0.50
-4-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Export and Multinational
Fund (pound) 8/31/98 $ 468.9 0.59%
Destiny I (pound) 9/30/98 6,399.7 0.31
Destiny II (pound) 9/30/98 4,058.8 0.45
Advisor Diversified
International (Rx) **
Class A 10/31/99 1.1 0.74 (beta)
Class T 10/31/99 1.5 0.74 (beta)
Class B 10/31/99 1.1 0.74 (beta)
Class C 10/31/99 1.1 0.74 (beta)
Institutional Class 10/31/99 1.0 0.74 (beta)
Advisor Europe Capital
Appreciation (Rx) **
Class A 10/31/99 0.5 0.74 (beta)
Class T 10/31/99 2.1 0.74 (beta)
Class B 10/31/99 0.7 0.74 (beta)
Class C 10/31/99 0.8 0.74 (beta)
Institutional Class 10/31/99 0.4 0.74 (beta)
Advisor Global Equity (Rx) **
Class A 10/31/99 1.1 0.74 (beta)
Class T 10/31/99 1.2 0.74 (beta)
Class B 10/31/99 1.1 0.74 (beta)
Class C 10/31/99 1.1 0.74 (beta)
Institutional Class 10/31/99 1.1 0.74 (beta)
Advisor International
Capital Appreciation:
(Rx) **
Class A 10/31/98 0.6 0.73 +
Class T 10/31/98 6.9 0.73 +
Class B 10/31/98 2.3 0.73 +
Class C 10/31/98 1.3 0.73 +
Institutional Class 10/31/98 5.0 0.73 +
Advisor Japan (Rx) **
Class A 10/31/99 0.4 0.74 (beta)
Class T 10/31/99 0.4 0.74 (beta)
Class B 10/31/99 0.4 0.74 (beta)
Class C 10/31/99 0.4 0.74 (beta)
Institutional Class 10/31/99 0.4 0.74 (beta)
-5-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Advisor Latin America (Rx)**
Class A 10/31/99 $ 0.4 0.74%(beta)
Class T 10/31/99 0.4 0.74 (beta)
Class B 10/31/99 0.4 0.74 (beta)
Class C 10/31/99 0.4 0.74 (beta)
Institutional Class 10/31/99 0.4 0.74 (beta)
Advisor Overseas: (SIGMA)
Class A 10/31/98 8.5 0.89
Class T 10/31/98 1,159.5 0.89
Class B 10/31/98 51.9 0.89
Class C 10/31/98 6.1 0.89
Institutional Class 10/31/98 47.3 0.89
Canada (SIGMA) 10/31/98 71.9 0.30
Capital Appreciation 10/31/98 2,379.7 0.44
(pound)
Disciplined Equity (pound) 10/31/98 2,857.4 0.43
Diversified International 10/31/98 1,849.8 0.83
(SIGMA)
Emerging Markets (SIGMA) 10/31/98 390.9 0.74
Europe (SIGMA) 10/31/98 1,399.6 0.73
Europe Capital
Appreciation (SIGMA) 10/31/98 594.4 0.72
France (SIGMA) 10/31/98 12.5 0.73
Germany (SIGMA) 10/31/98 23.7 0.73
Hong Kong and China (Rx) 10/31/98 154.3 0.74
International Value (Rx) 10/31/98 454.5 0.82
Japan (Rx) 10/31/98 238.4 1.01
Japan Small Companies (Rx) 10/31/98 95.1 0.74
Latin America (SIGMA) 10/31/98 594.2 0.75
Nordic (SIGMA) 10/31/98 104.3 0.74
Overseas (SIGMA) 10/31/98 3,862.7 0.90
Pacific Basin (Rx) 10/31/98 206.8 1.11
Southeast Asia (Rx) 10/31/98 235.6 1.16
Stock Selector (pound) 10/31/98 1,885.4 0.43
TechnoQuant Growth 10/31/98 67.4 0.39
United Kingdom (SIGMA) 10/31/98 7.5 0.74
Value (pound) 10/31/98 7, 451.9 0.41
Worldwide (SIGMA) 10/31/98 1,169.1 0.74
Advisor Dividend Growth
(pound)**
-6-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Class A 11/30/99 $ 0.5 0.59%(beta)
Class T 11/30/99 5.1 0.59 (beta)
Class B 11/30/99 3.4 0.59 (beta)
Class C 11/30/99 1.2 0.59 (beta)
Institutional Class 11/30/99 0.9 0.59 (beta)
Advisor Equity Growth:
(pound)
Class A 11/30/98 56.8 0.59
Class T 11/30/98 4,568.3 0.59
Class B 11/30/98 166.9 0.59
Class C 11/30/98 26.0 0.59
Institutional Class 11/30/98 1,004.7 0.59
Advisor Growth
Opportunities: (pound)
Class A 11/30/98 255.0 0.46
Class T 11/30/98 22,748.7 0.46
Class B 11/30/98 925.6 0.46
Class C 11/30/98 146.1 0.46
Institutional Class 11/30/98 493.0 0.46
Advisor Large Cap: (pound)
Class A 11/30/98 3.1 0.59
Class T 11/30/98 59.5 0.59
Class B 11/30/98 27.5 0.59
Class C 11/30/98 1.5 0.59
Institutional Class 11/30/98 7.7 0.59
Advisor Mid Cap: (pound)
Class A 11/30/98 8.2 0.59
Class T 11/30/98 357.3 0.59
Class B 11/30/98 73.2 0.59
Class C 11/30/98 6.5 0.59
Institutional Class 11/30/98 35.4 0.59
Advisor Retirement Growth
(pound)**
Class A 11/30/99 0.2 0.59 (beta)
Class T 11/30/99 0.5 0.59 (beta)
Class B 11/30/99 0.2 0.59 (beta)
Class C 11/30/99 0.2 0.59 (beta)
Institutional Class 11/30/99 0.2 0.59 (beta)
Advisor Small Cap: (pound)**
-7-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Class A 11/30/98 $ 4.2 0.74%(beta)
Class T 11/30/98 30.2 0.74 (beta)
Class B 11/30/98 9.5 0.74 (beta)
Class C 11/30/98 9.4 0.74 (beta)
Institutional Class 11/30/98 8.2 0.74 (beta)
Advisor Strategic
Opportunities: (pound)
Class A 11/30/98 3.5 0.38
Class T 11/30/98 491.8 0.38
Class B 11/30/98 109.5 0.38
Initial Class 11/30/98 20.2 0.38
Institutional Class 11/30/98 4.7 0.38
Advisor TechnoQuant
Growth: (pound)
Class A 11/30/98 3.8 0.59
Class T 11/30/98 18.3 0.59
Class B 11/30/98 11.6 0.59
Class C 11/30/98 0.3 0.59
Institutional Class 11/30/98 1.3 0.59
Emerging Growth (pound) 11/30/98 2,172.0 0.79
Growth Company (pound) 11/30/98 10,377.6 0.42
New Millennium (pound) 11/30/98 1,525.9 0.62
Retirement Growth (pound) 11/30/98 4,376.5 0.40
Contrafund (pound) 12/31/98 33,442.4 0.45
Trend (pound) 12/31/98 1,354.1 0.39
Variable Insurance Products:
Growth
Initial Class 12/31/98 9,027.5 0.59
Service Class 12/31/98 50.6 0.59
Overseas (SIGMA)
Initial Class 12/31/98 2,073.3 0.74
Service Class 12/31/98 15.9 0.74
Variable Insurance Products
II:
Asset Manager: Growth
(pound)
Initial Class 12/31/98 495.2 0.59
Service Class 12/31/98 1.1 0.59
Contrafund (pound)
Initial Class 12/31/98 4,974.2 0.59
-8-
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
------------------ ------------ ------------- ----------
Service Class 12/31/98 $ 61.3 0.59%
Variable Insurance Products
III:
Growth Opportunities
(pound)
Initial Class 12/31/98 1,296.4 0.59
Service Class 12/31/98 66.4 0.59
Mid Cap (pound) **
Initial Class 12/31/98 0.5 0.59 (beta)
Service Class 12/31/98 0.5 0.59 (beta)
(a) All fund data are as of the fiscal year end noted in the chart or as of
January 31, 1999, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets of
each fund or class at the close of business on each business day
throughout its fiscal period.
(c) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*). The ratio for certain multi-class
funds is presented gross of expense reductions for presentation
purposes.
+ Annualized
** Less than a complete fiscal year
(beta) Based on estimated expenses for the first year
(Rx) Fidelity Management & Research Company (FMR) 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 (FIIA (U.K.)
L), with respect to the fund.
(SIGMA) FMR has entered into sub-advisory agreements with the following
affiliates: FMR U.K., FMR Far East, FIIA, and FIIA (U.K.) L, with
respect to the fund.
(pound) FMR has entered into sub-advisory agreements with FMR U.K. and FMR Far
East, with respect to the fund.
-9-
<PAGE>
EXHIBIT 10
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
[TO BE UPDATED IN A SUBSEQUENT FILING]
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- -------------
TAXABLE BOND
Advisor Intermediate Bond:
(L)(pound)(diamond)
Class A 11/30/97 $2.1 0.44%
Class B 11/30/97 19.6 0.44
Class T 11/30/97 262.1 0.44
Class C (square) 11/30/97 0.0 0.44
Institutional Class 11/30/97 192.5 0.44
Institutional
Short-Intermediate 11/30/97 342.8 0.45
Government
Real Estate High Income 11/30/97 46.1 0.74
Advisor Emerging Markets
Income: (SIGMA)(pound)
Class A 12/31/97 1.3 0.69
Class B 12/31/97 22.3 0.69
Class T 12/31/97 92.2 0.69
Class C (square) 12/31/97 0.0 0.69
Institutional Class 12/31/97 3.6 0.69
Advisor Strategic Income:
(L)(pound)(diamond)
Class A 12/31/97 1.7 0.59
Class B 12/31/97 45.5 0.59
Class T 12/31/97 110.6 0.59
Class C 12/31/97 0.3 0.59
Institutional Class 12/31/97 6.2 0.59
Global Bond (SIGMA) 12/31/97 92.5 0.69
New Markets Income (Rx) 12/31/97 386.4 0.69
Real Estate High Income II 12/31/97 73.9 0.74
Variable Insurance Products:
High Income (L)
Initial Class 12/31/97 1,936.9 0.59
Service Class (square) 12/31/97 0.0 0.59
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- -------------
Variable Insurance Products II:
Investment Grade Bond 12/31/97 $ 262.9 0.44%
U.S. Bond Index 2/28/98 632.8 0.32*
Capital & Income (L) 4/30/98 2,144.9 0.59
Fidelity High Income (L) 4/30/98 2,412.2 0.80
Intermediate Bond (L) 4/30/98 3,139.1 0.44
Investment Grade Bond (L) 4/30/98 1,617.5 0.44
Short-Term Bond (L) 4/30/98 883.0 0.44
Spartan Government Income 4/30/98 275.9 0.60*
Spartan Short-Intermediate
Government 4/30/98 72.8 0.65
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/98 71.0 0.35
Ginnie Mae (L) 7/31/98 863.5 0.42*
Government Income 7/31/98 1,191.0 0.44
Intermediate Government Income
(L) 7/31/98 735.8 0.38
Target Timeline Funds: (L)
1999 7/31/98 13.1 0.00*
2001 7/31/98 11.7 0.00*
2003 7/31/98 16.4 0.00*
Spartan Ginnie Mae 8/31/98 614.3 0.38*
Short-Intermediate Government 9/30/98 126.3 0.44
Spartan Investment Grade Bond 9/30/98 820.2 0.38*
(L)
Spartan Short-Term Bond (L) 9/30/98 316.3 0.38*
Advisor Mortgage Securities:
(L)(pound)(diamond)
Class A 10/31/98 0.8 0.44
Class B 10/31/98 4.0 0.44
Class T 10/31/98 14.6 0.44
Institutional Class 10/31/98 21.3 0.44
Initial Class 10/31/98 471.0 0.44
Advisor Government Investment:
(L)(diamond)
Class A 10/31/98 3.1 0.43
Class B 10/31/98 29.1 0.43
- 2 -
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (a) (MILLIONS)(b) TO FMR (c)
- ------------------ ------------ ------------- -------------
Class T 10/31/98 $ 161.2 0.43%
Class C 10/31/98 3.7 0.43
Institutional Class 10/31/98 24.7 0.43
Advisor High Yield: (L)
Class A 10/31/98 87.2 0.58
Class B 10/31/98 823.9 0.58
Class T 10/31/98 2,481.8 0.58
Class C 10/31/98 71.0 0.58
Institutional Class 10/31/98 117.4 0.58
Advisor Short Fixed-Income:
(L)(diamond)
Class A 10/31/98 6.5 0.44
Class T 10/31/98 336.8 0.44
Class C 10/31/98 2.0 0.44
Institutional Class 10/31/98 6.5 0.44
(a) All fund data are as of the fiscal year end noted in the chart or as
of October 31, 1998.
(b) 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.
(c) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*). For multiple class funds, the ratio
of net advisory fees to average net assets is presented gross of
reductions for certain classes, for presentation purposes. Funds so
affected are indicated by (pound).
(square) Average net assets for the period shown were less than $100,000.
(Rx) 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 (FIIA (U.K.) L),
with respect to the fund.
(SIGMA) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: FMR U.K., FMR Far East,
FIIA, and FIIA (U.K.) L, with respect to the fund.
(L) Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K. and FMR Far East, with respect to the fund.
(diamond) Fidelity Management & Research Company has entered into a
sub-advisory agreement with Fidelity Investments Money Management,
Inc., with respect to the fund.
- 3 -
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 SMALL CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST: FIDELITY SMALL CAP STOCK 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 September
15, 1999 at 9:00 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
----------------------------------, 1999
---------------------------------------
---------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #315912501/fund #340
<PAGE>
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 [ ] FOR [ ] WITHHOLD 1.
as Trustees: Ralph F. Cox, Phyllis Burke all authority to
Davis, Robert M. Gates, Edward C. Johnson 3d, nominees vote for all
E. Bradley Jones, Donald J. Kirk, Peter S. listed nominees.
Lynch, William O. McCoy, Gerald C. McDonough, (except
Marvin L. Mann, Robert C. Pozen, and Thomas as marked
R. Williams to the
contrary
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE below).
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of Trust.
</TABLE>
COMM-pxc-0799 cusip #315912501/fund #340
<PAGE>
Vote this proxy card TODAY! Your prompt response
will save your fund 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 SMALL CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST as indicated above 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 September 15, 1999 at 9:00
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
--------------------------------, 1999
--------------------------------------------
--------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(340, 337, 338, 336, 032 HH)
<PAGE>
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 [ ] FOR [ ] WITHHOLD 1.
as Trustees: Ralph F. Cox, Phyllis Burke all authority to
Davis, Robert M. Gates, Edward C. Johnson 3d, nominees vote for all
E. Bradley Jones, Donald J. Kirk, Peter S. listed nominees.
Lynch, William O. McCoy, Gerald C. McDonough, (except
Marvin L. Mann, Robert C. Pozen, and Thomas as marked
R. Williams to the
contrary
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE below).
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of Trust.
</TABLE>
COMM-pxc-0799 cusip #315912501 #340 HH
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 MID-CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST: FIDELITY MID-CAP STOCK 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 September
15, 1999 at 9:00 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
---------------------------, 1999
-------------------------------------
-------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #316128404/fund #337
<PAGE>
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 [ ] FOR all [ ] 1.
specified below as Trustees: Ralph F. nominees listed WITHHOLD
Cox, Phyllis Burke Davis, Robert M. (except as authority
Gates, Edward C. Johnson 3d, E. marked to the to vote for
Bradley Jones, Donald J. Kirk, Peter contrary below). all
S. Lynch, William O. McCoy, Gerald C. nominees.
McDonough, Marvin L. Mann, Robert C.
Pozen, 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.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management &
Research (Far East) Inc. for the
fund.
</TABLE>
COMM-pxc-0799 cusip #316128404/fund #337
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 MID-CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST as indicated above 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 September 15, 1999 at 9:00
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
---------------------------, 1999
-------------------------------------
-------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(340, 337, 338, 336, 032 HH)
<PAGE>
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 [ ] FOR all [ ] 1.
specified below as Trustees: Ralph F. nominees listed WITHHOLD
Cox, Phyllis Burke Davis, Robert M. (except as authority
Gates, Edward C. Johnson 3d, E. marked to the to vote for
Bradley Jones, Donald J. Kirk, Peter contrary below). all
S. Lynch, William O. McCoy, Gerald C. nominees.
McDonough, Marvin L. Mann, Robert C.
Pozen, 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.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub- FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
advisory agreement with Fidelity
Management & Research (Far East)
Inc. for the fund.
</TABLE>
COMM-pxc-0799 cusip #316128404 #337 HH
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 LARGE CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST: FIDELITY LARGE CAP STOCK 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 September
15, 1999 at 9:00 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
----------------------------------, 1999
--------------------------------------------
--------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #315912402/fund #338
<PAGE>
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 [ ] FOR all [ ] 1.
specified below as Trustees: Ralph F. nominees listed WITHHOLD
Cox, Phyllis Burke Davis, Robert M. (except as authority
Gates, Edward C. Johnson 3d, E. marked to the to vote for
Bradley Jones, Donald J. Kirk, Peter contrary below). all
S. Lynch, William O. McCoy, Gerald C. nominees.
McDonough, Marvin L. Mann, Robert C.
Pozen, 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.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
& Touche LLP as independent
accountants of the fund.
3. To authorize the Trustees to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
adopt an amended and restated
Declaration of Trust.
4. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
contract for the fund.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management
& Research (Far East) Inc. for the
fund.
11. To amend the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment limitation concerning
diversification to exclude
securities of other investment
companies from the limitation.
</TABLE>
COMM-pxc-0799 cusip #315912402/fund #338
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 LARGE CAP STOCK FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST as indicated above 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 September 15, 1999 at 9:00
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
----------------------------------, 1999
--------------------------------------------
--------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(340, 337, 338, 336, 032 HH)
<PAGE>
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 [ ] FOR all [ ] 1.
specified below as Trustees: Ralph F. nominees listed WITHHOLD
Cox, Phyllis Burke Davis, Robert M. (except as authority
Gates, Edward C. Johnson 3d, E. marked to the to vote for
Bradley Jones, Donald J. Kirk, Peter contrary below). all
S. Lynch, William O. McCoy, Gerald C. nominees.
McDonough, Marvin L. Mann, Robert C.
Pozen, 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.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
& Touche LLP as independent
accountants of the fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
4. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
contract for the fund.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management
& Research (Far East) Inc. for the
fund.
11. To amend the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment limitation concerning
diversification to exclude
securities of other investment
companies from the limitation.
</TABLE>
COMM-pxc-0799 cusip #315912402 #338 HH
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 SMALL CAP SELECTOR
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST: FIDELITY SMALL CAP SELECTOR 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 September
15, 1999 at 9:00 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
--------------------------------, 1999
--------------------------------------------
--------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #315912303/fund #336
<PAGE>
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 [ ] FOR [ ] WITHHOLD 1.
as Trustees: Ralph F. Cox, Phyllis Burke all authority to
Davis, Robert M. Gates, Edward C. Johnson 3d, nominees vote for all
E. Bradley Jones, Donald J. Kirk, Peter S. listed nominees.
Lynch, William O. McCoy, Gerald C. McDonough, (except
Marvin L. Mann, Robert C. Pozen, and Thomas as marked
R. Williams to the
contrary
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE below).
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of Trust.
4. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
contract for the fund.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management
& Research (Far East) Inc. for the
fund.
8. To approve a distribution and service FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
plan pursuant to Rule 12b-1 for the fund.
9. To approve an agreement and plan FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
providing for the reorganization of the
fund from a separate series of one
Massachusetts business trust to another.
11. To amend the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment limitation concerning
diversification to exclude securities of
other investment companies from the limitation.
</TABLE>
COMM-pxc-0799 cusip #315912303/fund #336
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund 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 SMALL CAP SELECTOR
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST as indicated above 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 September 15, 1999 at 9:00
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
----------------------------------, 1999
--------------------------------------------
--------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(340, 337, 338, 336, 032 HH)
<PAGE>
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 [ ] FOR [ ] WITHHOLD 1.
as Trustees: Ralph F. Cox, Phyllis Burke all authority to
Davis, Robert M. Gates, Edward C. Johnson 3d, nominees vote for all
E. Bradley Jones, Donald J. Kirk, Peter S. listed nominees.
Lynch, William O. McCoy, Gerald C. McDonough, (except
Marvin L. Mann, Robert C. Pozen, and Thomas as marked
R. Williams to the
contrary
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE below).
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- ----------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of Trust.
4. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
contract for the fund.
6. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management
& Research (Far East) Inc. for the
fund.
8. To approve a distribution and service FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
plan pursuant to Rule 12b-1 for the fund.
9. To approve an agreement and plan FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
providing for the reorganization of the
fund from a separate series of one
Massachusetts business trust to another.
11. To amend the fund's fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
investment limitation concerning
diversification to exclude securities of
other investment companies from the limitation.
</TABLE>
COMM-pxc-0799 cusip #315912303 #336 HH
<PAGE>
Vote this proxy card TODAY! Your prompt response will save
your fund 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 INTERMEDIATE BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST: FIDELITY INTERMEDIATE BOND 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 September
15, 1999 at 9:00 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_____________________________, 1999
____________________________________
____________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #315912105/fund #032
<PAGE>
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:
- ----------------------------------------------------
1. To elect the twelve nominees specified [ ] FOR all [ ] WITHHOLD 1.
below as Trustees: Ralph F. Cox, Phyllis nominees listed authority to
Burke Davis, Robert M. Gates, Edward C. (except as vote for all
Johnson 3d, E. Bradley Jones, Donald J. marked to the nominees.
Kirk, Peter S. Lynch, William O. McCoy, contrary
Gerald C. McDonough, Marvin L. Mann, below).
Robert C. Pozen, 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.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [] AGAINST [] ABSTAIN [] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [] AGAINST [] ABSTAIN [] 3.
amended and restated Declaration of
Trust.
5. To approve an amended management FOR [] AGAINST [] ABSTAIN [] 5.
contract for the fund.
6. To approve an amended sub-advisory FOR [] AGAINST [] ABSTAIN [] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [] AGAINST [] ABSTAIN [] 7.
agreement with Fidelity Management &
Research (Far East) Inc. for the fund.
10. To eliminate a fundamental investment FOR [] AGAINST [] ABSTAIN [] 10.
policy of the fund.
11. To amend the fund's fundamental FOR [] AGAINST [] ABSTAIN [] 11.
investment limitation concerning
diversification to exclude securities
of other investment companies from the
limitation.
12. To amend the fund's fundamental FOR [] AGAINST [] ABSTAIN [] 12.
investment limitation concerning the
underwriting of securities.
COMM-pxc-0799 cusip #315912105/fund #032
<PAGE>
Vote this proxy card TODAY! Your prompt response will save
your fund 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 INTERMEDIATE BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Eric D. Roiter, and Gerald C. McDonough, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
COMMONWEALTH TRUST as indicated above 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 September 15, 1999 at 9:00
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_____________________________, 1999
____________________________________
____________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
(340, 337, 338, 336, 032 HH)
<PAGE>
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:
- ------------------------------------------------------
1. To elect the twelve nominees specified [ ] FOR all [ ] WITHHOLD 1.
below as Trustees: Ralph F. Cox, Phyllis nominees listed authority to
Burke Davis, Robert M. Gates, Edward C. (except as vote for all
Johnson 3d, E. Bradley Jones, Donald J. marked to the nominees.
Kirk, Peter S. Lynch, William O. McCoy, contrary
Gerald C. McDonough, Marvin L. Mann, below).
Robert C. Pozen, 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.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & FOR [] AGAINST [] ABSTAIN [] 2.
Touche LLP as independent accountants
of the fund.
3. To authorize the Trustees to adopt an FOR [] AGAINST [] ABSTAIN [] 3.
amended and restated Declaration of
Trust.
5. To approve an amended management FOR [] AGAINST [] ABSTAIN [] 5.
contract for the fund.
6. To approve an amended sub-advisory FOR [] AGAINST [] ABSTAIN [] 6.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
7. To approve an amended sub-advisory FOR [] AGAINST [] ABSTAIN [] 7.
agreement with Fidelity Management &
Research (Far East) Inc. for the fund.
10. To eliminate a fundamental investment FOR [] AGAINST [] ABSTAIN [] 10.
policy of the fund.
11. To amend the fund's fundamental FOR [] AGAINST [] ABSTAIN [] 11.
investment limitation concerning
diversification to exclude securities
of other investment companies from the
limitation.
12. To amend the fund's fundamental FOR [] AGAINST [] ABSTAIN [] 12.
investment limitation concerning the
underwriting of securities.
COMM-pxc-0799 cusip #315912105 #032 HH
