SUPPLEMENT TO THE SPARTAN MARKET INDEX FUND(registered trademark) JUNE
26, 1999 PROSPECTUS
The following information replaces the first paragraph in the "Fee
Table" section on page 4.
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of the fund. The annual fund
operating expenses provided below for the fund are based on historical
expenses, adjusted to reflect current fees, but do not reflect the
effect of any expense reimbursements.
The following information replaces the "Annual fund operating
expenses" table and footnote A found in the "Fee Table" section on
page 5.
ANNUAL FUND OPERATING EXPENSES (PAID FROM FUND ASSETS)
Management fee 0.24%
Distribution and Service None
(12b-1) fee
Other expenses 0.16%
Total annual fund operating 0.40%
expensesA
A EFFECTIVE APRIL 18, 1997, FMR HAS AGREED TO REIMBURSE THE FUND TO
THE EXTENT THAT TOTAL OPERATING EXPENSES (EXCLUDING INTEREST, TAXES,
SECURITIES LENDING COSTS, BROKERAGE COMMISSIONS AND EXTRAORDINARY
EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS, EXCEED 0.19%.
THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME AFTER DECEMBER
31, 1999.
The following information replaces similar information found under
the heading "Selling Shares" in the "Buying and Selling Shares"
section on page 12.
(small solid bullet) Redemption pro ceeds may be paid in securities
or other property rather than in cash if FMR determines it is in the
best interests of the fund.
The following information replaces the fifth paragraph in the "Fund
Management" section on page 20.
BT serves as sub-adviser and custodian for the fund. BT chooses the
fund's investments and places orders to buy and sell the fund's
investments.
The following information replaces the eighth paragraph in the "Fund
Management" section on page 20.
Effective June 4, 1999, Bankers Trust Corporation and all of its
subsidiaries, including BT, merged with and into a subsidiary of
Deutsche Bank AG. At a meeting held on March 18, 1999, the fund's
Board of Trustees approved a new sub-advisory agreement among the
fund, FMR and BT or its successor by merger that became effective June
4, 1999. At a meeting held on September 15, 1999, shareholders
approved this agreement.
The following information replaces the second and third full
paragraphs in the "Fund Management" section on page 21.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fund's annual management
fee rate is 0.24% of its average net assets.
FMR pays BT for providing investment management and custodial
services.
Prior to October 1, 1999, the fund paid a management fee at an annual
rate of 0.24% of its average net assets to FMR and a sub-advisory fee
(representing 40% of net income from securities lending) to BT. The
total management and sub-advisory fees for the fund for the fiscal
year ended April 30, 1999, were 0.24%.
SUPPLEMENT TO THE
SPARTAN MARKET INDEX FUND(registered trademark)
JUNE 26, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND IN THE
"ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION" SECTION ON PAGE 15.
If FMR determines that it is in the best interests of the fund, the
fund may make redemption payments in whole or in part i n readily
marketable securities or other property, valued for this purpose as
they are valued in computing the fund's NAV. The fund may make
redemption payments "in kind" to a shareholder that owns 5% or more of
its outstanding voting securities pursuant to an exemptive order
issued by the SEC. Shareholders that receive securities or other
property on redemption may realize a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated
inconveniences.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 15.
NED C. LAUTENBACH (55), Member of the Advisory Board (1999), has been
a partner of Clayton, Dubilier & Rice, Inc. (private equity investment
firm) since September 1998. Mr. Lautenbach was Senior Vice President
of IBM Corporation from 1992 until his retirement in July 1998. From
1993 to 1995 he was Chairman of IBM World Trade Corporation. He also
was a member of IBM's Corporate Executive Committee from 1994 to July
1998. He is a Director of PPG Industries Inc. (glass, coating and
chemical manufacturer), Dynatech Corporation (global communications
equipment), Eaton Corporation (global manufacturer of highly
engineered products) and ChoicePoint Inc. (data identification,
retrieval, storage, and analysis).
THE FOLLOWING INFORMATION FOUND IN THE "TRUSTEES AND OFFICERS" SECTION
ON PAGE 17 HAS BEEN REMOVED.
LEONARD M. RUSH (53), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THE FOLLOWING INFORMATION REPLACES THE "COMPENSATION TABLE" FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION ON PAGE 18.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of the fund for his
or her services for the fiscal year ended April 30, 1999, or calendar
year ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Total Compensation from the
Advisory Board Spartan Market IndexB Fund Complex*,A
Edward C. Johnson 3d** $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0
Ralph F. Cox $ 2,090 $ 223,500
Phyllis Burke Davis $ 2,047 $ 220,500
Robert M. Gates $ 2,089 $ 223,500
E. Bradley Jones $ 2,076 $ 222,000
Donald J. Kirk $ 2,101 $ 226,500
Ned C. Lautenbach*** $ 0 $ 0
Peter S. Lynch** $ 0 $ 0
William O. McCoy $ 2,089 $ 223,500
Gerald C. McDonough $ 2,557 $ 273,500
Marvin L. Mann $ 2,089 $ 220,500
Robert C. Pozen** $ 0 $ 0
Thomas R. Williams $ 2,089 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the fund and Mr. Burkhead are compensated by
FMR.
*** Effective October 14, 1999, Mr. Lautenbach serves as a Member of
the Advisory Board.
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; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash.
THE FOLLOWING INFORMATION REPLACES THE THIRD PARAGRAPH FOUND UNDER THE
HEADING "MANAGEMENT AND SUB-ADVISORY SERVICES" IN THE "MANAGEMENT
CONTRACT" SECTION ON PAGE 19.
BT is the sub-adviser of the fund and acts as the fund's custodian.
Under its management contract with the fund, FMR acts as investment
adviser. Under the sub-advisory agreement, and subject to the
supervision of the Board of Trustees, BT directs the investments of
the fund in accordance with its investment objective, policies and
limitations, and provides custodial services to the fund.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "MANAGEMENT-RELATED EXPENSES" IN THE "MANAGEMENT CONTRACT"
SECTION ON PAGE 19.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, and pricing and bookkeeping agent, and
the costs associated with securities lending, the fund pays all of its
expenses that are not assumed by those parties. The fund pays for the
typesetting, printing, and mailing of its proxy materials to
shareholders, legal expenses, and the fees of the auditor and
non-interested Trustees. The fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to shareholders; however, under the terms of the fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses paid
by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. The 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.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "MANAGEMENT AND SUB-ADVISORY FEES" IN THE "MANAGEMENT
CONTRACT" SECTION ON PAGE 19.
MANAGEMENT FEE. For the services of FMR under the management contract,
the fund pays FMR a monthly management fee at the annual rate of 0.24%
of the fund's average net assets throughout the month.
THE FOLLOWING INFORMATION REPLACES THE SECOND, THIRD, AND FOURTH
PARAGRAPHS FOUND UNDER THE HEADING "SUB-ADVISER" IN THE "MANAGEMENT
CONTRACT" SECTION ON PAGE 19.
Under the sub-advisory agreement, for providing investment management
and custodial services to the fund, FMR pays BT fees at an annual rate
of 0.006% of the average net assets of the fund.
For the fiscal years ended Fiscal Year End 1, 1999, 1998, and 1997,
the fund paid FMR management fees of $2,000,000, $3,310,000, and
$6,544,000, respectively, and paid BT sub-advisory fees of $199,000
for the fiscal year ended April 30, 1999, and $3,000 for the period
from December 1, 1997 through April 30, 1998. Prior to October 1,
1999, the fund paid a management fee at an annual rate of 0.24% of its
average net assets to FMR and a sub-advisory fee (representing 40% of
net income from securities lending) to BT.
For the fiscal year ended April 30, 1999, FMR paid BT fees of
$378,435, and for the period from December 1, 1997 through April 30,
1998, FMR paid BT fees of $112,000.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"MANAGEMENT CONTRACT" SECTION ON PAGE 19.
MANAGEMENT-RELATED SERVICES. The fund has also entered into a
securities lending agreement with BT. Under the terms of the
agreement, BT retains up to 30% of aggregate annual lending revenues
for providing securities lending services.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"MANAGEMENT CONTRACT" SECTION ON PAGE 20.
FMR may, from time to time, voluntarily reimburse all or a portion of
the fund's operating expenses (exclusive of interest, taxes,
securities lending costs, 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.
THE FOLLOWING INFORMATION REPLACES THE PARAGRAPH FOUND UNDER THE
HEADING "AUDITOR" IN THE "DESCRIPTION OF THE TRUST" SECTION ON PAGE
22.
AUDITOR. Deloitte & Touche LLP, 200 Berkeley Street, Boston,
Massachusetts, serves as independent accountant for the fund. The
auditor examines financial statements for the fund and provides other
audit, tax, and related services.
