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.
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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SPARTAN(REGISTERED) MARKET INDEX FUND
A FUND OF
FIDELITY COMMONWEALTH TRUST
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Spartan Market Index Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the Meeting)
of Spartan Market Index Fund (the fund) 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 as independent
accountants of the fund.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4(a). To approve an interim sub-advisory agreement with Bankers Trust
Company for the fund.
4(b). To approve a new sub-advisory agreement with Bankers Trust Company
for the fund.
5. To approve a new "manager-of-managers" arrangement for the fund.
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 the fund entitled to
notice of, and to vote at, such Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
July 19, 1999
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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
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY COMMONWEALTH TRUST:
SPARTAN MARKET INDEX 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 Spartan Market Index Fund (the fund) 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 fund's investment adviser.
Shareholders of the trust's other funds (Fidelity Small Cap Stock Fund, Fidelity
Mid-Cap Stock Fund, Fidelity Large Cap Stock Fund, Fidelity Small Cap Selector,
and Fidelity Intermediate Bond 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 those funds.
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 fund at an
anticipated cost of approximately $_____. [The expenses in connection with
preparing Proposals 1, 2, and 3 of 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 the
fund's expense cap will be paid by FMR. The fund will reimburse brokerage firms
and others for their reasonable expenses in forwarding solicitation material to
the beneficial owners of shares.] [The expenses in connection with preparing
Proposals 4(a) and 5 of this Proxy Statement and its enclosures and of all
solicitations will be borne by Bankers Trust Company (BT), subadviser to the
fund. BT will reimburse brokerage firms and others for their reasonable expenses
in forwarding solicitation material to the beneficial owners of shares.] [The
expenses in connection with preparing Proposal 4(b) of this Proxy Statement and
its enclosures and of all solicitations will be borne by FMR. FMR 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 fund's
principal underwriter and distribution agent, is 82 Devonshire Street, Boston,
Massachusetts 02109. The principal business address of BT is 130 Liberty Street,
New York, New York 10006.
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
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 fund may also arrange to have votes recorded by telephone. [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 the fund's expense cap will be paid by FMR.]/[The expenses in
connection with telephone voting will be borne by BT.]/[The expenses in
connection with telephone voting will be borne by FMR.] If the fund records
votes by telephone, it will use procedures designed to authenticate
shareholders' identities, to allow shareholders to authorize the voting of their
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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 fund at an anticipated cost of
approximately $_____.
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:
Spartan Market Index Fund
Fidelity Small Cap Stock Fund
Fidelity Mid-Cap Stock Fund
Fidelity Large Cap Stock Fund
Fidelity Small Cap Selector
Fidelity Intermediate Bond 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 THE 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 FUND CAST AT 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(A), 4(B), AND 5 REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF THE
FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), 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.
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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 fund's
investment adviser (FMR, or the Adviser), or the fund's 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.
Year of
Election
Nominee or
(Age) Principal Occupation** Appointment
----- ---------------------- -----------
Ralph F. Cox President of RABAR Enterprises 1991
(management consulting-engineering
industry, 1994). Prior to February 1994,
(67) 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 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 1992
1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon
(67) 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). 1997
Mr. Gates was Director of the Central
Intelligence Agency (CIA) from
(55) 1991-1993. From 1989 to 1991, Mr. Gates
served as Assistant to the President of
5
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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 President, is Chairman, Chief Executive 1974
3d Officer and a Director of FMR Corp.; a
Director and Chairman of the Board and
of the Executive Committee of FMR;
(69) 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. 1990
Jones was Chairman and Chief Executive
Officer of LTV Steel Company. He is a
(71) 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 Committee of University School
(Cleveland), and a Trustee of Cleveland
Clinic Florida.
Donald J. Kirk Executive-in-Residence (1995) at 1987
Columbia University Graduate School of
Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was
(66) 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 1990
to May 31, 1990, he was a Director of
FMR and Executive Vice President of FMR
(56) (a position he held until March 31,
6
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Year of
Election
Nominee or
(Age) Principal Occupation** Appointment
----- ---------------------- -----------
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 1997
University of North Carolina (16-school
system, 1995). Prior to his retirement
(65) 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 1989
(strategic advisory services). Mr.
McDonough is a Director of York
(71) 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), 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 1993
International, Inc. (office machines,
1991). Prior to 1991, he held the
(66) 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 1997
and a Director of FMR (1997); and
President and a Director of Fidelity
(53) 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. 1989
(management and financial advisory
services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the
7
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Year of
Election
Nominee or
(Age) Principal Occupation** Appointment
----- ---------------------- -----------
(71) 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 of 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).
** 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 fund owned, in the aggregate, less than 1% of the fund's 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
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 the fund for his or her
services for the fiscal year ended April 30, 1999, or calendar year ended
December 31, 1998, as applicable.
8
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COMPENSATION TABLE
Aggregate Total
Trustees and Members of the Advisory Compensation From Compensation From
Board Spartan Market the Fund
Index Fund B Complex*,A
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
Edward C. Johnson 3d ** $ 0 0
E. Bradley Jones $2,076 222,000
Donald J. Kirk $2,101 226,500
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
* 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.
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.
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.
9
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2. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS
OF THE FUND.
By a vote of the non-interested Trustees, the firm of Deloitte & Touche LLP
has been selected as independent accountants for the fund to sign or certify any
financial statements of the fund required by any law or regulation to be
certified by an independent accountant and filed with the Securities and
Exchange Commission (SEC) or any state. Pursuant to the 1940 Act, such selection
requires the ratification of shareholders. In addition, as required by the 1940
Act, the vote of the Trustees is subject to the right of the 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.
Deloitte & Touche LLP has advised the fund that it has no direct or material
indirect ownership interest in the fund.
For the fund's fiscal years ended April 30, 1997 and 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 fund's independent accountants beginning with the
fund's fiscal year ended April 30, 1999, upon the recommendation of the fund's
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 fund
and provide other audit and tax-related services. In recommending the selection
of the fund's accountants, the Audit Committee reviewed the nature and scope of
the services to be provided (including non-audit services) and whether the
performance of such services would affect the accountants' independence.
Representatives of Deloitte & Touche 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
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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.
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
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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:
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.
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.
OVERVIEW OF PROPOSALS 4(A), 4(B) AND 5
OVERVIEW OF PROPOSALS 4(A) AND 4(B). Bankers Trust Company ("BT"), the
fund's sub-adviser, is a wholly-owned subsidiary of Bankers Trust Corporation
("BT Corporation"). On _____, 1999, a wholly-owned subsidiary of Deutsche Bank
AG ("Deutsche Bank") merged with and into BT Corporation (the "BT Merger"). The
BT Merger could be considered a change of control of BT, resulting in the
assignment and automatic termination of the sub-advisory agreement dated
December 1, 1997, among FMR, BT, and the trust, on behalf of the fund (the "Old
Sub-Advisory Agreement"). THE BT MERGER HAS NO EFFECT ON THE FUND'S INVESTMENT
OBJECTIVE OR POLICIES.
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The Board of Trustees, including a majority of 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, an interim
sub-advisory agreement among FMR, BT, and the trust, on behalf of the fund (the
"Interim Sub-Advisory Agreement"), as described in Proposal 4(a). Under the
Interim Sub-Advisory Agreement, BT (subject to the supervision and direction of
the Board of Trustees and/or FMR) is required to provide the same investment
management, custodial, and securities lending services that it provided to the
fund under the Old Sub-Advisory Agreement. OTHER THAN THE EXECUTION AND
TERMINATION DATES, THE INTERIM SUB-ADVISORY AGREEMENT CONTAINS THE SAME TERMS
AND CONDITIONS AS THE OLD SUB-ADVISORY AGREEMENT. Under the Interim Sub-Advisory
Agreement, BT receives the same fees and expects to continue to provide the same
level and quality of services as under the Old Sub-Advisory Agreement.
On May 25, 1999, the SEC granted BT an exemptive order (the "BT Exemptive
Order") permitting the Interim Sub-Advisory Agreement to take effect, without
shareholder approval, on [INSERT THE LATER OF THE EFFECTIVE DATE OF THE BT
MERGER OR THE DATE ON WHICH THE SEC ISSUES THE BT EXEMPTIVE ORDER]. The BT
Exemptive Order permits the Interim Sub-Advisory Agreement to remain in effect,
for an interim period of up to 150 days, through the date on which it is
approved (or disapproved) by shareholders.
The Board of Trustees, including a majority of the Independent Trustees,
also has approved, and recommends that shareholders of the fund approve, a new
sub-advisory agreement among FMR, BT, and the trust, on behalf of the fund (the
"New Sub-Advisory Agreement"), as described in Proposal 4(b). If approved, the
New Sub-Advisory Agreement would replace the Interim Sub-Advisory Agreement
effective October 1, 1999 (or on the first day of the first month following
shareholder approval). If shareholders approve Proposal 4(b), BT (subject to the
supervision and direction of the Board of Trustees and/or FMR) will continue to
provide investment management, custodial, and securities lending services to the
fund, but all of these services will no longer be covered by the same contract.
While the Interim Sub-Advisory Agreement currently requires BT to provide
investment management, custodial, and securities lending services to the fund,
the New Sub-Advisory Agreement would require BT to provide only investment
management and custodial services to the fund. Under the fund's New Sub-Advisory
Agreement, FMR, NOT THE FUND, would pay BT for providing these services. In
conjunction with the New Sub-Advisory Agreement, BT and the trust, on behalf of
the fund, would enter into, and BT would continue to provide securities lending
services to the fund under, a new, separate securities lending agreement (the
"New Securities Lending Agreement"). Under the fund's New Securities Lending
Agreement, it is anticipated that the fund would pay BT lower fees for providing
securities lending services than the fund pays BT under the Interim Sub-Advisory
Agreement. As discussed below, shareholders are not being asked to approve the
New Securities Lending Agreement.
OVERVIEW OF PROPOSAL 5. Shareholder approval of the Interim Sub-Advisory
Agreement would not be necessary if the fund currently operated under a
so-called "manager-of-managers" arrangement. As described in Proposal 5, a
manager-of-managers arrangement would, among other things, permit FMR, with the
approval of the Board of Trustees, to enter into a new sub-advisory agreement if
a current agreement is assigned and automatically terminated, such as in the
case of the BT Merger. Thus, the proposed arrangement would avoid the expenses
and delays associated with holding a shareholder meeting to approve the new
agreement. Such an arrangement also would permit FMR, with the approval of the
Board of Trustees, to change sub-advisers or materially modify a sub-advisory
agreement without shareholder approval. THE PROPOSED ARRANGEMENT WOULD NOT,
HOWEVER, PERMIT FMR TO INCREASE THE FUND'S MANAGEMENT FEE RATE PAYABLE TO FMR
UNDER THE PRESENT MANAGEMENT CONTRACT WITHOUT SHAREHOLDER APPROVAL.
On May 19, 1999, FMR and the trust, on behalf of the fund, filed with the
Securities and Exchange Commission (the "SEC") an exemptive application seeking
authorization for the fund to operate under a manager-of-managers arrangement,
subject to shareholder approval and certain other conditions. Although the fund
cannot implement such an arrangement unless and until it receives the necessary
SEC authorization, the Board of Trustees is taking this opportunity to seek
shareholder approval of the proposed arrangement.
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Proposals 4(a), 4(b), and 5 do not affect the present management contract
dated December 1, 1997 between FMR and the trust, on behalf of the fund (the
"Present Management Contract"). SHAREHOLDER APPROVAL OF THE PROPOSALS WILL NOT
RESULT IN AN INCREASE OR A DECREASE IN THE FUND'S MANAGEMENT FEE RATE PAYABLE TO
FMR UNDER THE PRESENT MANAGEMENT CONTRACT. If shareholders approve the
proposals, FMR expects to continue to provide the same level and quality of
management services to the fund as it has always provided.
Refer to each proposal below for more detailed information.
4(A). TO APPROVE AN INTERIM SUB-ADVISORY AGREEMENT WITH BT FOR THE FUND.
The Board of Trustees, including a majority of the Independent Trustees,
has approved, and recommends that shareholders of the fund approve, the Interim
Sub-Advisory Agreement.
THE OLD SUB-ADVISORY AGREEMENT. As discussed above, prior to the effective
date of the BT Merger, BT served as the fund's sub-adviser pursuant to the Old
Sub-Advisory Agreement. The fund's shareholders approved the Old Sub-Advisory
Agreement at a special meeting held on November 19, 1997. At that meeting,
shareholders approved the appointment of BT as sub-adviser of the fund to handle
the day-to-day management of the fund's investments and to provide custodial and
securities lending services to the fund. FMR proposed, and the Board of Trustees
approved, BT's appointment as part of FMR's ongoing efforts to provide services
to the fund efficiently and at low cost.
Under the Old Sub-Advisory Agreement, BT (subject to the supervision and
direction of the Board of Trustees and/or FMR) directed the fund's investments
in accordance with its investment objective, policies, and limitations; voted
the fund's portfolio securities; provided custodial services to the fund; and
administered the fund's securities lending program. For providing these services
to the fund, FMR paid BT monthly fees at an annual rate of 0.006% of the fund's
average net assets, and the fund paid BT monthly fees equal to 40% of net income
from the fund's securities lending activities. The fund retained the remaining
60% of net income from its securities lending activities. Because the fees that
the fund paid BT were based on a percentage of net income from securities
lending, the fund paid the fees only to the extent that it earned income from
securities lending. For the fiscal year ended April 30, 1999, FMR, on behalf of
the fund, paid BT sub-advisory fees of $_____, and the fund paid BT sub-advisory
fees of $_____.
IMPACT OF BT MERGER ON OLD SUB-ADVISORY AGREEMENT. Generally, Section
15(a) of the 1940 Act requires that a fund's shareholders approve all agreements
pursuant to which persons serve as investment advisers or sub-advisers to the
fund. Section 15(a) also requires that such an agreement automatically terminate
if it is assigned. An assignment of a sub-advisory agreement may be deemed to
occur due to a change of control of the sub-adviser. Because BT became an
indirect, wholly-owned subsidiary of Deutsche Bank as a result of the BT Merger,
the BT Merger could be considered a change of control of BT, resulting in the
assignment and automatic termination of the Old Sub-Advisory Agreement.
THE INTERIM SUB-ADVISORY AGREEMENT. As discussed above, the BT Exemptive
Order permitted the Interim Sub-Advisory Agreement to become effective, without
shareholder approval, on _____, 1999. OTHER THAN THE EXECUTION AND TERMINATION
DATES, THE INTERIM SUB-ADVISORY AGREEMENT CONTAINS THE SAME TERMS AND CONDITIONS
AS THE OLD SUB-ADVISORY AGREEMENT. Under the Interim Sub-Advisory Agreement, BT
receives the same fees and expects to continue to provide the same level and
quality of services as under the Old Sub-Advisory Agreement.
Under the Interim Sub-Advisory Agreement, BT (subject to the supervision
and direction of the Board of Trustees and/or FMR) directs the fund's
investments in accordance with its investment objective, policies, and
limitations; votes the fund's portfolio securities; provides custodial services
to the fund; and administers the fund's securities lending program. For
providing these services to the fund, FMR pays BT monthly fees at an annual rate
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of 0.006% of the fund's average net assets, and the fund pays BT monthly fees
equal to 40% of net income from the fund's securities lending activities. The
fund retains the remaining 60% of net income from its securities lending
activities. Securities lending is a means of earning a modest amount of income
by lending the fund's securities to other parties temporarily. The party
borrowing the securities (typically a broker-dealer or other institution)
provides collateral to secure the loan, agrees to return the securities to the
fund upon notice, and pays the fund a fee for the loan (and/or allows it to earn
income on the collateral). Because the fees that the fund pays BT are based on a
percentage of net income from securities lending, the fund pays the fees only to
the extent that it earns income from securities lending.
Under the terms of the BT Exemptive Order, BT is permitted to earn fees
under the Interim Sub-Advisory Agreement, provided that the fees are held in
escrow pending shareholder approval of the Interim Sub-Advisory Agreement. In
accordance with the BT Exemptive Order, the fees that BT has earned to date
under the Interim Sub-Advisory Agreement have been held in escrow, and any
additional such fees will be held in escrow, until shareholders approve (or
disapprove) the Interim Sub-Advisory Agreement. [As of _____, 1999, the amount
in escrow totaled $_____.] (The portion of net income from the fund's securities
lending activities that the fund retains is not subject to the escrow
arrangement.) If shareholders approve the Interim Sub-Advisory Agreement, the
fees held in escrow, together with any interest thereon, will be released to BT.
If shareholders do not approve the Interim Sub-Advisory Agreement, the fees held
in escrow, together with any interest thereon, will be released to the fund.
A copy of the Interim Sub-Advisory Agreement is supplied as Exhibit 2 on
page _. The Interim Sub-Advisory Agreement became effective on _____, 1999. If
shareholders approve the New Sub-Advisory Agreement (see Proposal 4(b) below),
the New Sub-Advisory Agreement will become effective on October 1, 1999 (or on
the first day of the first month following approval), and the Interim
Sub-Advisory Agreement will terminate on that date. If shareholders approve the
Interim Sub-Advisory Agreement, but do not approve the New Sub-Advisory
Agreement, the Interim Sub-Advisory Agreement will remain in effect through July
31, 2000, 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. The Interim Sub-Advisory Agreement may be terminated on 60
days' written notice by the Board of Trustees and will terminate automatically
in the event of its assignment. In addition, the Interim Sub-Advisory Agreement
may be modified subject to both Board and shareholder approval.
MATTERS CONSIDERED BY THE BOARD. At meetings held on March 18, 1999 and
May 20, 1999, the Board of Trustees, including the Independent Trustees,
discussed the BT Merger and its implications for the fund and considered the
Interim Sub-Advisory Agreement. In approving the Interim Sub-Advisory Agreement
and recommending that it be presented to shareholders for their approval, the
Trustees considered the best interests of the shareholders and took into account
all factors that they deemed relevant. The Board of Trustees received materials
relating to the Interim Sub-Advisory Agreement in advance of the meeting at
which the Interim Sub-Advisory Agreement was considered, and had the opportunity
to ask questions and request further information in connection with such
consideration. During their deliberations, the Trustees considered that the
Interim Sub-Advisory Agreement has substantially the same terms and conditions
as the Old Sub-Advisory Agreement. The Trustees also considered that, under the
Interim Sub-Advisory Agreement, BT receives the same fees, and expects to
continue to provide the same level and quality of services to the fund, as under
the Old Sub-Advisory Agreement. The Trustees further considered that the fees
payable to BT under the Interim Sub-Advisory Agreement during the interim period
would be deposited in an interest-bearing escrow account and released to BT if
shareholders approve the Interim Sub-Advisory Agreement or to the fund if
shareholders do not approve the Interim Sub-Advisory Agreement. In addition, the
Board considered that BT recently pleaded guilty to misstating entries in the
bank's books and records, but that the events leading up to BT's guilty plea did
not arise out of the investment advisory or mutual fund activities of BT or its
affiliates (see "Activities and Management of Bankers Trust Company" beginning
on page _ below).
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CONCLUSION. The Board of Trustees has concluded that the Interim
Sub-Advisory Agreement will benefit the fund and its shareholders. The Board of
Trustees, including a majority of the Independent Trustees, voted to approve the
submission of the Interim Sub-Advisory Agreement to shareholders of the fund and
recommends that shareholders of the fund vote FOR the Interim Sub-Advisory
Agreement. If shareholders approve the Interim Sub-Advisory Agreement, the fees
held in escrow, together with any interest thereon, will be released to BT. If
shareholders do not approve the Interim Sub-Advisory Agreement, the fees held in
escrow, together with any interest thereon, will be released to the fund and the
Board of Trustees will consider what other action is in the best interest of the
fund and its shareholders.
4(B). TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH BT FOR THE FUND.
The Board of Trustees, including a majority of the Independent Trustees,
has approved, and recommends that shareholders of the fund approve, the New
Sub-Advisory Agreement. If shareholders approve this proposal, BT (subject to
the supervision and direction of the Board of Trustees and/or FMR) will continue
to provide investment management and custodial services to the fund under the
New Sub-Advisory Agreement, but will provide securities lending services to the
fund under the New Securities Lending Agreement. Shareholders are not being
asked to approve the New Securities Lending Agreement. SHAREHOLDER APPROVAL OF
THIS PROPOSAL WILL NOT RESULT IN AN INCREASE OR A DECREASE IN THE FUND'S
MANAGEMENT FEE RATE PAYABLE TO FMR UNDER THE PRESENT MANAGEMENT CONTRACT.
INTERIM SUB-ADVISORY AGREEMENT. As stated above, under the Interim
Sub-Advisory Agreement, BT (subject to the supervision and direction of the
Board of Trustees and/or FMR) directs the fund's investments in accordance with
its investment objective, policies, and limitations; votes the fund's portfolio
securities; provides custodial services to the fund; and administers the fund's
securities lending program. For providing these services to the fund, FMR pays
BT monthly fees at an annual rate of 0.006% of the fund's average net assets,
and the fund pays BT monthly fees equal to 40% of net income from the fund's
securities lending activities. The fund retains the remaining 60% of net income
from its securities lending activities. (As stated above, the fees that BT has
earned under the Interim Sub-Advisory Agreement are being held in escrow pending
shareholder approval of the Interim Sub-Advisory Agreement.) The Interim
Sub-Advisory Agreement explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
The fund's Interim (and Old) Sub-Advisory Agreements "bundle" investment
advisory and securities lending services (among other services) under one
contract. As a result of this kind of arrangement, the fund reports securities
lending fees as expenses and, therefore, includes the fees in its expense ratio.
Including securities lending fees in the fund's expense ratio makes the ratio
higher than it would be otherwise. The Board of Trustees believes that including
securities lending fees in the fund's expense ratio places the fund at a
competitive disadvantage relative to its universe of "competing" funds, which
were identified based on [investment objective and asset size]. The fund's
competitors generally have separate investment advisory and securities lending
agreements. If the fund had a separate agreement covering only securities
lending services, the fund (like its competitors) would net its securities
lending fees against its securities lending income (rather than report the fees
as expenses) and, therefore, would not include the fees in its expense ratio.
Because the fund's competitors do not include securities lending fees in their
expense ratios, [(assuming all other fees and expenses are equal)] the fund's
expense ratio [will]/[may] be higher than its competitors' expense ratios.
NEW SUB-ADVISORY AGREEMENT. If approved, under the New Sub-Advisory
Agreement, BT (subject to the supervision and direction of the Board of Trustees
and/or FMR) will continue to direct the fund's investments in accordance with
its investment objective, policies, and limitations; vote the fund's portfolio
securities; and provide custodial services to the fund. For providing these
services to the fund, FMR will pay BT monthly fees at an annual rate of 0.006%
of the fund's average net assets. THE FUND WILL NOT PAY BT FEES FOR PROVIDING
THESE SERVICES UNDER THE NEW SUB-ADVISORY AGREEMENT. BT expects to provide the
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same level and quality of investment management and custodial services to the
fund under the New Sub-Advisory Agreement as it currently provides under the
Interim Sub-Advisory Agreement. The New Sub-Advisory Agreement is subject to the
requirements of Section 15(a) of the 1940 Act and, therefore, shareholders are
being asked to approve the New Sub-Advisory Agreement. If shareholders approve
the New Sub-Advisory Agreement, BT and the trust, on behalf of the fund, will
enter into the New Securities Lending Agreement, pursuant to which BT will
continue to administer the fund's securities lending program. (See "New
Securities Lending Agreement" on page _ below.) Shareholders are not being asked
to approve the New Securities Lending Agreement.
The New Sub-Advisory Agreement would allow FMR, BT, and the trust, on
behalf of the fund, to amend the New Sub-Advisory Agreement subject to the
provisions of Section 15 of the 1940 Act, as modified or interpreted by the SEC.
In contrast, the Interim Sub-Advisory Agreement explicitly requires the vote of
a majority of the outstanding voting securities of the fund to authorize all
amendments. Generally, the New Sub-Advisory Agreement's amendment provisions
would allow amendment of the New Sub-Advisory Agreement without shareholder vote
ONLY IF THE 1940 ACT SO PERMITS. In short, the New Sub-Advisory Agreement's
amendment provisions give FMR, BT, and the trust added flexibility to amend the
New Sub-Advisory Agreement subject to 1940 Act constraints. Of course, any
amendments to the New Sub-Advisory Agreement would require the approval of the
Board of Trustees.
As stated above, FMR would pay all of BT's fees under the fund's New
Sub-Advisory Agreement. If shareholders approve the New Sub-Advisory Agreement,
FMR could, in the future and subject to the approval of the Board of Trustees,
amend the New Sub-Advisory Agreement to change the fees FMR pays to BT for
providing the services described above. IF SHAREHOLDERS APPROVE THE NEW
SUB-ADVISORY AGREEMENT, FMR COULD NOT, HOWEVER, IN THE FUTURE AMEND THE FUND'S
PRESENT MANAGEMENT CONTRACT TO INCREASE THE FUND'S MANAGEMENT FEE RATE PAYABLE
TO FMR THEREUNDER WITHOUT SHAREHOLDER APPROVAL.
A copy of the form of New Sub-Advisory Agreement is supplied as Exhibit 3
on page _. Except for the differences discussed above, the New Sub-Advisory
Agreement is substantially identical to the Interim Sub-Advisory Agreement. If
approved by shareholders, the New Sub-Advisory Agreement will replace the
Interim Sub-Advisory Agreement and take effect on October 1, 1999 (or on the
first day of the first month following approval), and will remain in effect
through July 31, 2000, 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. If shareholders do not approve the New
Sub-Advisory Agreement, but do approve the Interim Sub-Advisory Agreement, the
Interim Sub-Advisory Agreement will continue in effect as described in Proposal
4(a) above. The New Sub-Advisory Agreement may be terminated on 60 days' written
notice by the Board of Trustees and will terminate automatically in the event of
its assignment.
NEW SECURITIES LENDING AGREEMENT. As stated above, if shareholders approve
the New Sub-Advisory Agreement, BT and the trust, on behalf of the fund, will
enter into the New Securities Lending Agreement, pursuant to which BT will
continue to administer the fund's securities lending program. For providing
securities lending services, it is currently anticipated that the fund will pay
BT lower monthly fees equal to 35% of the fund's securities lending revenue (and
the fund will retain the remaining 65%). Once the aggregate assets of the fund
and Index 500 Portfolio, Spartan U.S. Equity Index Fund, Spartan Total Market
Index Fund, Spartan Extended Market Index Fund, and Spartan International Index
Fund (five other equity index funds managed by FMR and sub-advised by BT)
(collectively, the "Six Equity Index Funds") exceed $35 billion and the
aggregate assets of Spartan Total Market Index Fund, Spartan Extended Market
Index Fund and Spartan International Index Fund (collectively, the "Three Equity
Index Funds") exceed $600 million, the portion of securities lending revenue
payable to BT will be (i) 30% on the first $5 million per year, (ii) 25% on the
next $2.5 million per year, and (iii) 20% on the excess of securities lending
revenue per year over $7.5 million. As of April 30, 1999, the aggregate assets
of the Six Equity Index Funds were $31.2 billion, and the aggregate assets of
the Three Equity Index Funds were $420 million.
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As stated above, as a result of the New Securities Lending Agreement, the
fund would net its securities lending fees against its securities lending income
and, therefore, would not include the fees in its expense ratio. The New
Securities Lending Agreement is a service contract, not an investment advisory
contract. As such, the New Securities Lending Agreement is not subject to the
requirements of Section 15(a) of the 1940 Act and, therefore, SHAREHOLDERS ARE
NOT BEING ASKED TO APPROVE THE NEW SECURITIES LENDING Agreement. (See Proposal
4(a) above for a brief explanation of the fund's securities lending program.)
Shareholder approval would not be required for amendments to the New Securities
Lending Agreement (including changes to the anticipated fee structure). Of
course, any amendments to the New Securities Lending Agreement would require the
approval of the Board of Trustees.
IMPACT ON FUND EXPENSES. The following table illustrates the impact of the
proposal on the fund's expenses. The following table provides data concerning
the fund's [management and sub-advisory fees and] total operating expenses for
the fiscal year ended April 30, 1999, under the Interim Sub-Advisory Agreement
and if the New Sub-Advisory Agreement (and separate New Securities Lending
Agreement, as described above) had been in effect during the same period. The
following data are [based on historical expenses adjusted to reflect current
fees and are] calculated as percentages of the fund's average net assets. The
total operating expenses provided below do not reflect the effect of any expense
reimbursements during the period.
Interim Agreement New Agreements
----------------- --------------
Management Fee 0.24%** 0.24%
12b-1 Fees None None
Other Expenses 0.16% 0.16%
Total Operating Expenses* 0.40%** 0.40%
* FMR currently reimburses the fund to the extent that its total operating
expenses (with the exceptions noted below) exceed 0.19% of its average net
assets. Expenses eligible for reimbursement do not include interest,
taxes, brokerage commissions, or extraordinary expenses. Sub-advisory fees
paid by the fund associated with securities lending are not eligible for
reimbursement and, under the Interim Sub-Advisory Agreement, represent an
additional expense for the fund. The expense reimbursement arrangement
will remain in effect through December 31, 1999.
** Including sub-advisory fees of less than 0.01%, equal to 40% of net income
from securities lending (not visible due to rounding).
EXAMPLE: The following example 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.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Interim $41 $128 $224 $505
Agreement
New Agreements $41 $128 $224 $505
The purpose of the table and example above is to assist investors in
understanding the various costs and expenses of investing in shares of the fund.
The example above should not be considered a representation of past or future
expenses of the fund. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
MATTERS CONSIDERED BY THE BOARD. At a meeting held on May 20, 1999, the
Board of Trustees, including the Independent Trustees, considered the New
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Sub-Advisory Agreement. In approving the New Sub-Advisory Agreement and
recommending that it be presented to shareholders for their approval, the
Trustees considered the best interests of the shareholders and took into account
all factors that they deemed relevant. The Board of Trustees received materials
relating to the New Sub-Advisory Agreement in advance of the meeting at which
the New Sub-Advisory Agreement was considered, and had the opportunity to ask
questions and request further information in connection with such consideration.
During their deliberations, the Trustees considered that the New Sub-Advisory
Agreement has substantially the same terms and conditions as the Interim
Sub-Advisory Agreement, except that the New Sub-Advisory Agreement does not
provide for securities lending services or for shareholder approval of
amendments to the agreement. The Trustees also considered that, under the New
Sub-Advisory Agreement, BT receives the same fee from FMR, and expects to
continue to provide the same level and quality of investment management and
custodial services to the fund, as under the Interim Sub-Advisory Agreement. The
Board also determined that the securities lending services currently provided
for in the Interim Sub-Advisory Agreement are best provided for in a separate
securities lending agreement. The Board of Trustees considered that, under a
separate securities lending agreement, the fund would pay BT lower fees than
under the Interim Sub-Advisory Agreement. With regard to the amendment
provisions, the Board of Trustees and the Independent Trustees considered the
benefit to shareholders of FMR's, BT's and the trust's increased flexibility
(within 1940 Act constraints) to amend the New Sub-Advisory Agreement without
the delays and potential costs of a proxy solicitation. In addition, the Board
considered that BT recently pleaded guilty to misstating entries in the bank's
books and records, but that the events leading up to BT's guilty plea did not
arise out of the investment advisory or mutual fund activities of BT or its
affiliates (see "Activities and Management of Bankers Trust Company" beginning
on page _ below).
CONCLUSION. The Board of Trustees has concluded that the New Sub-Advisory
Agreement will benefit the fund and its shareholders. The Board of Trustees,
including a majority of the Independent Trustees, voted to approve the
submission of the New Sub-Advisory Agreement to shareholders of the fund and
recommends that shareholders of the fund vote FOR the New Sub-Advisory
Agreement. If approved, the New Sub-Advisory Agreement will take effect on the
first day of the first month following shareholder approval.
5. TO APPROVE A NEW "MANAGER-OF-MANAGERS" ARRANGEMENT FOR THE FUND.
At a meeting on March 18, 1999, the Board of Trustees, including a
majority of the Independent Trustees, voted to approve the submission of a
so-called "manager-of-managers" proposal to shareholders of the fund. Such an
arrangement, if approved, would permit FMR, with the approval of the Board of
Trustees, to hire, terminate, or replace sub-advisers, and to modify material
terms and conditions of a sub-advisory agreement (including the fees payable
thereunder) without shareholder approval. (Hence, FMR would act as a
"manager-of-managers.") THE ARRANGEMENT WOULD NOT, HOWEVER, PERMIT FMR TO
INCREASE THE FUND'S MANAGEMENT FEE RATE PAYABLE TO FMR UNDER THE PRESENT
MANAGEMENT CONTRACT WITHOUT SHAREHOLDER APPROVAL. As discussed below, the
arrangement may enable the fund to operate more efficiently because FMR would be
able to make these kinds of sub-advisory changes from time to time without the
expenses and delays associated with obtaining shareholder approval of the
changes. If shareholders approve the arrangement, the Board will continue to
consider and approve any sub-advisory changes that FMR proposes under the
arrangement to ensure that the changes are in the best interests of the fund and
its shareholders. For these and other reasons discussed below, the Board of
Trustees recommends that shareholders of the fund vote FOR the proposal.
REQUEST FOR SEC EXEMPTIVE RELIEF. Generally, Section 15(a) of the 1940 Act
requires that a fund's shareholders approve all agreements pursuant to which
persons serve as investment advisers or sub-advisers to the fund. On May 19,
1999, FMR and the trust, on behalf of the fund, filed with the SEC an
application (the "Application") seeking, among other relief, an exemption from
Section 15(a) (and certain other provisions of the 1940 Act) to permit FMR, with
the approval of the Board of Trustees, to hire, terminate, or replace
sub-advisers, and to modify material terms and conditions of a sub-advisory
agreement (including the fees payable thereunder) without shareholder approval.
If granted, the requested relief would not, however, permit FMR to enter into an
19
<PAGE>
agreement with a sub-adviser that is an affiliate of FMR, the trust, or the fund
(other than by reason of serving as sub-adviser to the fund) or to change the
sub-advisory fee to be paid to an affiliated sub-adviser, without shareholder
approval. If granted, the requested relief would apply, for instance, where a
sub-advisory agreement is automatically terminated as a result of a change of
control (such as a merger) of the sub-adviser. In such case, the sub-adviser
could continue to serve as sub-adviser to the fund under a new agreement
approved by the Board but not by the fund's shareholders. IF GRANTED, THE
REQUESTED RELIEF WOULD NOT APPLY TO THE PRESENT MANAGEMENT CONTRACT. ANY CHANGES
TO THE PRESENT MANAGEMENT CONTRACT, INCLUDING ANY CHANGE IN THE FUND'S
MANAGEMENT FEE RATE PAYABLE TO FMR, WOULD REMAIN SUBJECT TO THE BOARD AND
SHAREHOLDER APPROVAL REQUIREMENTS OF SECTION 15(A) OF THE 1940 ACT.
The Application currently is pending at the SEC. There can be no assurance
that the SEC will grant the requested relief. One of the SEC's conditions to
implementing such relief, if granted, is expected to be that the proposed
arrangement be approved by a majority of the fund's outstanding voting
securities. Because the BT Merger required the Board of Trustees to call a
special meeting to seek shareholder approval of the Interim Sub-Advisory
Agreement, the Board of Trustees is taking this opportunity to seek shareholder
approval of the proposed arrangement, as well. If the SEC grants the requested
relief and shareholders approve the proposal, it is expected that the trust and
FMR will be required to comply with certain additional SEC conditions in order
for the fund to implement and operate under the arrangement. For example, it is
expected that the fund will be required to provide shareholders with relevant
information (that otherwise would be provided in a proxy statement) within a
specified period of time after hiring a new sub-adviser, and the fund will be
required to disclose in its prospectus certain aspects of the
manager-of-managers arrangement.
FMR'S ROLE AS THE "MANAGER-OF-MANAGERS." FMR serves as the fund's manager
pursuant to the Present Management Contract. The fund's shareholders last
approved the Present Management Contract at a special meeting held on November
19, 1997. Under the Present Management Contract, FMR provides the fund with
investment research, advice, and supervision, and furnishes an investment
program for the fund consistent with the fund's investment objectives and
policies. The Present Management Contract expressly permits FMR to appoint
sub-advisers to perform any or all of the services specified in the contract.
FMR is responsible for recommending to the Board of Trustees the hiring,
termination, and replacement of sub-advisers; supervising and evaluating the
performance of sub-advisers; and negotiating and, as circumstances warrant,
renegotiating the terms and conditions of any sub-advisory agreement (including
the fees payable thereunder). FMR believes that these duties have benefited, and
will continue to benefit, the fund because FMR is able to select those
sub-advisers who are particularly well-suited to manage the fund's investment
portfolio. (For a discussion of the fund's Present Management Contract,
including the fees payable to FMR thereunder, refer to the section entitled
"Present Management Contract," beginning on page _.) Although BT is currently
the only sub-adviser to the fund, FMR may, in the future, enter into
sub-advisory agreements with one or more additional sub-advisers. FMR does not
anticipate frequent changes in sub-advisers.
REASONS FOR PROPOSAL. The Board of Trustees believes that permitting FMR
to perform the duties for which shareholders of the fund pay FMR - selecting,
supervising, and evaluating the sub-advisers - without incurring the unnecessary
expenses or delays of obtaining shareholder approval is in the best interests of
the fund's shareholders and will allow the fund to operate more efficiently.
Currently, in order for FMR to appoint a sub-adviser or materially modify a
sub-advisory agreement, the trust must call and hold a special shareholder
meeting, create and distribute proxy materials, and solicit votes from the
fund's shareholders. This process is time-intensive, slow and costly. These
costs are generally borne by the fund, provided they do not exceed the fund's
existing expense cap. Without the delay inherent in holding shareholder
meetings, the Board of Trustees would be able to act more quickly and with less
expense to appoint a sub-adviser when the Board and FMR believe that the
appointment would benefit the fund and its shareholders. Furthermore, the Board
of Trustees believes that it is appropriate to vest these duties in FMR (subject
to the Board of Trustees' review) in light of FMR's significant experience and
expertise and shareholders' expectation that FMR will utilize that experience
and expertise to select the most competent sub-advisers for the fund.
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<PAGE>
Moreover, the Board will provide oversight of the sub-adviser selection
process to help ensure that shareholders' interests are protected if FMR selects
a new sub-adviser or modifies a sub-advisory agreement. The Board, including a
majority of the Independent Trustees, will evaluate and approve all new
sub-advisory agreements, as well as any modifications to all sub-advisory
agreements. In its review, the Board will analyze all factors that it considers
to be relevant to the determination, including the nature, quality and scope of
services provided by the sub-advisers. The Board will compare the investment
performance of the assets managed by the sub-advisers with other accounts with
similar investment objectives managed by other advisers and will review the
sub-advisers' compliance with federal securities laws and regulations. The Board
of Trustees believes that its review will ensure that FMR continues to act in
the best interest of the fund and its shareholders.
CONCLUSION. The Board of Trustees, including a majority of the
Independent Trustees, voted to approve the submission of the manager-of-managers
proposal to shareholders of the fund and recommends that shareholders of the
fund vote FOR the proposal. As stated above, the fund's implementation of a
manager-of-managers arrangement is also conditioned upon receipt of the
requested exemptive relief from the SEC. If the SEC declines to grant the relief
requested in the Application, the fund will not implement the proposed
arrangement.
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 Spartan Market
Index Fund and advised by FMR is contained in the Table of Average Net Assets
and Expense Ratios in Exhibit 4 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, and Robert A. Lawrence are currently
officers of the trust and officers or employees of FMR or FMR Corp. With the
exception of Mr. Costello and Mr. Karstetter, 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.
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.
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<PAGE>
ACTIVITIES AND MANAGEMENT OF BANKERS TRUST COMPANY
BT, a New York banking corporation with principal offices at 130 Liberty
Street, New York, New York 10006, is a wholly owned subsidiary of Bankers Trust
Corporation (formerly Bankers Trust New York Corporation) ("BT Corporation"),
whose principal offices are also at 130 Liberty Street, New York, New York
10006. BT was founded in 1903. As of March 31, 1999, BT Corporation was the
seventh largest bank holding company in the United States with total assets of
approximately $127 billion. BT is a worldwide merchant bank that conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets. Investment management is a core business of BT. As of March 31, 1999,
BT had over $378 billion in assets under management globally. Of that total,
over $183 billion was in U.S. equity index assets. This makes BT one of the
nation's leading managers of index funds.
On November 30, 1998, BT Corporation, Deutsche Bank AG ("Deutsche Bank"), and
Circle Acquisition Corporation ("Circle Corporation"), a wholly owned subsidiary
of Deutsche Bank, entered into a merger agreement ("BT Merger Agreement").
Pursuant to the terms of the BT Merger Agreement, Circle Corporation merged with
and into BT Corporation on _____, 1999, with BT Corporation continuing as the
surviving entity ("BT Merger"). Although the direct corporate ownership of BT
was not affected by the BT Merger and BT remains a wholly owned subsidiary of BT
Corporation, as of the date of the BT Merger, BT became an indirect, wholly
owned subsidiary of Deutsche Bank. Deutsche Bank, a banking company organized
under the laws of the Federal Republic of Germany, provides, along with its
various subsidiaries, a comprehensive range of global banking and financial
services both domestically and abroad. As of September 30, 1998, Deutsche Bank
and its affiliates had total assets of approximately $689.6 billion, with over
$___ billion in assets under management. (See also "Overview of Proposals"
beginning on page __.)
In conjunction with its global custodial services, BT operates one of the
largest and most extensive securities lending programs. BT serves as securities
lending agent with respect to loan transactions involving a daily average in
excess of $57 billion on loan. Approximately 90 lenders participated in BT's
program during 1998.
Information concerning the advisory or sub-advisory fees and average net
assets of funds with investment objectives similar to Spartan Market Index Fund
and advised or sub-advised by BT is contained in the Table of Average Net Assets
and Expense Ratios in Exhibit 5 beginning on page __. The name, address and
principal occupation of each director and the principal executive officer of BT
is provided in Exhibit 6 beginning on page _.
No officer or Trustee of the trust is an officer, employee or director of BT.
No officer or Trustee of the trust owns any securities of, or has any other
material direct or indirect interest in, BT, BT Corporation, or any entity
controlled by or under common control with BT. During the period March 1, 1998
through May 31, 1999, [no material transactions] were entered into by any
Trustee or nominee as Trustee of the trust to which BT, BT Corporation, or any
entity controlled by or under common control with BT is or was a party.
BT has been advised by counsel that BT currently may perform the services for
the fund described in this proxy statement without violation of the
Glass-Steagall Act or other applicable banking laws or regulations. State laws
on this issue may differ from the interpretation of relevant federal law and
banks and financial institutions may be required to register as dealers pursuant
to state securities law.
On March 11, 1999, BT announced that it had reached an agreement with the
United States Attorney's Office in the Southern District of New York to resolve
an investigation concerning inappropriate transfers of unclaimed funds and
related record keeping problems that occurred between 1994 and early 1996.
Pursuant to its agreement with the U.S. Attorney's Office, BT pleaded guilty to
misstating entries in the bank's books and records and agreed to pay a $60
million fine to federal authorities. Separately, BT agreed to pay a $3.5 million
fine to the State of New York. The events leading up to the guilty plea did not
arise out of the investment advisory or mutual fund activities of BT or its
affiliates. As a result of the plea, absent an order from the Commission, BT
would not be able to continue to provide investment advisory services to the
fund. The Commission has granted a temporary order to permit BT and its
affiliates to continue to provide investment advisory services to registered
investment companies. There is no assurance that the Commission will grant a
permanent order. If a permanent order is not granted, FMR and the Board of
Trustees will consider appropriate actions, including selecting, approving, and
submitting for shareholder approval (if required at the time) a replacement
sub-adviser.
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<PAGE>
PRESENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services. FMR
provides the fund with all necessary office facilities and personnel for
servicing the fund's investments, compensates all officers of the fund and all
Trustees who are "interested persons" of the trust or of FMR, and all personnel
of the 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 the fund. These services include providing facilities for
maintaining the fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters, and other persons
dealing with the fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal securities laws and making
necessary filings under state securities laws; developing management and
shareholder services for the fund; and furnishing reports, evaluations, and
analyses on a variety of subjects to the Trustees.
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
Interim 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, administers the securities
lending program of the fund, and provides custodial services to the fund.
In addition to the management fee payable to FMR, the sub-advisory fee
payable to BT, and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent and pricing and bookkeeping agent, 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.
Transfer agent fees and pricing and bookkeeping fees, including reimbursement
for out-of-pocket expenses, paid to Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, by the fund for the fiscal year ended April 30, 1999, amounted
to $______ and $______, respectively.
The 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. The distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure purchasers for
shares of the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer and sale of
shares are paid by FMR.
FMR is the fund's manager pursuant to a management contract dated December 1,
1997, which was last approved by shareholders on November 19, 1997. At that
time, shareholder approval had been obtained to amend the management contract to
(1) expressly permit FMR to delegate investment advisory authority to an
investment adviser, and (2) replace the fund's then "all-inclusive" management
fee structure with a "flat" management fee structure. Under the all-inclusive
fee structure, the fund paid FMR a management fee at an annual rate of 0.45% of
the fund's average net assets. For this fee, FMR provided management services to
the fund and also was responsible for paying the fund's other expenses (with
limited exceptions). Under the flat fee structure, the fund pays FMR a lower
management fee at an annual rate of 0.24% of the fund's average net assets, but
the fund is responsible for paying its other expenses (unless borne by FMR under
an expense reimbursement arrangement).
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<PAGE>
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 its average net assets
throughout the month. The fee received by FMR for the fiscal year ended April
30, 1999 from the fund was $_______, of which $______ was reimbursed by FMR.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's total operating expenses (exclusive of sub-advisory fees associated with
securities lending, interest, taxes, 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 April 18, 1997, FMR has agreed to reimburse the fund to the extent
that its total operating expenses (with the exceptions noted below), as a
percentage of its average net assets, exceed 0.19%. Expenses eligible for
reimbursement do not include interest, taxes, brokerage commissions and
extraordinary expenses. In addition, sub-advisory fees paid by the fund
associated with securities lending are not eligible for reimbursement. This
arrangement will remain in effect through December 31, 1999.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by BT pursuant to authority contained in the fund's
management contract and sub-advisory agreement.
BT may use research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage Services
(Japan), LLC (FBSJ), indirect subsidiaries of FMR Corp., and BT Brokerage
Corporation and BT Futures Corp., indirect subsidiaries of BT Corporation, 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.]
[For the fiscal year ended April 30, 1999, the fund paid no brokerage
commissions to affiliated brokers.]/[During the fiscal year ended April 30,
1999, the fund paid brokerage commissions of $______ to NFSC, $______ to FBSJ,
[$______ to FBS,] $______ to BT Brokerage Corporation, and $______ to BT Futures
Corp.]
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.
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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.
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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;))
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[(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))
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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
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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
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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
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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,
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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.
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((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
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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
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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
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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.))
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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
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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.
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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;
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(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))
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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
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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))
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(((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
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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
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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]
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EXHIBIT 2
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUBADVISORY AGREEMENT
This Agreement is entered into as of the [1st] ((___)) day of
[December] ((______________)), [1997] ((1999)), among Fidelity Commonwealth
Trust, a Massachusetts business trust (the "Trust"), on behalf of Spartan Market
Index Fund, a series portfolio of the Trust (the "Portfolio"), Fidelity
Management & Research Company, a Massachusetts corporation ("Manager"), and
Bankers Trust Company, a New York banking corporation ("Subadviser").
WHEREAS, the Trust, on behalf of the Portfolio, has entered into a
Management Contract, dated December 1, 1997, with Manager (the "Management
Contract"), pursuant to which Manager has agreed to provide certain management
and administrative services to the Portfolio; and
WHEREAS, Manager desires to appoint Subadviser as investment subadviser
to provide the investment advisory and administrative services to the Portfolio
specified herein, and Subadviser is willing to serve the Portfolio in such
capacity; and
WHEREAS, the trustees of the Trust (the "Trustees"), including a
majority of the Trustees who are not "interested persons" (as such term is
defined below) of any party to this Agreement, and the shareholder(s) of the
Portfolio, have each consented to such an arrangement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
I. APPOINTMENT OF SUBADVISER; COMPENSATION
1.1 APPOINTMENT AS SUBADVISER. Subject to and in accordance with the
provisions hereof, Manager hereby appoints Subadviser as investment subadviser
to perform the various investment advisory and other services to the Portfolio
set forth herein and, subject to the restrictions set forth herein, hereby
delegates to Subadviser the authority vested in Manager pursuant to the
Management Contract to the extent necessary to enable Subadviser to perform its
obligations under this Agreement.
1.2 SCOPE OF INVESTMENT AUTHORITY. (a) The Subadviser is hereby
authorized, on a discretionary basis, to manage the investments and determine
the composition of the assets of the Portfolio, subject at all times to (i) the
supervision and control of the Trustees, (ii) the requirements of the Investment
Company Act of 1940 and rules thereunder, as amended from time to time (the
"Investment Company Act"), (iii) the investment objective, policies and
limitations, as provided in the Portfolio's Prospectus and other governing
documents, and (iv) such instructions, policies and limitations relating to the
Portfolio as the Trustees or Manager may from time to time adopt and communicate
in writing to Subadviser. Notwithstanding anything herein to the contrary,
Subadviser is not authorized to take any action, including the purchase and sale
of portfolio securities, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous sentence.
(b) It is understood and agreed that, for so long as this Agreement
shall remain in effect, Subadviser shall retain discretionary investment
authority over the manner in which the Portfolio's assets are invested, and
<PAGE>
Manager shall not have the right to overrule any investment decision with
respect to a particular security made by Subadviser, PROVIDED that the Trustees
and Manager shall at all times have the right to monitor the Portfolio's
investment activities and performance, require Subadviser to make reports and
give explanations as to the manner in which the Portfolio's assets are being
invested, and, should either Manager or the Trustees become dissatisfied with
Subadviser's performance in any way, terminate this Agreement in accordance with
the provisions of Section 9.2 hereof.
1.3 APPOINTMENT AS PROXY VOTING AGENT. Subject to and in accordance
with the provisions hereof, the Trustees hereby appoint Subadviser as the
Portfolio's proxy voting agent, and hereby delegate to Subadviser discretionary
authority to vote all proxies solicited by or with respect to issuers of
securities in which the assets of the Portfolio may be invested from time to
time. Upon written notice to Subadviser, the Trustees may at any time withdraw
the authority granted to Subadviser pursuant to this Section 1.3 to perform any
or all of the proxy voting services contemplated hereby.
1.4 GOVERNING DOCUMENTS. Manager will provide Subadviser with copies of
(i) the Trust's Declaration of Trust and By-laws, as currently in effect, (ii)
the Portfolio's currently effective prospectus and statement of additional
information, as set forth in the Trust's registration statement under the
Investment Company Act and the Securities Act of 1933, as amended, (iii) any
instructions, investment policies or other restrictions adopted by the Trustees
or Manager supplemental thereto, and (iv) the Management Contract. Manager will
provide Subadviser with such further documentation and information concerning
the investment objectives, policies and restrictions applicable to the Portfolio
as Subadviser may from time to time reasonably request.
1.5 SUBADVISER'S RELATIONSHIP. Notwithstanding anything herein to the
contrary, Subadviser shall be an independent contractor and will have no
authority to act for or represent the Trust, the Portfolio or Manager in any way
or otherwise be deemed an agent of any of them, except to the extent expressly
authorized by this Agreement or in writing by the Trust or Manager.
1.6 COMPENSATION. Subadviser shall be compensated for the services it
performs on behalf of the Portfolio in accordance with the terms set forth in
Appendix A to this Agreement.
II. SERVICES TO BE PERFORMED BY SUBADVISER
2.1 INVESTMENT ADVISORY SERVICES. (a) In fulfilling its obligations to
manage the assets of the Portfolio, Subadviser will:
(i) formulate and implement a continuous investment program
for the Portfolio, including, without limitation, implementation of a
securities lending program in accordance with the provisions of Article
III hereof;
(ii) take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities and other
investments, including the selection of brokers or dealers, the placing
of orders for such purchases and sales in accordance with the
provisions of paragraph (b) below and assuring that such purchases and
sales are properly settled and cleared;
(iii) provide such reports with respect to the implementation
of the Portfolio's investment program as the Trustees or Manager shall
reasonably request; and
(iv) provide advice and assistance to Manager as to the
determination of the fair value of certain securities where market
quotations are not readily available for purposes of calculating net
asset value of the Portfolio in accordance with valuation procedures
and methods established by the Trustees.
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(b) The Subadviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers and dealers
selected by Subadviser. Such brokers and dealers may include brokers or dealers
that are "affiliated persons" (as such term is defined in the Investment Company
Act) of the Trust, the Portfolio, Manager or Subadviser, PROVIDED that
Subadviser shall only place orders on behalf of the Portfolio with such
affiliated persons in accordance with procedures adopted by the Trustees
pursuant to Rule 17e-1 under the Investment Company Act. The Subadviser 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 other
accounts over which Subadviser or its affiliates exercise investment discretion.
The Subadviser is authorized to pay a broker or dealer who provided 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
Subadviser 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 Subadviser and
its affiliates have in respect to accounts over which they exercise investment
discretion. The Trustees shall periodically review the commissions paid by the
Portfolio to determine if the commissions paid over representative periods were
reasonable in relation to the benefits to the Portfolio.
2.2. ADMINISTRATIVE AND OTHER SERVICES. (a) Subadviser will, at its
expense, furnish (i) all necessary investment and management facilities,
including salaries of personnel required for it to execute its duties
faithfully, and (ii) administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of the investment
affairs of the Portfolio (excluding determination of net asset values and
shareholder accounting services).
(b) Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and the
rules thereunder. Subadviser agrees that such records are the property of the
Trust, and will be surrendered to the Trust promptly upon request. The Manager
shall be granted reasonable access to the records and documents in Subadviser's
possession relating to the Portfolios.
(c) Subadviser shall provide such information as is necessary to enable
Manager to prepare and update the Trust's registration statement (and any
supplement thereto) and the Portfolio's financial statements. Subadviser
understands that the Trust and Manager will rely on such information in the
preparation of the Trust's registration statement and the Portfolio's financial
statements, and hereby covenants that any such information approved by
Subadviser expressly for use in such registration and/or financial statements
shall be true and complete in all material respects.
(d) Subadviser will vote the Portfolio's investment securities in the
manner in which Subadviser believes to be in the best interests of the
Portfolio, and shall review its proxy voting activities on a periodic basis with
the Trustees.
(e) Subadviser will provide custodian services to the Portfolio in
accordance with the provisions of a separate Custodian Agreement, dated as of
the date hereof, between the Trust, on behalf of the Portfolio, and Subadviser.
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III. SECURITIES LENDING
3.1. APPOINTMENT AS AGENT. For as long as this Agreement shall remain
in effect, Subadviser is hereby authorized as the Portfolio's agent to lend on a
disclosed basis the Portfolio's securities. Subadviser is further authorized as
the Portfolio's agent to sign agreements with borrowers, ownership or other
certificates as may be required by the Internal Revenue Service or any other tax
authorities, and to take any other actions necessary to effect such loans.
3.2. INDEMNIFICATION. (a) In the event that any securities lending
transaction is terminated and the loaned securities or any portion thereof shall
not have been returned to the Portfolio by or on behalf of the borrower within
the time specified by Subadviser's agreement with the borrower (the "Delivery
Date"), Subadviser shall, at its expense, within one (1) business day after the
Delivery Date replace the loaned securities (or any portion thereof not so
returned) with a like amount of the loaned securities of the same issuer, class
and denomination, and hold the Portfolio, the Trustees and Manager harmless from
any brokerage commission, fees, taxes or other expenses incurred by Subadviser
in the purchase of such replacement securities. If Subadviser is unable to
purchase such replacement securities on the open market within one business day
after the Delivery Date (the "Reimbursement Date"), Subadviser shall credit the
Portfolio's account by the close of business on the Reimbursement Date with an
amount of cash in U.S. dollars equal to (i) if the Portfolio shall continue to
hold such unreturned loaned securities, the Market Value (as defined below) of
such unreturned loaned securities determined at the close of business as of the
Reimbursement Date, plus all financial benefits derived from the beneficial
ownership of the unreturned loaned securities which have accrued on such
securities whether or not received from borrower, or (ii) if the Portfolio shall
have sold such securities prior to the Reimbursement Date, (x) the sale proceeds
in respect of such sale, to the extent not received by the Portfolio, plus (y)
any interest, penalties, fees or other costs, if any, incurred by the Portfolio
as a direct result of a failure to settle such sale on a timely basis, PROVIDED
that such interest, penalties, fees or other costs shall not include any
consequential or special damages which may arise out of such failure to settle
such sale on a timely basis. The "Market Value" of any securities on any given
day shall be the fair market value of such security on such day, as determined
in accordance with the Portfolio's valuation procedures and methods, as adopted
by the Trustees.
(b) In the event that Subadviser shall be required to make any payment
to the Portfolio or shall incur any loss or expense pursuant to paragraph (a)
above, it shall, to the extent of such payment or loss or expense, be subrogated
to, and succeed to, all of the Portfolio's rights against the borrower and to
the collateral involved. To the extent the collateral consists of cash or
securities issued or guaranteed by the United States Government or its agencies,
the Portfolio shall contemporaneously with any such payment to the Portfolio by
Subadviser surrender same to Subadviser for its sole disposition.
(c) Notwithstanding the foregoing, in no event shall Subadviser incur
liability pursuant to paragraph (a) above if Subadviser is prevented, forbidden
or delayed from causing a loaned security to be returned to the Portfolio by the
applicable Delivery Date by reason of (i) any provision of any present or future
law or regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof, or of any
court of competent jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of Subadviser unless, in each case, such delay
or nonperformance is caused by (A) the negligence, misfeasance or misconduct of
Subadviser or any of its directors, officers, employees or agents, or (B) a
malfunction or failure of equipment operated or utilized by Subadviser other
than a malfunction or failure beyond Subadviser's control and which could not
have been reasonably anticipated and/or prevented by Subadviser.
3.3. MARKET RISK. The Portfolio acknowledges that any cash collateral
provided by a borrower in respect of a securities lending transaction may be
invested by Subadviser on the Portfolio's behalf at the Portfolio's risk, and
if, upon termination of any loan, the cash collateral held by Subadviser for
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Portfolio's account is less than the amount required to be returned to the
borrower under Subadviser's agreement with the borrower, the Portfolio will
provide borrower with cash in the amount of any such deficiency.
3.4. SUBADVISER'S RELATIONSHIPS WITH BORROWERS. The Portfolio
acknowledges that Subadviser or its affiliates may be a creditor of, for its own
account or in a fiduciary capacity, or generally engage in any kind of
commercial or investment banking business with, a borrower, to whom Subadviser
has lent the Portfolio's securities. Without limiting the generality of the
foregoing, Subadviser shall not be required to disclose to the Portfolio or
Manager any financial information about a borrower obtained in the course of its
relationship with such borrower.
3.5 SECURITIES LENDING PROCEDURES. Subadviser's securities lending
activities on behalf of the Portfolio shall be governed by such procedures as
shall be adopted by the Trustees or Manager, as the same may be amended from
time to time.
IV. COMPLIANCE; CONFIDENTIALITY
4.1 COMPLIANCE. (a) Subadviser will comply with (i) all applicable
state and federal laws and regulations governing the performance of the
Subadviser's duties hereunder, (ii) the investment objective, policies and
limitations, as provided in the Portfolio's Prospectus and other governing
documents, and (iii) such instructions, policies and limitations relating to the
Portfolio as the Trustees or Manager may from time to time adopt and communicate
in writing to subadviser.
(b) Subadviser will adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and will provide the
Trust with a copy of such code of ethics, evidence of its adoption and copies of
any supplemental policies and procedures implemented to ensure compliance
therewith.
4.2 CONFIDENTIALITY. The parties to this Agreement agree that each
shall treat as confidential all information provided by a party to the others
regarding such party's business and operations, including without limitation the
investment activities or holdings of the Portfolio. All confidential information
provided by a party hereto shall be used by any other parties hereto solely for
the purposes of rendering services pursuant to this Agreement and, except as may
be required in carrying out the terms of this Agreement, shall not be disclosed
to any third party without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is publicly available
when provided or which thereafter becomes publicly available other than in
contravention of this Section 4.2 or which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of its jurisdiction
over a party, any auditor of the parties hereto, by judicial or administrative
process or otherwise by applicable law or regulation.
V. LIABILITY OF SUBADVISER
5.1 LIABILITY; STANDARD OF CARE. Notwithstanding anything herein to the
contrary, except as provided in Section 3.2 hereof, neither Subadviser, nor any
of its directors, officers or employees, shall be liable to Manager or the Trust
for any loss resulting from Subadviser's acts or omissions as Subadviser to the
Portfolio, except to the extent any such losses result from bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of the
Subadviser or any of its directors, officers or employees in the performance of
the Subadviser's duties and obligations under this Agreement.
5.2 INDEMNIFICATION. (a) Subadviser agrees to indemnify and hold the
Trust and Manager harmless from any and all direct or indirect liabilities,
losses or damages (including reasonable attorneys fees) suffered by the Trust or
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Manager resulting from (i) Subadviser's breach of its duties hereunder, or (ii)
bad faith, willful misfeasance, reckless disregard or gross negligence on the
part of the Subadviser or any of its directors, officers or employees in the
performance of the Subadviser's duties and obligations under this Agreement,
except to the extent such loss results from the Trust's or Manager's own willful
misfeasance, bad faith, reckless disregard or negligence in the performance of
their respective duties and obligations under the Management Contract or this
Agreement.
(b) Manager hereby agrees to indemnify and hold Subadviser harmless
from any and all direct or indirect liabilities, losses or damages (including
reasonable attorney's fees) suffered by Subadviser resulting from (i) Manager's
breach of its duties under Management Contract, or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of Manager or
any of its directors, officers or employees in the performance of Manager's
duties and obligations under this Agreement, except to the extent such loss
results from Subadviser's own willful misfeasance, bad faith, reckless disregard
or negligence in the performance of Subadviser's duties and obligations under
this Agreement.
VI. SUPPLEMENTAL ARRANGEMENTS; EXPENSES; INSURANCE
6.1 SUPPLEMENTAL ARRANGEMENTS. Subject to the prior written consent of
the Trustees and Manager, Subadviser may enter into arrangements with other
persons affiliated with Subadviser to better fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to Subadviser,
provided that such arrangements do not rise to the level of an advisory contract
subject to the requirements of Section 15 of the Investment Company Act.
6.2 EXPENSES. It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by Subadviser hereunder
or by Manager under the Management Agreement. Subadviser expressly agrees to pay
the cost of all custody services required by the Portfolio. Expenses paid by the
Portfolios will include, but not be limited to, (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
Trustees other than those who are "interested persons" of the Trust, Manager or
Subadviser; (iv) legal and audit expenses; (v) 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 therefor; (ix) a pro rata share
based on the relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts with
the Manager, of 50% of insurance premiums for fidelity bond and other coverage;
(x) investment management fees; (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
any legal obligation that the Portfolio may have to indemnify the Trustees,
officers and/or employees or agents with respect thereto. Subadviser shall not
cause the Trust or the Portfolios to incur any expenses, other than those
reasonably necessary for Subadviser to fulfill its obligations under this
Agreement, unless Subadviser has first notified Manager of its intention to do
so.
6.3 INSURANCE. Subadviser shall maintain for the duration hereof, with
an insurer acceptable to Manager, a blanket bond and professional liability
(errors and omissions) insurance in amounts reasonably acceptable to Manager.
Subadviser agrees that such insurance shall be considered primary and Subadviser
shall assure that such policies pay claims prior to similar policies that may be
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maintained by Manager. In the event Subadviser fails to have in force such
insurance, that failure will not exclude Subadviser's responsibility to pay up
to the limit Subadviser would have had to pay had said insurance been in force.
VII. CONFLICTS OF INTEREST
7.1 CONFLICTS OF INTEREST. It is understood that the Trustees,
officers, agents and shareholders of the Trust are or may be interested in
Subadviser as directors, officers, stockholders or otherwise; that directors,
officers, agents and stockholders of Subadviser are or may be interested in the
Trust as trustees, officers, shareholders or otherwise; that Subadviser may be
interested in the Trust; and that the existence of any such dual interest shall
not affect the validity of this Agreement or of any transactions hereunder
except as otherwise provided in the Trust's Declaration of Trust and the
Articles of Incorporation of Subadviser, respectively, or by specific provisions
of applicable law.
VIII. REGULATION
8.1 REGULATION. Subadviser shall submit to all regulatory and
administrative bodies having jurisdiction over the services provided pursuant to
this Agreement any information, reports or other material which any such body by
reason of this Agreement may reasonably request or require pursuant to
applicable laws and regulations.
IX. DURATION AND TERMINATION OF AGREEMENT
9.1 EFFECTIVE DATE; DURATION; CONTINUANCE. (a) This Agreement shall
become effective on [December 1, 1997] ((_______, 1999)).
(b) Subject to prior termination pursuant to Section 9.2 below, this
Agreement shall continue in force until July 31, [1998] ((____)), 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 or by a
vote of a majority of the outstanding voting securities of the Portfolio,
PROVIDED that in either event such continuance shall also be approved by the
vote of a majority of the Trustees who are not "interested persons" (as such
term is defined in the Investment Company Act) of any party to this Agreement
cast in person at a meeting called for the purpose of voting on such approval.
(c) Shareholder approval of this Agreement or any continuance of this
Agreement, if required, shall be effective with respect to the Portfolio if a
majority of the outstanding voting securities of the series (as defined in Rule
18f-2(h) under the Investment Company Act) of shares of the Portfolio votes to
approve this Agreement or its continuance.
9.2 TERMINATION AND ASSIGNMENT. This Agreement may be terminated at any
time, upon sixty days' written notice, without the payment of any penalty, (i)
by the Trustees, (ii) by the vote of a majority of the outstanding voting
securities of the Portfolio; (iii) by Manager, or (iv) by Subadviser.
(b) This Agreement will terminate automatically, without the payment of
any penalty, (i) in the event of its assignment (as defined in the Investment
Company Act) or (ii) in the event the Management Contract is terminated for any
reason.
9.3 DEFINITIONS. 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
Investment Company Act as now in effect or as hereafter amended, and subject to
such orders or no-action letters as may be granted by the Securities and
Exchange Commission.
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X. REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 REPRESENTATIONS OF THE PORTFOLIO. The Trust, on behalf of the
Portfolio, represents and warrants that:
(i) the Trust is a business trust established pursuant to the
laws of the Commonwealth of Massachusetts;
(ii) the Trust is duly registered as an investment company under
the Investment Company Act and the Portfolio is a duly constituted
series portfolio thereof;
(iii) the execution, delivery and performance of this Agreement
are within the Trust's powers, have been and remain duly authorized by
all necessary action (including without limitation all necessary
approvals and other actions required under the Investment Company Act)
and will not violate or constitute a default under any applicable law
or regulation or of any decree, order, judgment, agreement or
instrument binding on the Trust or the Portfolio;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against the Trust and the Portfolio in
accordance with its terms.
10.2 REPRESENTATIONS OF THE MANAGER. The Manager represents, warrants
and agrees that:
(i) Manager is a corporation established pursuant to the laws of
the Commonwealth of Massachusetts;
(ii) Manager is duly registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act");
(iii) Manager has been duly appointed by the Trustees and
Shareholders of the Portfolio to provide investment services to the
Portfolio as contemplated by the Management Contract;
(iv) the execution, delivery and performance of this Agreement
are within Manager's powers, have been and remain duly authorized by
all necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree, order,
judgment, agreement or instrument binding on Manager;
(v) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(vi) this Agreement constitutes a legal, valid and binding
obligation enforceable against Manager.
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10.3 REPRESENTATIONS OF SUBADVISER. Subadviser represents, warrants and
agrees that:
(i) Subadviser is a New York banking corporation established
pursuant to the laws of the State of New York;
(ii) Subadviser is duly registered as an "investment adviser"
under the Advisers Act; or is a "bank" as defined in Section 202 (a)
(2) of the Advisers Act or an "insurance company" as defined in Section
202 (a) (2) of the Advisers Act.
(iii) the execution, delivery and performance of this Agreement
are within Subadviser's powers, have been and remain duly authorized by
all necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree, order,
judgment, agreement or instrument binding on Subadviser;
(iv) no consent (including, but not limited to, exchange control
consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against Subadviser.
10.4 COVENANTS OF SUBADVISER. (a) Subadviser will promptly notify the
Trust and Manager in writing of the occurrence of any event which could have a
material impact on the performance of its obligations pursuant to this
Agreement, including without limitation:
(i) the occurrence of any event which could disqualify Subadviser
from serving as an investment adviser of a registered investment
company pursuant to Section 9 (a) of the Investment Company Act or
otherwise;
(ii) any material change in the Subadviser's overall business
activities that may have a material adverse affect on the Subadviser's
ability to perform under its obligations under this Agreement;
(iii) any event that would constitute a change in control of
Subadviser;
(iv) any change in the portfolio manager of the Portfolio; and
(v) the existence of any pending or threatened audit,
investigation, complaint, examination or other inquiry (other than
routine regulatory examinations or inspections) relating to the
Portfolio conducted by any state or federal governmental regulatory
authority.
(b) Subadviser agrees that it will promptly supply Manager with copies
of any material changes to any of the documents provided by Subadviser pursuant
to Section 4.1.
XI. MISCELLANEOUS PROVISIONS
11.1 USE OF SUBADVISER'S NAME. Neither the Trust nor Manager will use
the name of Subadviser, or any affiliate of Subadviser, in any prospectus,
advertisement sales literature or other communication to the public except in
accordance with such policies and procedures as shall be mutually agreed to in
writing by the Subadviser and the Manager.
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11.2 USE OF TRUST OR MANAGER'S NAME. Subadviser will not use the name
of Manager, the Trust or the Portfolio in any prospectus, advertisement, sales
literature or other communication to the public except in accordance with such
policies and procedures as shall be mutually agreed to in writing by the
Subadviser and the Manager.
11.3 AMENDMENTS. This Agreement may only be amended with the prior
written consent of each of the parties hereto and if such amendment is
specifically approved (i) by the vote of a majority of the outstanding voting
securities of the Portfolio, and (ii) by the vote of a majority of the Trustees
who are not interested persons (as such term is defined in the Investment
Company Act) of any person to this Agreement cast in person at a meeting called
for the purpose of voting on such approval. The required shareholder approval
shall be effective with respect to the Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the amendment.
11.4 ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement of the parties with respect to the subject hereof.
11.5 CAPTIONS. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part of
the Agreement.
11.6 NOTICES. All notices required to be given pursuant to this
Agreement shall be delivered or mailed to the last known business address of the
Trust, Manager or Subadviser, as the case may be, in person or by registered
mail or a private mail or delivery service providing the sender with notice of
receipt. Notice shall be deemed given on the date delivered or mailed in
accordance with this Section 11.6.
11.7 SEVERABILITY. Should any portion of this Agreement, for any
reason, be held to be void at law or in equity, the Agreement shall be
construed, insofar as is possible, as if such portion had never been contained
herein.
11.8 GOVERNING LAW. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Massachusetts
(without giving effect to the choice of law provisions thereof), or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of the Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
11.9 LIMITATION OF LIABILITY. A copy of the Declaration of Trust
establishing the Trust, dated November 8, 1974, together with all amendments, is
on file in the office of the Secretary of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is not executed on behalf of any of
the Trustees as individuals and no Trustee, shareholder, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall resort be
had to their private property, for the satisfaction of any obligation or claim,
in connection with the affairs of the Trust or the Portfolio, but only the
assets belonging to the Portfolio shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
SIGNATURE LINES OMITTED
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APPENDIX A
Pursuant to Section 1.6 of the Subadvisory Agreement among Fidelity
Commonwealth Trust (the "Trust"), on behalf of Spartan Market Index Fund (the
"Portfolio"), Fidelity Management & Research Company ("Manager") and Bankers
Trust Company ("Subadviser"), Subadviser shall be compensated for the services
it performs on behalf of the Portfolio as follows:
1. FEES PAYABLE BY MANAGER. Manager will pay Subadviser a monthly fee
computed at an annual rate of 0.006% (0.6 basis points) of the average daily net
assets of the Portfolio (computed in the manner set forth in the Trust's
Declaration of Trust) throughout the month.
Subadviser's fee shall be computed monthly, and within twelve business
days of the end of each calendar month, Manager shall transmit to Subadviser the
fee for the previous month. Payment shall be made in federal funds wired to a
bank account designated by Subadviser. If this Agreement becomes effective or
terminates before the end of any month, the fee (if any) for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
Subadviser agrees to look exclusively to Manager, and not to any assets
of the Trust or the Portfolio, for the payment of Subadviser's fees arising
under this Paragraph 1.
2. FEES PAYABLE BY TRUST. The Trust, on behalf of the Portfolio, shall
pay Subadviser a monthly fee equal to 40% of the Portfolio's aggregate Net
Securities Lending Income (as defined below) attributable to the securities
lending activities conducted by Subadviser on the Portfolio's behalf. For
purposes of this Paragraph 2, the Portfolio's aggregate "Net Securities Lending
Income" for any given month shall be calculated in accordance with the following
provisions:
(a) LOANS COLLATERALIZED BY CASH. For securities lending transactions
collateralized by cash, the Portfolio's aggregate Net Securities
Lending Income attributable to such transactions for such month
shall be equal to (I) the income earned by the Portfolio from
investing such cash collateral during such month, plus (II) if
such cash collateral is invested in a money market fund or similar
investment vehicle managed by Subadviser or its affiliates, an
amount equal to the Portfolio's pro rata share (calculated by
dividing the average daily amount of the Portfolio's cash
collateral so invested during such month by the average daily net
assets of such investment vehicle for such month) of the Total
Operating Expenses (as defined below) accrued by such investment
vehicle in respect of such month, less (III) any rebates,
commissions or similar fees paid by the Portfolio in respect of
such transactions during such month. For purposes of this
subparagraph 2(a), an investment vehicle's "Total Operating
Expenses" shall consist of "Management Fees," "Rule 12b-1 Fees,"
and "Other Expenses," as such terms are defined in paragraphs 8,
9, and 10, respectively, of the instructions to Part A, Item 2 of
the form of registration statement promulgated by the Securities
and Exchange Commission on Form N-1A, as the same may be amended
from time to time.
(b) LOANS COLLATERALIZED BY SECURITIES. For securities lending
transactions collateralized by securities or a letter of credit,
the Portfolio's aggregate Net Securities Lending Income
attributable to such transactions for such month shall be equal to
(I) the securities lending fees paid by the borrower to the
Portfolio in respect of such transactions, less (II) any rebates,
commissions or similar fees paid by the Portfolio in respect of
such transactions.
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(c) SUBSTITUTE PAYMENTS. Substitute payments received by the Portfolio
from a borrower in lieu of any dividends, distributions or other
financial benefits paid out in respect of a loaned security shall
not be considered part of the Portfolio's Net Securities Lending
Income for purposes of calculating the fee payable by the
Portfolio pursuant to this Paragraph 2, except that (I) to the
extent that any such substitute payment exceeds the amount that
the Portfolio would have received had such security not been
loaned to the borrower, the Portfolio's Net Securities Lending
Income shall be increased by an amount equal to the difference,
and (II) to the extent that any such substitute payment is less
than the amount that the Portfolio would have received had such
security not been loaned to the borrower, the Portfolio's Net
Securities Lending Income shall be decreased by an amount equal to
the difference.
The fees payable by the Portfolio pursuant to this Paragraph 2 shall accrue
daily and shall be paid to Subadviser monthly within twelve business days of the
end of each calendar month. If the Portfolio's aggregate Net Securities Lending
Income for any calendar month shall be a negative amount, the fee payable by the
Portfolio for such month pursuant to this Paragraph 2 shall be zero, and an
amount equal to 40% of such negative Net Securities Lending Income shall be
carried forward and applied against future fees earned by Subadviser pursuant to
this Paragraph 2 for a period not to exceed 3 calendar months.
Subadviser agrees to look exclusively to the assets of the Portfolio, and not to
any other assets of the Trust or Manager, for the payment of Subadviser's fees
arising under this Paragraph 2.
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EXHIBIT 3
FORM OF
SUBADVISORY AGREEMENT
This Agreement is entered into as of the ___ day of ______________,
1999, among Fidelity Commonwealth Trust, a Massachusetts business trust (the
"Trust"), on behalf of Spartan Market Index Fund, a series portfolio of the
Trust (the "Portfolio"), Fidelity Management & Research Company, a Massachusetts
corporation ("Manager"), and Bankers Trust Company, a New York banking
corporation ("Subadviser").
WHEREAS, the Trust, on behalf of the Portfolio, has entered into a
Management Contract, dated December 1, 1997, with Manager (the "Management
Contract"), pursuant to which Manager has agreed to provide certain management
and administrative services to the Portfolio; and
WHEREAS, Manager desires to appoint Subadviser as investment subadviser
to provide the investment advisory and administrative services to the Portfolio
specified herein, and Subadviser is willing to serve the Portfolio in such
capacity; and
WHEREAS, the trustees of the Trust (the "Trustees"), including a
majority of the Trustees who are not "interested persons" (as such term is
defined below) of any party to this Agreement, and the shareholder(s) of the
Portfolio, have each consented to such an arrangement;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
I. APPOINTMENT OF SUBADVISER; COMPENSATION
1.1 APPOINTMENT AS SUBADVISER. Subject to and in accordance with the
provisions hereof, Manager hereby appoints Subadviser as investment subadviser
to perform the various investment advisory and other services to the Portfolio
set forth herein and, subject to the restrictions set forth herein, hereby
delegates to Subadviser the authority vested in Manager pursuant to the
Management Contract to the extent necessary to enable Subadviser to perform its
obligations under this Agreement.
1.2 SCOPE OF INVESTMENT AUTHORITY. (a) The Subadviser is hereby
authorized, on a discretionary basis, to manage the investments and determine
the composition of the assets of the Portfolio, subject at all times to (i) the
supervision and control of the Trustees, (ii) the requirements of the Investment
Company Act of 1940, as amended (the "Investment Company Act") and the rules
thereunder, (iii) the investment objective, policies and limitations, as
provided in the Portfolio's Prospectus and other governing documents, and (iv)
such instructions, policies and limitations relating to the Portfolio as the
Trustees or Manager may from time to time adopt and communicate in writing to
Subadviser. Notwithstanding anything herein to the contrary, Subadviser is not
authorized to take any action, including the purchase and sale of portfolio
securities, in contravention of any restriction, limitation, objective, policy
or instruction described in the previous sentence.
(b) It is understood and agreed that, for so long as this Agreement
shall remain in effect, Subadviser shall retain discretionary investment
authority over the manner in which the Portfolio's assets are invested, and
Manager shall not have the right to overrule any investment decision with
respect to a particular security made by Subadviser, PROVIDED that the Trustees
and Manager shall at all times have the right to monitor the Portfolio's
investment activities and performance, require Subadviser to make reports and
give explanations as to the manner in which the Portfolio's assets are being
invested, and, should either Manager or the Trustees become dissatisfied with
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Subadviser's performance in any way, terminate this Agreement in accordance with
the provisions of Section 8.2 hereof.
1.3 APPOINTMENT AS PROXY VOTING AGENT. Subject to and in accordance
with the provisions hereof, the Trustees hereby appoint Subadviser as the
Portfolio's proxy voting agent, and hereby delegate to Subadviser discretionary
authority to vote all proxies solicited by or with respect to issuers of
securities in which the assets of the Portfolio may be invested from time to
time. Upon written notice to Subadviser, the Trustees may at any time withdraw
the authority granted to Subadviser pursuant to this Section 1.3 to perform any
or all of the proxy voting services contemplated hereby.
1.4 GOVERNING DOCUMENTS. Manager will provide Subadviser with copies of
(i) the Trust's Declaration of Trust and By-laws, as currently in effect, (ii)
the Portfolio's currently effective prospectus and statement of additional
information, as set forth in the Trust's registration statement under the
Investment Company Act and the Securities Act of 1933, as amended, (iii) any
instructions, investment policies or other restrictions adopted by the Trustees
or Manager supplemental thereto, and (iv) the Management Contract. Manager will
provide Subadviser with such further documentation and information concerning
the investment objectives, policies and restrictions applicable to the Portfolio
as Subadviser may from time to time reasonably request.
1.5 SUBADVISER'S RELATIONSHIP. Notwithstanding anything herein to the
contrary, Subadviser shall be an independent contractor and will have no
authority to act for or represent the Trust, the Portfolio or Manager in any way
or otherwise be deemed an agent of any of them, except to the extent expressly
authorized by this Agreement or in writing by the Trust or Manager.
1.6 COMPENSATION. Subadviser shall be compensated for the services it
performs on behalf of the Portfolio in accordance with the terms set forth in
Appendix A to this Agreement.
II. SERVICES TO BE PERFORMED BY SUBADVISER
2.1 INVESTMENT ADVISORY SERVICES. (a) In fulfilling its obligations to
manage the assets of the Portfolio, Subadviser will:
(i) formulate and implement a continuous investment program
for the Portfolio;
(ii) take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities and other
investments, including the selection of brokers or dealers, the placing
of orders for such purchases and sales in accordance with the
provisions of paragraph (b) below and assuring that such purchases and
sales are properly settled and cleared;
(iii) provide such reports with respect to the implementation
of the Portfolio's investment program as the Trustees or Manager shall
reasonably request; and
(iv) provide advice and assistance to Manager as to the
determination of the fair value of certain securities where market
quotations are not readily available for purposes of calculating net
asset value of the Portfolio in accordance with valuation procedures
and methods established by the Trustees.
(b) The Subadviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers and dealers
selected by Subadviser. Such brokers and dealers may include brokers or dealers
that are "affiliated persons" (as such term is defined in the Investment Company
Act) of the Trust, the Portfolio, Manager or Subadviser, PROVIDED that
Subadviser shall only place orders on behalf of the Portfolio with such
affiliated persons in accordance with procedures adopted by the Trustees
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pursuant to Rule 17e-1 under the Investment Company Act. The Subadviser 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 other
accounts over which Subadviser or its affiliates exercise investment discretion.
The Subadviser is authorized to pay a broker or dealer who provided 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
Subadviser 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 Subadviser and
its affiliates have in respect to accounts over which they exercise investment
discretion. The Trustees shall periodically review the commissions paid by the
Portfolio to determine if the commissions paid over representative periods were
reasonable in relation to the benefits to the Portfolio.
2.2. ADMINISTRATIVE AND OTHER SERVICES. (a) Subadviser will, at its
expense, furnish (i) all necessary investment and management facilities,
including salaries of personnel required for it to execute its duties
faithfully, and (ii) administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of the investment
affairs of the Portfolio (excluding determination of net asset values and
shareholder accounting services).
(b) Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and the
rules thereunder. Subadviser agrees that such records are the property of the
Trust, and will be surrendered to the Trust promptly upon request. The Manager
shall be granted reasonable access to the records and documents in Subadviser's
possession relating to the Portfolios.
(c) Subadviser shall provide such information as is necessary to enable
Manager to prepare and update the Trust's registration statement (and any
supplement thereto) and the Portfolio's financial statements. Subadviser
understands that the Trust and Manager will rely on such information in the
preparation of the Trust's registration statement and the Portfolio's financial
statements, and hereby covenants that any such information approved by
Subadviser expressly for use in such registration and/or financial statements
shall be true and complete in all material respects.
(d) Subadviser will vote the Portfolio's investment securities in the
manner in which Subadviser believes to be in the best interests of the
Portfolio, and shall review its proxy voting activities on a periodic basis with
the Trustees.
(e) Subadviser will provide custodian services to the Portfolio in
accordance with the provisions of a separate Custodian Agreement, dated as of
the date hereof, between the Trust, on behalf of the Portfolio, and Subadviser.
III. COMPLIANCE; CONFIDENTIALITY
3.1 COMPLIANCE. (a) Subadviser will comply with (i) all applicable
state and federal laws and regulations governing the performance of the
Subadviser's duties hereunder, (ii) the investment objective, policies and
limitations, as provided in the Portfolio's Prospectus and other governing
documents, and (iii) such instructions, policies and limitations relating to the
Portfolio as the Trustees or Manager may from time to time adopt and communicate
in writing to subadviser.
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(b) Subadviser will adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and will provide the
Trust with a copy of such code of ethics, evidence of its adoption and copies of
any supplemental policies and procedures implemented to ensure compliance
therewith.
3.2 CONFIDENTIALITY. The parties to this Agreement agree that each
shall treat as confidential all information provided by a party to the others
regarding such party's business and operations, including without limitation the
investment activities or holdings of the Portfolio. All confidential information
provided by a party hereto shall be used by any other parties hereto solely for
the purposes of rendering services pursuant to this Agreement and, except as may
be required in carrying out the terms of this Agreement, shall not be disclosed
to any third party without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is publicly available
when provided or which thereafter becomes publicly available other than in
contravention of this Section 3.2 or which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of its jurisdiction
over a party, any auditor of the parties hereto, by judicial or administrative
process or otherwise by applicable law or regulation.
IV. LIABILITY OF SUBADVISER
4.1 LIABILITY; STANDARD OF CARE. Notwithstanding anything herein to the
contrary, neither Subadviser, nor any of its directors, officers or employees,
shall be liable to Manager or the Trust for any loss resulting from Subadviser's
acts or omissions as Subadviser to the Portfolio, except to the extent any such
losses result from bad faith, willful misfeasance, reckless disregard or gross
negligence on the part of the Subadviser or any of its directors, officers or
employees in the performance of the Subadviser's duties and obligations under
this Agreement.
4.2 INDEMNIFICATION. (a) Subadviser agrees to indemnify and hold the
Trust and Manager harmless from any and all direct or indirect liabilities,
losses or damages (including reasonable attorneys fees) suffered by the Trust or
Manager resulting from (i) Subadviser's breach of its duties hereunder, or (ii)
bad faith, willful misfeasance, reckless disregard or gross negligence on the
part of the Subadviser or any of its directors, officers or employees in the
performance of the Subadviser's duties and obligations under this Agreement,
except to the extent such loss results from the Trust's or Manager's own willful
misfeasance, bad faith, reckless disregard or negligence in the performance of
their respective duties and obligations under the Management Contract or this
Agreement.
(b) Manager hereby agrees to indemnify and hold Subadviser harmless
from any and all direct or indirect liabilities, losses or damages (including
reasonable attorney's fees) suffered by Subadviser resulting from (i) Manager's
breach of its duties under Management Contract, or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of Manager or
any of its directors, officers or employees in the performance of Manager's
duties and obligations under this Agreement, except to the extent such loss
results from Subadviser's own willful misfeasance, bad faith, reckless disregard
or negligence in the performance of Subadviser's duties and obligations under
this Agreement.
V. SUPPLEMENTAL ARRANGEMENTS; EXPENSES; INSURANCE
5.1 SUPPLEMENTAL ARRANGEMENTS. Subject to the prior written consent of
the Trustees and Manager, Subadviser may enter into arrangements with other
persons affiliated with Subadviser to better fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to Subadviser,
provided that such arrangements do not rise to the level of an advisory contract
subject to the requirements of Section 15 of the Investment Company Act.
4
<PAGE>
5.2 EXPENSES. It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by Subadviser hereunder
or by Manager under the Management Agreement. Subadviser expressly agrees to pay
the cost of all custody services required by the Portfolio. Expenses paid by the
Portfolios will include, but not be limited to, (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
Trustees other than those who are "interested persons" of the Trust, Manager or
Subadviser; (iv) legal and audit expenses; (v) 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 therefor; (ix) a pro rata share
based on the relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts with
the Manager, of 50% of insurance premiums for fidelity bond and other coverage;
(x) investment management fees; (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
any legal obligation that the Portfolio may have to indemnify the Trustees,
officers and/or employees or agents with respect thereto. Subadviser shall not
cause the Trust or the Portfolios to incur any expenses, other than those
reasonably necessary for Subadviser to fulfill its obligations under this
Agreement, unless Subadviser has first notified Manager of its intention to do
so.
5.3 INSURANCE. Subadviser shall maintain for the duration hereof, with
an insurer acceptable to Manager, a blanket bond and professional liability
(errors and omissions) insurance in amounts reasonably acceptable to Manager.
Subadviser agrees that such insurance shall be considered primary and Subadviser
shall assure that such policies pay claims prior to similar policies that may be
maintained by Manager. In the event Subadviser fails to have in force such
insurance, that failure will not exclude Subadviser's responsibility to pay up
to the limit Subadviser would have had to pay had said insurance been in force.
VI. CONFLICTS OF INTEREST
6.1 CONFLICTS OF INTEREST. It is understood that the Trustees,
officers, agents and shareholders of the Trust are or may be interested in
Subadviser as directors, officers, stockholders or otherwise; that directors,
officers, agents and stockholders of Subadviser are or may be interested in the
Trust as trustees, officers, shareholders or otherwise; that Subadviser may be
interested in the Trust; and that the existence of any such dual interest shall
not affect the validity of this Agreement or of any transactions hereunder
except as otherwise provided in the Trust's Declaration of Trust and the
Articles of Incorporation of Subadviser, respectively, or by specific provisions
of applicable law.
VII. REGULATION
7.1 REGULATION. Subadviser shall submit to all regulatory and
administrative bodies having jurisdiction over the services provided pursuant to
this Agreement any information, reports or other material which any such body by
reason of this Agreement may reasonably request or require pursuant to
applicable laws and regulations.
VIII. DURATION AND TERMINATION OF AGREEMENT
8.1 EFFECTIVE DATE; DURATION; CONTINUANCE. (a) This Agreement shall
become effective on ________, 1999.
5
<PAGE>
(b) Subject to prior termination pursuant to Section 8.2 below, this
Agreement shall continue in force until July 31, 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 or by a vote of
a majority of the outstanding voting securities of the Portfolio, PROVIDED that
in either event such continuance shall also be approved by the vote of a
majority of the Trustees who are not "interested persons" (as such term is
defined in the Investment Company Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
(c) The required shareholder approval of this Agreement or any
continuance of this Agreement shall be effective with respect to the Portfolio
if a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of the Portfolio votes
to approve this Agreement or its continuance.
8.2 TERMINATION AND ASSIGNMENT. (A) This Agreement may be terminated at
any time, upon sixty days' written notice, without the payment of any penalty,
(i) by the Trustees, (ii) by the vote of a majority of the outstanding voting
securities of the Portfolio; (iii) by Manager, or (iv) by Subadviser.
(b) This Agreement will terminate automatically, without the payment of
any penalty, (i) in the event of its assignment (as defined in the Investment
Company Act) or (ii) in the event the Management Contract is terminated for any
reason.
8.3 DEFINITIONS. 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
Investment Company Act as now in effect or as hereafter amended, and subject to
such orders or no-action letters as may be granted by the Securities and
Exchange Commission ("Commission").
X. REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 REPRESENTATIONS OF THE PORTFOLIO. The Trust, on behalf of the
Portfolio, represents and warrants that:
(i) the Trust is a business trust established pursuant to the
laws of the Commonwealth of Massachusetts;
(ii) the Trust is duly registered as an investment company
under the Investment Company Act and the Portfolio is a duly
constituted series portfolio thereof;
(iii) the execution, delivery and performance of this
Agreement are within the Trust's powers, have been and remain duly
authorized by all necessary action (including without limitation all
necessary approvals and other actions required under the Investment
Company Act) and will not violate or constitute a default under any
applicable law or regulation or of any decree, order, judgment,
agreement or instrument binding on the Trust or the Portfolio;
(iv) no consent (including, but not limited to, exchange
control consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against the Trust and the Portfolio in
accordance with its terms.
9.2 REPRESENTATIONS OF THE MANAGER. The Manager represents, warrants
and agrees that:
6
<PAGE>
(i) Manager is a corporation established pursuant to the laws
of the Commonwealth of Massachusetts;
(ii) Manager is duly registered as an "investment adviser"
under the Investment Advisers Act of 1940 ("Advisers Act");
(iii) Manager has been duly appointed by the Trustees and
Shareholders of the Portfolio to provide investment services to the
Portfolio as contemplated by the Management Contract.
(iv) the execution, delivery and performance of this Agreement
are within Manager's powers, have been and remain duly authorized by
all necessary corporate action and will not violate or constitute a
default under any applicable law or regulation or of any decree, order,
judgment, agreement or instrument binding on Manager;
(v) no consent (including, but not limited to, exchange
control consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(vi) this Agreement constitutes a legal, valid and binding
obligation enforceable against Manager.
9.3 REPRESENTATIONS OF SUBADVISER. Subadviser represents, warrants and
agrees that:
(i) Subadviser is a New York banking corporation established
pursuant to the laws of the State of New York;
(ii) Subadviser is duly registered as an "investment adviser"
under the Advisers Act; or is a "bank" as defined in Section 202 (a)
(2) of the Advisers Act or an "insurance company" as defined in Section
202 (a) (2) of the Advisers Act.
(iii) the execution, delivery and performance of this
Agreement are within Subadviser's powers, have been and remain duly
authorized by all necessary corporate action and will not violate or
constitute a default under any applicable law or regulation or of any
decree, order, judgment, agreement or instrument binding on Subadviser;
(iv) no consent (including, but not limited to, exchange
control consents) of any applicable governmental authority or body is
necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly
complied with; and
(v) this Agreement constitutes a legal, valid and binding
obligation enforceable against Subadviser.
9.4 COVENANTS OF THE SUBADVISER. (a) Subadviser will promptly notify
the Trust and Manager in writing of the occurrence of any event which could have
a material impact on the performance of its obligations pursuant to this
Agreement, including without limitation:
(i) the occurrence of any event which could disqualify
Subadviser from serving as an investment adviser of a registered
investment company pursuant to Section 9 (a) of the Investment Company
Act or otherwise;
7
<PAGE>
(ii) any material change in the Subadviser's overall business
activities that may have a material adverse affect on the Subadviser's
ability to perform under its obligations under this Agreement;
(iii) any event that would constitute a change in control of
Subadviser;
(iv) any change in the portfolio manager of the Portfolio; and
(v) the existence of any pending or threatened audit,
investigation, complaint, examination or other inquiry (other than
routine regulatory examinations or inspections) relating to the
Portfolio conducted by any state or federal governmental regulatory
authority.
(b) Subadviser agrees that it will promptly supply Manager with copies
of any material changes to any of the documents provided by Subadviser pursuant
to Section 3.1.
X. MISCELLANEOUS PROVISIONS
10.1 USE OF SUBADVISER'S NAME. Neither the Trust nor Manager will use
the name of Subadviser, or any affiliate of Subadviser, in any prospectus,
advertisement sales literature or other communication to the public except in
accordance with such policies and procedures as shall be mutually agreed to in
writing by the Subadviser and the Manager.
10.2 USE OF TRUST OR MANAGER'S NAME. Subadviser will not use the name
of Manager, the Trust or the Portfolio in any prospectus, advertisement, sales
literature or other communication to the public except in accordance with such
policies and procedures as shall be mutually agreed to in writing by the
Subadviser and the Manager.
10.3 AMENDMENTS. This Agreement may be modified by mutual consent of
the Manager, the Subadviser and the Portfolio subject to the provisions of
Section 15 of the Investment Company Act, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or regulations adopted
by, or interpretive releases of, the Commission.
10.4 ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement of the parties with respect to the subject hereof.
10.5 CAPTIONS. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part of
the Agreement.
10.6 NOTICES. All notices required to be given pursuant to this
Agreement shall be delivered or mailed to the last known business address of the
Trust, Manager or Subadviser, as the case may be, in person or by registered
mail or a private mail or delivery service providing the sender with notice of
receipt. Notice shall be deemed given on the date delivered or mailed in
accordance with this Section 10.6.
10.7 SEVERABILITY. Should any portion of this Agreement, for any
reason, be held to be void at law or in equity, the Agreement shall be
construed, insofar as is possible, as if such portion had never been contained
herein.
10.8 GOVERNING LAW. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Massachusetts
(without giving effect to the choice of law provisions thereof), or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of the Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
8
<PAGE>
10.9 LIMITATION OF LIABILITY. The Declaration of Trust establishing the
Trust, dated November 8, 1974, a copy of which, together with all amendments, is
on file in the office of the Secretary of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is not executed on behalf of any of
the Trustees as individuals and no Trustee, shareholder, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall resort be
had to their private property, for the satisfaction of any obligation or claim,
in connection with the affairs of the Trust or the Portfolio, but only the
assets belonging to the Portfolio shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
SIGNATURE LINES OMITTED
9
<PAGE>
APPENDIX A
Pursuant to Section 1.6 of the Subadvisory Agreement among Fidelity
Commonwealth Trust (the "Trust"), on behalf of Spartan Market Index Fund (the
"Portfolio"), Fidelity Management & Research Company ("Manager") and Bankers
Trust Company ("Subadviser"), Subadviser shall be compensated for the services
it performs on behalf of the Portfolio as follows:
1. FEES PAYABLE BY MANAGER. Manager will pay Subadviser a monthly fee
computed at an annual rate of 0.006% (0.6 basis points) of the average daily net
assets of the Portfolio (computed in the manner set forth in the Trust's
Declaration of Trust) throughout the month.
Subadviser's fee shall be computed monthly, and within twelve business
days of the end of each calendar month, Manager shall transmit to Subadviser the
fee for the previous month. Payment shall be made in federal funds wired to a
bank account designated by Subadviser. If this Agreement becomes effective or
terminates before the end of any month, the fee (if any) for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
Subadviser agrees to look exclusively to Manager, and not to any assets
of the Trust or the Portfolio, for the payment of Subadviser's fees arising
under this Paragraph 1.
10
<PAGE>
EXHIBIT 4
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS(a)
[TO BE UPDATED IN A SUBSEQUENT FILING]
<TABLE>
<CAPTION>
RATIO OF
NET ADVISORY
FISCAL AVERAGE NET ASSETS FEES TO AVERAGE NET
INVESTMENT OBJECTIVE AND FUND YEAR END(a) (MILLIONS)(b) ASSETS PAID TO FMR(c)
- ----------------------------- ----------- ------------------ ---------------------
<S> <C> <C> <C>
INDEX FUNDS
Variable Insurance Products II: 12/31/96 $ 480.5 0.13%*
Index 500
Spartan U.S. Equity Index 2/28/97 5,035.0 0.01*
Spartan Market Index 4/30/97 1,491.9 0.45
(a) All fund data are as of the fiscal year end noted in the chart.
(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 (*).
</TABLE>
<PAGE>
EXHIBIT 5
BANKERS TRUST COMPANY ADVISED/SUB-ADVISED MUTUAL FUNDS*
[TO BE UPDATED IN A SUBSEQUENT FILING]
<TABLE>
<CAPTION>
Assets Advisory Fees
Fund as of 5/25/99 Payable to BT(a)
- ---------------------------------------------- ---------------------- ------------------------
<S> <C> <C>
S&P INDEX FUNDS
- ---------------
Equity Index Portfolio (b) $6,535,084,349.59 0.085%
Includes the following feeder funds: $2,376,406,676.21
BT Inst'l: Equity 500 Index Fund (c) $924,030,686.42
BT Pyramid Investment Equity 500
Index (d) $2,670,922,035.83
USAA S&P 500 Index (e) $318,025,886.62
Amer AADV: S&P 500 - AMR Class (f) $3,475,740.53
Amer AADV: S&P 500 - Mileage Fund (f) $241,297,029.28
Scudder S&P 500 Index (g)
VALIC S&P (Variable Annuity Life Insurance $4,318,817,502 0.02% 1st $2 billion
Company) (i) 0.01% over $2 billion
PacMut S&P (Pacific Mutual Life Insurance $1,548,635,978 0.07% 1st $100mm
Company) (i) 0.03% next $100mm
0.01% over $200mm
minimum $100,000
advisory fee
BT Insur: Equity 500 Index (Variable $108,602,298.52 0.20%
Annuity) (h)
S&P "INDEX BASED" FUND
- ----------------------
AARP U.S. Stock Index (j) $403,717,834 0.07% 1st $100mm
0.03% next $100mm
0.01% over $200mm
minimum $75,000
advisory fee
EAFE INDEX FUNDS
- ----------------
BT Inv Port: EAFE Equity Index Portfolio (b) $59,334,019.05 0.25%
Includes the following feeder fund:
BT ADV: EAFE Equity Index Fund - Inst'l $59,358,576.25
Cl (c)
BT Insur: EAFE Equity Index Fund (Variable $43,998,229.14 0.45%
Annuity) (h)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Assets Advisory Fees
Fund as of 5/25/99 Payable to BT(a)
- ---------------------------------------------- ---------------------- ------------------------
<S> <C> <C>
RUSSELL 2000 INDEX FUNDS
- ------------------------
BT Inv Port: Small Cap Index Portfolio (b) $119,163,061.81 0.15%
Includes the following feeder fund:
BT ADV: Small Cap Index Fund - Inst'l $88,773,064.53
Cl (c)
BT Insur: Small Cap Index Fund (Variable $31,302,185.68 0.35%
Annuity) (h)
(a) Reflects reductions for any expense reimbursement paid by or due from the
pursuant to expense limitations. Funds so affected are indicated by an (*).
(b) Master portfolio not available for direct retail purchase. (c) Feeder fund
available to institutional investors through BT. (d) Feeder fund available
to retail investors through BT.
(e) Feeder fund available to customers of United States Automobile Association
and retail public. (f) Feeder fund available to customers of American
Airlines.
(g) Feeder fund available to customers of Scudder, Stevens & Clark; commenced
operations on August 29, 1997.
(h) Available only through variable annuity products; the EAFE Equity Index Fund
and Small Cap Index Fund of the BT Insurance Funds Trust commenced
operations on August 22, 1997.
(i) Available only through variable annuity products.
(j) Sub-advised fund available to members of American Association of Retired
Persons.
* Includes sub-advised funds that commenced operations prior to 1/1/99.
</TABLE>
<PAGE>
EXHIBIT 6
BANKERS TRUST COMPANY - DIRECTORS
NAME AND PRINCIPAL OCCUPATION BUSINESS ADDRESS
- ----------------------------- ----------------
Mr. Lee A. Ault III, Investor 190l Avenue of the Stars
Suite 1800
Los Angeles, CA 90067-6018
Mr. Neil R. Austrian, President and National Football League
Chief Operating Officer, National 280 Park Avenue - FL. 17E
Football League New York, NY 10017
Mr. George B. Beitzel, Director of 29 King Street
Various Corporations Chappaqua, NY 10514-3432
Dr. Phillip A. Griffiths, Director, Institute for Advanced Study
Institute for Advanced Study Olden Lane
Princeton, NJ 08540
Mr. William R. Howell, Chairman J.C. Penney Company, Inc.
Emeritus, J.C. Penney Company, P.O. Box 10001
Inc. Dallas, TX 75301-1109
Vernon E. Jordan, Jr., Esq., Senior Akin, Gump, Strauss, Hauer &
Partner, Akin, Gump, Strauss, Feld, LLP
Hauer & Feld, LLP, Attorneys-at-law 1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Mr. Hamish Maxwell, Retired Chairman Philip Morris Companies, Inc.
and Chief Executive Officer, 120 Park Avenue
Philip Morris Companies, Inc. New York, NY 10017
Mr. Frank N. Newman, Chairman of the Bankers Trust Company
Board, Chief Executive Officer and 130 Liberty Street
President, Bankers Trust New York, NY 10006
Corporation and Bankers Trust
Company
Mr. N.J. Nicholas Jr., Investor 45 West 67th Street - Suite 19F
New York, NY 10023
Mr. Russell E. Palmer, Chairman and The Palmer Group
Chief Executive Officer, The 3600 Market Street, Suite 530
Palmer Group Philadelphia, PA 19104
Mr. Donald L. Staheli, Retired 39 Locust Avenue
Chairman of the Board and Chief Suite 204
Executive Officer, Continental New Canaan, CT 06840
Grain Company
Mrs. Patricia Carry Stewart, Former Bankers Trust Company
Vice President, The Edna McConnell 130 Liberty Street
Clark Foundation New York, NY 10006
Mr. G. Richard Thoman, President, Xerox Corporation
Chief Executive Officer and 800 Long Ridge Road
Director, Xerox Corporation Stamford, CT 06904
<PAGE>
NAME AND PRINCIPAL OCCUPATION BUSINESS ADDRESS
- ----------------------------- ----------------
Mr. George J. Vojta, Vice Chairman of Bankers Trust Company
the Board, Bankers Trust 130 Liberty Street
Corporation and Bankers Trust New York, NY 10006
Company
Mr. Paul A. Volcker, Director of 610 Fifth Avenue
Various Corporations Suite 420
New York, NY 10020
- 2 -
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------------
FIDELITY COMMONWEALTH TRUST: SPARTAN MARKET INDEX FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Gerald C. McDonough and Eric D. Roiter, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
FIDELITY COMMONWEALTH TRUST: SPARTAN MARKET INDEX FUND which the
undersigned is entitled to vote at the Special Meeting of Shareholders of
the fund to be held at the office of the trust at 82 Devonshire St.,
Boston, MA 02109, on 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 # 315912204/fund #317
<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 [ ] FOR [ ] 1.
specified below as Trustees: all nominees WITHHOLD
Ralph F. Cox, Phyllis Burke listed authority
Davis, Robert M. Gates, Edward (except as to vote
C. Johnson 3d, E. Bradley marked to for all
Jones, Donald J. Kirk, Peter S. the contrary nominees.
Lynch, William O. McCoy, Gerald below).
C. 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.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & Touche FOR[ ] AGAINST[ ] ABSTAIN[] 2.
LLP as independent accountants of the fund.
3. To authorize the Trustees to adopt an amended FOR[ ] AGAINST[ ] ABSTAIN[] 3.
and restated Declaration of Trust.
4(a). To approve an interim sub-advisory agreement FOR[ ] AGAINST[ ] ABSTAIN[] 4(a).
with Bankers Trust Company for the fund.
4(b). To approve a new sub-advisory agreement with FOR[ ] AGAINST[ ] ABSTAIN[] 4(b).
Bankers Trust Company for the fund.
5. To approve a new "manager-of-managers" FOR[ ] AGAINST[ ] ABSTAIN[] 5.
arrangement for the fund.
FMI-pxc-0799 cusip # 315912204/fund #317
</TABLE>
