SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the [X]
Registrant
Filed by a [ ]
Party other than the
Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] 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.
(1) Amount Previously Paid:
(2) Form, Schedule or
Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
SPARTAN(registered trademark) 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
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
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 $ 6,000 . The expenses in
connection with preparing this Proxy Statement and its enclosures and
of all solicitations will be borne by Bankers Trust Company (BT),
sub - adviser to the fund , or the fund, provided the fund's
expenses do not exceed the fund's existing expense cap listed on page
18. Fund expenses exceeding the fund's expense cap will be paid by
FMR. BT, the fund, or 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 borne by BT
or the fund, provided the fund's expenses do not exceed the
fund's existing expense cap listed on page 19 . Fund
e xpenses exceeding the fund's expense cap will be paid 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 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 $ 8,000 .
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 May
3 1 , 1999 are indicated in the following table:
Spartan Market Index Fund 94,675,737
Fidelity Small Cap Stock Fund 46,536,944
Fidelity Mid-Cap Stock Fund * 88,896,271
Fidelity Large Cap Stock Fund 35,206,389
Fidelity Small Cap Selector 41,854,634
Fidelity Intermediate Bond Fund 346,177,789
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of each fund on May 31 , 1999 was as
follows:
Fidelity Small Cap Selector: General Motors Corp., New York, NY
(9.41%);
Ford Motor Company, Dearborn, MI (5.83%).
Fidelity Mid-Cap Stock Fund: Charitable Gift Fund, Boston, MA
(5.22%).*
* On May 31, 1999, Fidelity Mid-Cap Stock Fund was a series of
Fidelity Devonshire Trust.
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.
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 14) 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 57 registered investment
companies advised by FMR. Mr. Gates, Mr. McCoy, and Mr. Pozen are
currently Trustees of 55 registered investment companies advised by
FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is
present, shall be elected.
<TABLE>
<CAPTION>
<S> <C> <C>
Nominee (Age) Principal Occupation** Year of Election or Appointment
Ralph F. Cox (67) President of RABAR 1991
Enterprises (management
consulting-engineering
industry, 1994). Prior to
February 1994, he was
President of Greenhill
Petroleum Corporation
(petroleum exploration and
production). Until March
1990, Mr. Cox was President
and Chief Operating Officer
of Union Pacific Resources
Company (exploration and
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 (67) Prior to her retirement in 1992
September 1991, Mrs. Davis
was the Senior Vice
President of Corporate
Affairs of Avon Products,
Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX
Companies, Inc. (retail
stores), 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 (55) Consultant, author, and 1997
lecturer (1993). Mr. Gates
was Director of the Central
Intelligence Agency (CIA)
from 1991-1993. From 1989 to
1991, Mr. Gates served as
Assistant to the President
of the United States and
Deputy National Security
Advisor. Mr. Gates is a
Director of LucasVarity PLC
(automotive components and
diesel engines), Charles
Stark Draper Laboratory
(non-profit), NACCO
Industries, Inc. (mining and
manufacturing), and TRW Inc.
(original equipment and
replacement products). Mr.
Gates also is a Trustee of
the Forum for International
Policy and of the Endowment
Association of the College
of William and Mary. In
addition, he is a member of
the National Executive Board
of the Boy Scouts of America.
*Edward C. Johnson 3d (69) President, is Chairman, Chief 1974
Executive Officer and a
Director of FMR Corp.; a
Director and Chairman of the
Board and of the Executive
Committee of FMR; Chairman
and a Director of Fidelity
Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.;
and a Director of FDC.
E. Bradley Jones (71) Prior to his retirement in 1990
1984, Mr. Jones was Chairman
and Chief Executive Officer
of LTV Steel Company. He is
a Director of TRW Inc.
(original equipment and
replacement products),
Consolidated Rail
Corporation, Birmingham
Steel Corporation, and RPM,
Inc. (manufacturer of
chemical products), and he
previously served as a
Director of NACCO
Industries, Inc. (mining and
manufacturing, 1985-1995),
Hyster-Yale Materials
Handling, Inc. (1985-1995),
and Cleveland-Cliffs Inc
(mining), and as a Trustee
of First Union Real Estate
Investments. In addition, he
serves as a Trustee of the
Cleveland Clinic Foundation,
where he has also been a
member of the Executive
Committee as well as
Chairman of the Board and
President, a Trustee and
member of the Executive
Committee of University
School (Cleveland), and a
Trustee of Cleveland Clinic
Florida.
Donald J. Kirk (66) Executive-in-Residence (1995) 1987
at Columbia University
Graduate School of Business
and a financial consultant.
From 1987 to January 1995,
Mr. Kirk was a Professor at
Columbia University Graduate
School of Business. Prior to
1987, he was Chairman of the
Financial Accounting
Standards Board. Mr. Kirk
previously served as a
Director of General Re
Corporation (reinsurance,
1987-1998) and Valuation
Research Corp. (appraisals
and valuations, 1993-1995).
He serves as Chairman of the
Board of Directors of
National Arts Stabilization
Inc., Chairman of the Board
of Trustees of the Greenwich
Hospital Association,
Director of the Yale-New
Haven Health Services Corp.
(1998), a Member of the
Public Oversight Board of
the American Institute of
Certified Public
Accountants' SEC Practice
Section (1995), and as a
Public Governor of the
National Association of
Securities Dealers, Inc.
(1996).
*Peter S. Lynch (56) Vice Chairman and Director of 1990
FMR. Prior to May 31, 1990,
he was a Director of FMR and
Executive Vice President of
FMR (a position he held
until March 31, 1991); Vice
President of Fidelity
Magellan Fund and FMR Growth
Group Leader; and 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 (65) Vice President of Finance for 1997
the University of North
Carolina (16-school system,
1995). Prior to his
retirement in December 1994,
Mr. McCoy was Vice Chairman
of the Board of BellSouth
Corporation
(telecommunications, 1984)
and President of BellSouth
Enterprises (1986). He is
currently a Director of
Liberty Corporation (holding
company, 1984), Weeks
Corporation of Atlanta (real
estate, 1994), Carolina
Power and Light Company
(electric utility, 1996) and
the Kenan Transport Co.
(1996). Previously, he was a
Director of First American
Corporation (bank holding
company, 1979-1996). In
addition, Mr. McCoy serves
as a member of the Board of
Visitors for the University
of North Carolina at Chapel
Hill (1994) and for the
Kenan-Flager Business School
(University of North
Carolina at Chapel Hill,
1988).
Gerald C. McDonough (71) Chairman of G.M. Management 1989
Group (strategic advisory
services). Mr. McDonough is
a Director of York
International Corp. (air
conditioning and
refrigeration), Commercial
Intertech Corp. (hydraulic
systems, building systems,
and metal products, 1992),
CUNO, Inc. (liquid and gas
filtration products, 1996),
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 (66) Chairman of the Board of 1993
Lexmark International, Inc.
(office machines, 1991).
Prior to 1991, he held the
positions of Vice President
of International Business
Machines Corporation ("IBM")
and President and General
Manager of various IBM
divisions and subsidiaries.
Mr. Mann is a Director of
M.A. Hanna Company
(chemicals, 1993) and
Imation Corp. (imaging and
information storage, 1997).
*Robert C. Pozen (53) Senior Vice President, is 1997
also President and a
Director of FMR (1997); and
President and a Director of
Fidelity Investments Money
Management, Inc. (1998),
Fidelity Management &
Research (U.K.) Inc. (1997),
and Fidelity Management &
Research (Far East) Inc.
(1997). Previously, Mr.
Pozen served as General
Counsel, Managing Director,
and Senior Vice President of
FMR Corp.
Thomas R. Williams (71) President of The Wales Group, 1989
Inc. (management and
financial advisory
services). Prior to retiring
in 1987, Mr. Williams served
as Chairman of the Board of
First Wachovia Corporation
(bank holding company), and
Chairman and Chief Executive
Officer of The First
National Bank of Atlanta and
First Atlanta Corporation
(bank holding company). He
is currently a 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).
</TABLE>
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of May 3 1 , 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.
<TABLE>
<CAPTION>
<S> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Total Compensation from the
Advisory Board Spartan Market Index FundB Fund Complex*,A
Edward C. Johnson 3d** $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0
Ralph F. Cox $ 2,090 $ 223,500
Phyllis Burke Davis $ 2,047 $ 220,500
Robert M. Gates $ 2,089 $ 223,500
E. Bradley Jones $ 2,076 $ 222,000
Donald J. Kirk $ 2,101 $ 226,500
Peter S. Lynch** $ 0 $ 0
William O. McCoy $ 2,089 $ 223,500
Gerald C. McDonough $ 2,557 $ 273,500
Marvin L. Mann $ 2,089 $ 220,500
Robert C. Pozen** $ 0 $ 0
Thomas R. Williams $ 2,089 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the fund and Mr. Burkhead are compensated by
FMR.
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.
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,
to the best of its knowledge and belief, as of the record date, no
professional of Deloitte & Touche LLP had any direct or material
indirect ownership interest in the fund inconsistent with independence
standards pertaining to accountants.
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 fund 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 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 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 current sub-adviser, is a wholly-owned subsidiary of
Bankers Trust Corporation ("BT Corporation"). On June 4 , 1999,
a wholly-owned subsidiary of Deutsche Bank AG ("Deutsche Bank") merged
with BT Corporation (the "BT Merger"). The BT Merger may 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 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 and securities lending services to the fund as under
the Old Sub-Advisory Agreement. OTHER THAN THE COMMENCEMENT AND
TERMINATION DATES, THE INTERIM SUB-ADVISORY AGREEMENT IS IDENTICAL
TO THE OLD SUB-ADVISORY AGREEMENT . Under the Interim
Sub-Advisory Agreement, BT receives fees at the same rate, 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 prior shareholder approval, on June 4,
1999 . 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. 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 and securities lending services to the
fund, but these services will no longer be covered by the same
contract. While the Interim Sub-Advisory Agreement currently requires
BT to provide both investment management and securities lending
services to the fund, the New Sub-Advisory Agreement would require BT
to provide only investment management services to the fund. Under the
fund's New Sub-Advisory Agreement, FM R (not the fund) wou ld 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"). As discussed
below, the arrangement pursuant to which BT and the fund share income
from the fund's securities lending activities is expected to be more
favorable to the fund under the New Securities Lending Agreement than
it is under the Interim Sub-Advisory Agreement. S hareholders 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 hire, terminate, or
replace sub-advisers (including BT), and to materially
modify a sub-advisory agreement , all without shareholder
approval.
On May 19, 1999, FMR and the trust, on behalf of the fund, filed with
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 it receives the necessary
SEC authorization, the Board of Trustees is taking this opportunity to
seek shareholder approval of the proposed arrangement. There can be
no assurance that the SEC will grant the requested authorization.
Proposals 4(a), 4(b), and 5 do not affect the fund's management
fee rate payable to FMR under the present management contract
dated December 1, 1997 between FMR and the trust, on behalf of the
fund (the "Present Management Contract").
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, an Interim Sub-Advisory Agreement with BT .
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 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 directed the fund's
investments in accordance with its investment objective, policies, and
limitations; voted the fund's portfolio securities; and administered
the fund's securities lending program. Under the Old Sub-Advisory
Agreement , FMR paid BT monthly fees at an annual rate of 0.006% of
the fund's average net assets . T he fund paid BT monthly fees
equal to 40% (and retained the remaining 60%) of net income
from the fund's 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 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
$ 378,435 , and the fund paid BT sub-advisory fees of
$ 199,000 .
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 may 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 prior shareholder approval, on June
4 , 1999. OTHER THAN THE COMMENCEMENT AND TERMINATION DATES,
THE INTERIM SUB-ADVISORY AGREEMENT IS IDENTICAL TO THE OLD
SUB-ADVISORY AGREEMENT. Under the Interim Sub-Advisory Agreement, BT
receives fees at the same rate, and expects to continue to
provide the same level and quality of services , as under the
Old Sub-Advisory Agreement.
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 June 30 , 1999, the amount
in escrow totaled $ 43,756 . 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 36 . The Interim Sub-Advisory Agreement became effective
on June 4, 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 (unless terminated earlier) ,
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, including
the Independent 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 meetings 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 fees at the same rate, 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 was informed 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 BT" beginning on page below).
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,
recommends that shareholders of the fund vote FOR the Interim
Sub-Advisory Agreement. If shareholders approve the Interim
Sub-Advisory Agreement, the Interim Sub-Advisory Agreement will
continue in effec t as described above. If shareholders do not
approve the Interim Sub-Advisory Agreement, 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, a New Sub-Advisory Agreement with BT .
The main purpose of this proposal is to separate into different
contracts the investment management and securities lending services
that BT currently provides to the fund under a single contract. Thus,
if shareholders approve this proposal, BT will continue to provide
investment management 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, and
shareholder approval would not be required to amend the New Securities
Lending Agreement. It is anticipated that the fund will benefit by
separating the investment management and securities lending services
into different contracts.
INTERIM SUB-ADVISORY AGREEMENT. As stated above, under the Interim
Sub-Advisory Agreement, BT directs the fund's investments in
accordance with its investment objective, policies, and limitations;
votes the fund's portfolio securities; and administers the fund's
securities lending program. Under the Interim Sub-Advisory
Agreement, FMR (not the fund) pays BT monthly fees at an
annual rate of 0.006% of the fund's average net assets . T he
fund pays BT monthly fees equal to 40% (and retains the remaining
60%) of net income from the fund's securities lending activities.
The Interim Sub-Advisory Agreement explicitly requires the vote of a
majority of the outstanding voting securities of the fund to authorize
all amendments.
NEW SUB-ADVISORY AGREEMENT. If approved, under the New Sub-Advisory
Agreement, BT will continue to direct the fund's investments in
accordance with its investment objective, policies, and
limitations , and vote the fund's portfolio securities . Under
the New Sub-Advisory Agreement, FMR (not the fund) will pay
BT monthly fees at an annual rate of 0.006% of the fund's average net
as sets (the same rate as under the Interim Sub-Advisory Agreement).
BT exp ects to provide the same level and quality of investment
management services to the fund under the New Sub-Advisory Agreement
as it currently provides under the Interim Sub-Advisory Agreement.
Unlike the Interim Sub-Advisory Agreement, the New Sub-Advisory
Agreement would not include securities lending provisions.
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. Thus, the New
Sub-Advisory Agreement is subject to the requirements of Section
15(a) and 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 25 below.)
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. A ny amendments to the New Sub-Advisory
Agreement would require the approval of the Board of Trustees.
A copy of the form of New Sub-Advisory Agreement (marked to show
changes from the Interim Sub-Advisory Agreement) is supplied as
Exhibit 3 on page 42. 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 (unless terminated earlier) , 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. Under the New Securities Lending Agreement, it is
currently anticipated that the fund will receive from BT at least 70%
(and BT will retain no more than 30%) of net income from the fund's
securities lending activities. As stated above, under the Interim
Sub-Advisory Agreement, the fund pays BT monthly fees equal to 40%
(and retains the remaining 60%) of net income from the fund's
securities lending activities. Thus, the arrangement pursuant to which
BT and the fund share income from the fund's securities lending
activities is expected to be more favorable to the fund under the New
Securities Lending Agreement than it is under the Interim Sub-Advisory
Agreement. For the fiscal year ended April 30, 1999, fees paid to BT
from securities lending income amounted to 0.0030% of the fund's
average net assets.
Section 15(a) of the 1940 Act does not apply to agreements for the
provision of non-advisory services. Thus, the New Securities
Lending Agreement is not subject to the requirements of Section 15(a)
and shareholders are not being asked to approve the New Securities
Lending Agreement. Shareholder approval would not be required to
amend the New Securities Lending Agreement . A ny
amendments to the New Securities Lending Agreement would ,
however, require the approval of the Board of Trustees.
MATTERS CONSIDERED BY THE BOARD. At a meeting held on May 20, 1999,
the Board of Trustees, including the Independent Trustees, considered
the New Sub-Advisory Agreement. In approving the New Sub-Advisory
Agreement and recommending that it be presented to shareholders for
their approval, the Trustees , including the Independent
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
fee s at the same rate from FMR , and expects to continue to
provide the same level and quality of investment management 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 the arrangement pursuant to which BT and the fund
share income from the fund's securities lending activities is expected
to be more favorable to the fund under the New Securities Lending
Agreement than it is 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 was informed 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 BT " 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,
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 (including BT) , and to modify material terms and
conditions of a sub-advisory agreement (including the fees payable
thereunder) , all without shareholder approval. (Hence, FMR
would act as a "manager-of-managers.")
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 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.
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 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.
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 of shareholders
to seek approval of the Interim Sub-Advisory Agreement, the Board
of Trustees is taking this opportunity to seek shareholder approval of
the proposed manager-of-managers 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 .
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). Although FMR and
the Board of Trustees currently may not appoint a new sub-adviser
without shareholder approval, they may terminate the Sub-Advisory
Agreement or begin the process of selecting a new sub-adviser for the
fund at any time, including prior to the Meeting.
REASONS FOR PROPOSAL. The Board of Trustees believes that allowing
FMR to negotiate and renegotiate sub-advisory arrangements for the
fund without incurring the 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 hold a special
shareholder meeting and solicit votes from the fund's shareholders.
Without having to hold 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 allow FMR
to negotiate and renegotiate sub-advisory arrangements for the fund
in light of FMR's significant experience and expertise .
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 of Trustees
believes that its review will ensure that FMR continues to act in the
best interest of the fund and its shareholders.
The Board of Trustees received materials relating to the
manager-of-managers arrangement in advance of the meetings at which
the arrangement was considered, and had the opportunity to ask
questions and request further information in connection with such
consideration. Based on their consideration of the above factors and
other information that they deemed relevant, the Board of Trustees,
including the Independent Trustees, voted to approve the submission of
the manager-of-managers proposal to shareholders of the fund for their
approval.
CONCLUSION. The Board of Trustees, including a majority of the
Independent Trustees, 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 50 .
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, no transactions
were entered into by Trustees and nominees as Trustee of the trust
involving more than 1% of the voting common, non-voting common and
equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF BT
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 eighth 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.
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.
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 BT Corporation on
June 4 , 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 is a major global banking institution that is engaged in a
wide range of financial services, including investment management,
mutual funds, retail and commercial banking, investment banking, and
insurance. Deutsche Bank's principal offices are located at
Taunusanlage 12, D-60325 Frankfurt am Main, Federal Republic of
Germany. As of March 31, 1999 , Deutsche Bank and its
affiliates had total assets of approximately $ 727 billion, with
over $ 245 billion in assets under management.
Information concerning the advisory or sub-advisory fees and average
net assets of mutual 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 52 . The name, address and principal
occupation of each director of BT is provided in Exhibit 6 beginning
on page 58 .
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 Ma y 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 SEC , BT would not be able to continue to provide investment
advisory services to the fund. The SEC has granted BT a
temporary order to permit BT and its affiliates to continue to provide
investment advisory services to registered investment companies ,
and BT has filed an application for a permanent order . However,
t here is no assurance that the SEC 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.
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, and administers the securities lending program of
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 $ 8,483,000 and
$ 860,000 , 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).
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
$ 15,696,000 , of which $ 13,696,000 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 through December 31, 1999 , FMR
has agreed to reimburse the fund to the extent that its total
operating expenses (with the exceptions noted below) exceed
0.19% of its average net assets. Effective January 1, 2000
through December 31, 2003, FMR has agreed to reimburse the fund to
the extent that its total operating expenses (with the exceptions
noted below) exceed 0.41% of its average net assets. Expenses
eligible for reimbursement do not include interest, taxes, brokerage
commissions or extraordinary expenses. In addition,
sub-advisory fees paid by the fund associated with securities lending
are not eligible for reimbursement.
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 Deutsche Bank , if the commissions are
fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services.
During the fiscal year ended April 30, 1999, the fund paid brokerage
commissions of $ 9,000 to BT Brokerage Corporation , which
amounted to approximately 1.5% of the aggregate brokerage commissions
paid by the fund.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to
the Secretary of the Trust, 82 Devonshire Street, Boston,
Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of Fidelity Service Company,
Inc., P.O. Box 789, Boston, Massachusetts 02109 , 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.
EXHIBIT 1
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
The language to be added to the current Declaration of Trust is
((underlined)), and the language to be deleted is set forth in
[brackets]. Headings that were underlined in the trust's current
Declaration of Trust remain underlined in this Exhibit.
((AMENDED AND)) RESTATED DECLARATION OF TRUST, made [June 16, 1994]
((______, 1999)) by each of the Trustees whose signature is affixed
hereto (the "Trustees")((.))
WHEREAS, the Trustees desire to ((amend and)) restate this
Declaration of Trust for the sole purpose of supplementing the
Declaration of Trust to incorporate amendments duly adopted; and
WHEREAS, this Trust was initially made on November 8, 1974 by Edward
C. Johnson 3d, Caleb Loring, Jr., George K. McKenzie and William R.
Spaulding in order to establish a trust fund for the investment and
reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[T]((t))rust under this ((Amended and)) [r]((R))estated Declaration of
Trust as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as [the] "Fidelity Commonwealth
Trust."
DEFINITIONS
SECTION 2. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The [T]((t))erms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable)((,)) and "Principal Underwriter" shall
have the meanings given them in the 1940 Act, as [amended from time to
time] ((modified by or interpreted by any applicable order or orders
of the Commission or any rules or regulations adopted or
interpretative releases of the Commission thereunder));
(b) (("Bylaws" shall mean the bylaws of the Trust, if any, as amended
from time to time;))
(c) (("Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;))
(d) (("Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to
time;))
[(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))
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 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 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 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, 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.
((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
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 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 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.))
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 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.
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;
(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))
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 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))
(((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 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 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
EXHIBIT 2
SUBADVISORY AGREEMENT
This Agreement is entered into as of the 4th day of June, 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 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.
(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.
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 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 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 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 June 4, 1999.
(b) Subject to prior termination pursuant to Section 9.2 below, this
Agreement shall continue in force until July 31, 1999, 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.
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.
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.
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
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.
(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.
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUBADVISORY AGREEMENT
This Agreement is entered into as of the [4th]
(( ___ )) day of [June] (( _______ )) , 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") ((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
Subadviser's performance in any way, terminate this Agreement in
accordance with the provisions of Section [9.2] ((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 [, 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.
(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
Portfolio.
(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. 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 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.] ((III.)) COMPLIANCE; CONFIDENTIALITY
[4.1] ((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.
(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] ((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 [4.2] ((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.
[V.] ((IV)) LIABILITY OF SUBADVISER
[5.1] ((4.1)) 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] ((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.
[VI.] ((V.)) SUPPLEMENTAL ARRANGEMENTS; EXPENSES; INSURANCE
[6.1] ((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.
[6.2] ((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
Portfolio 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] ((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.
[VII.] ((VI.)) CONFLICTS OF INTEREST
[7.1] ((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.
[VIII.] ((VII.)) REGULATION
[8.1] ((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.
[IX.] ((VIII.)) DURATION AND TERMINATION OF AGREEMENT
[9.1] ((8.1)) Effective Date; Duration; Continuance. (a) This
Agreement shall become effective on [June 4] ((______)) , 1999.
(b) Subject to prior termination pursuant to Section [9.2]
((8.2)) below, this Agreement shall continue in force until July
31, [1999] ((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)) [S]((s)) hareholder 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] ((8.2)) Termination and Assignmen t. (((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.
[9.3] ((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.] ((IX.)) REPRESENTATIONS, WARRANTIES AND COVENANTS
[10.1] ((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.
[10.2] ((9.2)) 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.
[10.3] ((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.
[10.4] ((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;
(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] ((3.1)) .
[XI.] ((X.)) MISCELLANEOUS PROVISIONS
[11.1] ((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.
[11.2] ((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.
[11.3] ((10.3)) 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] ((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)).
[11.4] ((10.4)) Entire Agreement. This Agreement contains the
entire understanding and agreement of the parties with respect to the
subject hereof.
[11.5] ((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.
[11.6] ((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 [11.6] ((10.6)) .
[11.7] ((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.
[11.8] ((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.
[11.9] ((10.9)) 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
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.
(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.]
EXHIBIT 4
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE
RATIOS (A)
INVESTMENT OBJECTIVE AND FUND FISCAL YEAR END (A) AVERAGE NET ASSETS RATIO OF NET ADVISORY FEES
(MILLIONS)(B) TO AVERAGE NET ASSETS PAID
TO FMR (C)(D)
INDEX FUNDS
Variable Insurance Products II: 12/31/98 $ 2,874.6 0.17%*
Index 500
Spartan Extended Market Index 2/28/99 49.4 0.00*
Spartan International Index 2/28/99 33.9 0.00*
Spartan Total Market Index 2/28/99 98.8 0.00*
Spartan U.S. Equity Index 2/28/99 13,107.3 0.01*
Spartan Market Index 4/30/99 6,539.8 0.03*
</TABLE>
(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 (*).
(d) For Spartan Extended Market Index, Spartan International Index,
and Spartan Total Market Index, the funds paid sub-advisory fees of
0.06%, 0.01%, and 0.02%, respectively, of their average net assets to
Bankers Trust Company. For Variable Insurance Products II: Index 500,
Spartan U.S. Equity Index, and Spartan Market Index, the funds paid
sub-advisory fees of less than 0.01% of their average net assets to
Bankers Trust Company. Sub-advisory fees paid by the funds associated
with securities lending are not eligible for reimbursement.
EXHIBIT 5
<TABLE>
<CAPTION>
<S> <C> <C>
BANKERS TRUST COMPANY PROPRIETARY FUNDS
FUND NET ASSETS UNDER MANAGEMENT ADVISORY FEES PAYABLE TO BT
5-31-99
S&P INDEX FUNDS
Equity Index Portfolio (a) (b) $ 6,607,007,085 0.075%
Includes the following feeder
funds:
BT Inst'l: Equity 500 Index $ 2,391,761,781
Fund (c)
BT Pyramid Investment Equity $ 929,474,411
500 Index (d)
USAA S&P 500 Index (e) $ 2,713,859,248
Amer AADV: S&P 500 - AMR $ 322,610,586
Class (f)
Amer AADV: S&P 500 - $ 3,632,960
Mileage Fund (f)
Scudder S&P 500 Index (g) $ 244,805,518
BT Insur: Equity 500 Index $ 111,273,342 0.20%
(Variable Annuity) (a) (h)
EAFE INDEX FUNDS
BT Inv Port: EAFE Equity $ 58,523,081 0.25%
Index Portfolio (a) (b)
Includes the following feeder
fund:
BT ADV: EAFE Equity Index $ 58,545,887
Fund - Inst'l Cl (c)
BT Insur: EAFE Equity Index $ 42,502,488 0.45%
Fund (Variable Annuity) (a)
(h)
RUSSELL 2000 INDEX FUNDS
BT Inv Port: Small Cap Index $ 120,320,401 0.15%
Portfolio (a) (b)
Includes the following feeder
fund:
BT ADV: Small Cap Index Fund $ 89,651,365
- - Inst'l Cl (c)
BT Insur: Small Cap Index $ 31,853,002 0.35%
Fund (Variable Annuity) (a)
(h)
</TABLE>
(a) Information pertaining to advisory fees is shown before expense
waivers and/or reimbursements, if any, are applied.
(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.
<TABLE>
<CAPTION>
<S> <C> <C>
BANKERS TRUST COMPANY THIRD PARTY SUB-ADVISED FUNDS
FUND ASSETS UNDER MANAGEMENT 5-31-99 FEE SCHEDULE
VALIC - American General A monthly fee computed at the
Series Portfolio: $ 814,774,297 annual rate of 0.03% on the
MidCap Index Fund (a) first $300 million and 0.02%
on assets over $300 million
for the MidCap Index Fund,
0.02% on the first $2
billion and 0.01% on assets
over $2 billion for the
Stock Index Fund and 0.03%
on the first $150 million
and 0.02% on assets over
$150 million for the Small
Cap Index Fund.
Notwithstanding the above
provision, VALIC is required
to pay a minimum annual
sub-advisory fee of $50,000
to BT for the Small Cap
Index Fund. There are no
minimum sub-advisory fees
for the Stock Index Fund or
the MidCap Index Fund. The
Investment Sub-Advisory
Agreements require that each
Sub-Adviser promptly reduce
its monthly fee by the
amount of any commission,
tender and exchange offer
solicitation fees, other
fees or similar payments
received by the Sub-Adviser,
or any affiliated person of
the Sub-Adviser, in
connection with Sub-Advised
Fund portfolio transactions.
Stock Index Fund (a) $ 4,624,973,419
Small Cap Index Fund (a) $ 223,185,980
VALIC - American General A monthly fee computed at the
Series Portfolio Company 2 $ 12,489,608 annual rate of 0.03% of the
(Class A Shares, Class B average daily net asset
Shares): values of the portion of the
Stock Index Fund (a) Small Cap Value Fund
portfolio that BT manages.
With respect to the Stock
Index Fund, VALIC shall pay
to BT a monthly fee computed
at the annual rate of 0.02%
of the first $2 billion and
0.01% of average daily net
asset values on the excess
over $2 billion. VALIC shall
pay BT a monthly fee
computed at the annual rate
of 0.03% of the first $300
million and 0.02% of average
daily net asset values on
the excess over $300 million
of the MidCap Index Fund,
and 0.03% of the first $150
million and 0.02% of average
daily net asset values on
the excess over $150 million
of the Small Cap Index Fund.
MidCap Index Fund (a) $ 6,585,995
Small Cap Index Fund (a) $ 6,109,550
Small Cap Value Fund (a) (b) $ 2,904,138
American General Series A monthly fee computed at the
Portfolio Company 3: $ 3,273,066 annual rate of 0.03% of the
Small Cap Value Fund (a) (b) average daily net asset
value of the portion of the
Small Cap Value Fund
portfolio that BT manages.
EQ Advisors Trust:
BT Equity 500 Index Fund (a) $ 392,561,486 0.05% of the Portfolio's
average daily net assets
BT Small Company Index Fund (a) $ 41,807,938 0.05% of the Portfolio's
average daily net assets
BT International Equity Index $ 62,195,249 0.15% of the Portfolio's
Fund (a) average daily net assets
FUND ASSETS UNDER MANAGEMENT 5-31-99 FEE SCHEDULE
Pacific Mutual: A fee is paid at the
Equity Index Portfolio (a) $ 1,808,280,989 beginning of each calendar
quarter, based on an annual
percentage of the combined
daily net assets of the
Equity Index and Small-Cap
Index Portfolios, according
to the following schedule,
subject to a minimum annual
fee of $100,000: 0.08% on
first $100 million; 0.04% on
next $100 million; 0.02% on
excess.
Small-Cap Index Portfolio (a) $ 42,738,313
Scudder Kemper Investments The fee paid to the
Inc.: $ 464,922,428 Sub-Adviser is calculated on
AARP U.S. Stock Index Fund (a) a quarterly basis and
depends on the level of
total assets in the AARP
U.S. Stock Index Fund. The
fee rate decreases as the
level of total assets for
the Fund increases. The fee
rate for each level of
assets is: 0.07% of the
first $100 million of
average daily net assets,
0.03% of such assets in
excess of $100 million, and
0.01% of such assets in
excess of $200 million with
a minimum annual fee of
$75,000.
SunAmerica Asset Management
Corporation: $ 5,142,375 0.10% - first $500 million
Large-Cap Growth Portfolio 0.03% - over $500 million
(a) (b)
Large-Cap Composite $ 5,308,328 0.05% - first $500 million
Portfolio (a) (b) 0.03% - over $500 million
Large-Cap Value Portfolio $ 5,470,359 0.10% - first $500 million
(a) (b) 0.03% - over $500 million
Mid-Cap Growth Portfolio (a) $ 5,380,426 0.10% - first $500 million
(b) 0.03% - over $500 million
Mid-Cap Value Portfolio (a) $ 5,504,588 0.10% - first $500 million
(b) 0.03% - over $500 million
Small-Cap Portfolio (a) (b) $ 5,350,213 0.07% - first $500 million
0.03% - over $500 million
International Equity $ 5,069,965 0.15% - first $500 million
Portfolio (a) (b) 0.05% - over $500 million
Diversified Fixed Income $ 5,245,870 0.12% - first $500 million
Portfolio (a) (b) 0.08% - over $500 million
For all SunAmerica Portfolios
listed here, the aggregate
annual fees paid to
Sub-Adviser are subject to
the following minimum: First
Year (April 1999 through
March 2000) - no minimum;
Second Year (April 2000
through March 2001) -
$300,000 total for the
Portfolios combined; Third
Year (April 2001, through
March 2002) - $600,000 total
for the Portfolios combined;
Fourth Year (April 2002,
through March 2003) -
$850,000 total for the
Portfolios combined; Each
Subsequent Year (beginning
April 2003) - $850,000 total
for the Portfolios combined.
</TABLE>
(a) Information pertaining to advisory fees is shown before expense
waivers and/or reimbursements, if any, are applied.
(b) BT acts as Sub-Adviser of the portion of the portfolio of this
fund which invests according to an investment strategy that seeks to
replicate a securities index.
EXHIBIT 6
BANKERS TRUST COMPANY - DIRECTORS
NAME AND PRINCIPAL OCCUPATION BUSINESS ADDRESS
Mr. Josef Ackermann, Member, Deutsche Bank AG Taunusanlage
Board of Managing Directors, 12 D-60262 Frankfurt am Main
Deutsche Bank AG Federal Republic of Germany
Mr. Robert B. Allardice III, Deutsche Bank Americas
Executive Vice President, Holding Corp. 31 West 52nd
Deutsche Bank Americas Street New York, New York
Holding Corp. 10019
Mr. George B. Beitzel, 29 King Street Chappaqua, NY
Director of various 10514-3432
corporations
Mr. William R. Howell, J.C. Penney Company, Inc.
Chairman Emeritus, J.C. P.O. Box 10001 Dallas, TX
Penney Company, Inc. 75301-1109
Mr. Hermann-Josef Lamberti, Deutsche Bank AG Taunusanlage
Member, Board of Managing 12 D-60262 Frankfurt am Main
Directors, Deutsche Bank AG Federal Republic of Germany
*Mr. Frank N. Newman, Bankers Trust Company 130
Chairman of the Board, Chief Liberty Street New York, NY
Executive Officer and 10006
President, Bankers Trust
Corporation and Bankers
Trust Company
Mr. John A. Ross, Regional Deutsche Bank Americas
Chief Executive Officer, Holding Corp. 31 West 52nd
Deutsche Bank Americas Street New York, New York
Holding Corp. 10019
*Effective June 30, 1999,
Frank N. Newman resigned as
Chairman of the Board, Chief
Executive Officer and
President, Bankers Trust
Corporation and Bankers
Trust Company. It is
anticipated that the
vacancies that resulted from
Mr. Newman's resignation
will be filled at the next
Board of Directors meeting,
which is currently scheduled
to take place on July 22,
1999.
FMI-pxs-0799 CUSIP#315912204/FUND#317
1.720682.100
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, Marvin L. Mann , 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
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:
Please fold and detach card at perforation before mailing.
- ----------------------------------------------------------------------
Please vote by filling in the boxes below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. To elect the twelve nominees FOR all nominees listed WITHHOLD authority to vote 1.
specified below as Trustees: (except as marked to the for all nominees.
(01) Ralph F. Cox, (02) contrary at left).
Phyllis Burke Davis, (03)
Robert M. Gates, (04) Edward
C. Johnson 3d, (05) E. [ ]
Bradley Jones, (06) Donald [ ]
J. Kirk, (07) Peter S.
Lynch, (08) William O.
McCoy, (09) Gerald C.
McDonough, (10) Marvin L.
Mann, (11) Robert C. Pozen,
and (12) 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>
______________________________________________________________________
FOR AGAINST ABSTAIN
2. To ratify the selection of [ ] [ ] [ ] 2.
Deloitte & Touche LLP as
independent accountants of
the fund.
3. To authorize the Trustees to [ ] [ ] [ ] 3.
adopt an amended and
restated Declaration of Trust.
4(a). To approve an interim [ ] [ ] [ ] 4(a).
sub-advisory agreement with
Bankers Trust Company for
the fund.
4(b). To approve a new sub-advisory [ ] [ ] [ ] 4(b).
agreement with Bankers Trust
Company for the fund.
5. To approve a new [ ] [ ] [ ] 5.
"manager-of-managers"
arrangement for the fund.
FMI-pxc-0799 cusip # 315912204/fund #317
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
SPARTAN(Registered trademark) MARKET INDEX FUND
Dear Shareholder:
I am writing to let you know that a special meeting of shareholders of
Spartan Market Index Fund will be held on September 15, 1999. The
purpose of the meeting is to vote on several important proposals that
affect the fund and your investment in it. As a shareholder, you have
the opportunity to voice your opinion on the matters that affect your
fund. This package contains information about the proposals and the
materials to use when voting by mail.
Please read the enclosed materials and cast your vote on the proxy
card(s). PLEASE VOTE AND RETURN YOUR CARD(S) PROMPTLY. YOUR VOTE IS
EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY
BE.
All of the proposals have been carefully reviewed by the Board of
Trustees. The Trustees, most of whom are not affiliated with
Fidelity, are responsible for protecting your interests as a
shareholder. The Trustees believe these proposals are in the best
interest of shareholders. They recommend that you vote FOR each
proposal.
The following Q&A is provided to assist you in understanding the
proposals. Each of the proposals is described in greater detail in
the enclosed proxy statement.
VOTING IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED. To cast
your vote, simply complete the proxy card(s) enclosed in this package.
Be sure to sign the card(s) before mailing it in the postage-paid
envelope.
If you have any questions before you vote, please call Fidelity at
1-800-544-8888. We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposals
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposals to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You are being asked to vote on the following proposals:
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.
WHAT ROLE DOES THE BOARD PLAY? (PROPOSAL 1)
The Trustees oversee the investment policies of the fund. Members of
the Board are fiduciaries and have an obligation to serve the best
interests of shareholders, including approving changes such as those
proposed in the proxy statement. In addition, the Trustees review
fund performance, oversee fund activities, and review contractual
arrangements with companies that provide services to the fund.
WHAT IS THE ROLE OF THE INDEPENDENT ACCOUNTANTS? (PROPOSAL 2)
The independent accountants examine annual financial statements for
the fund and provide other audit and tax-related services. They also
sign or certify any financial statements of the fund that are required
by law to be independently certified and filed with the Securities and
Exchange Commission (SEC).
WHY IS THE FUND PROPOSING TO ADOPT AN AMENDED AND RESTATED DECLARATION
OF TRUST? (PROPOSAL 3)
The new Declaration of Trust is a more modern form of trust instrument
for a Massachusetts business trust. It gives the Trustees more
flexibility, and, subject to the applicable requirements of federal
and state law, broader authority to act. This increased flexibility
may allow the Trustees to react more quickly to changes in competitive
and regulatory conditions.
Adoption of the new Declaration of Trust will not alter the Trustees'
existing fiduciary obligations to act in the best interests of the
fund's shareholders. Before utilizing any new flexibility that the
new Declaration of Trust may afford, the Trustees must first consider
the shareholders' interests and act in accordance with such interests.
The new Declaration of Trust amends the current Declaration of Trust
in a number of significant ways. Please review the proxy statement
for specific details.
WHY IS AN INTERIM SUB-ADVISORY AGREEMENT BEING PROPOSED FOR THE FUND?
(PROPOSAL 4(A))
The fund's current sub-adviser, Bankers Trust Company (BT), is a
wholly owned subsidiary of Bankers Trust Corporation (BT Corporation).
On June 4, 1999, a wholly owned subsidiary of Deutsche Bank AG merged
with BT Corporation (BT Merger). The BT Merger may be considered a
change of control of BT, resulting in the assignment and automatic
termination of the fund's sub-advisory agreement with BT.
On May 25, 1999, the SEC granted BT an exemptive order permitting the
fund's interim sub-advisory agreement to take effect, without prior
shareholder approval, on June 4, 1999. Pursuant to the order, the
fund's sub-advisory agreement may remain in effect, for an interim
period of up to 150 days, through the date on which it is approved (or
disapproved) by the fund's shareholders.
Therefore, in order for BT to continue to serve as sub-adviser to the
fund, it is necessary for the fund's shareholders to approve an
interim sub-advisory agreement with BT. Other than the commencement
and
termination dates, the fund's interim sub-advisory agreement is
identical to the sub-advisory agreement that was in effect with
respect to the fund prior to the BT Merger. BT receives fees at the
same rates and expects to continue to provide the same level and
quality of investment management and securities lending services to
the fund under the interim sub-advisory agreement as it did under the
prior sub-advisory agreement. Please refer to the proxy statement for
specific details of the interim sub-advisory agreement proposal.
WHY IS A NEW SUB-ADVISORY AGREEMENT BEING PROPOSED FOR THE FUND?
(PROPOSAL 4(B))
The main purpose of this proposal is to separate into different
contracts the investment management and securities lending services
that BT currently provides to the fund under a single contract. Thus,
if shareholders of the fund approve this proposal, BT will continue to
provide investment management services to the fund under the new
sub-advisory agreement (which would then replace the interim
sub-advisory agreement), but BT will provide securities lending
services to the fund under a separate, new securities lending
agreement. Shareholders are not being asked to approve, and
shareholder approval would not be required to amend, the new
securities lending agreement. It is anticipated that the fund will
benefit by separating the investment management and securities lending
services into different contracts. Please refer to the proxy
statement for specific details of the new sub-advisory agreement
proposal.
WHAT IS A "MANAGER-OF-MANAGERS" ARRANGEMENT? (PROPOSAL 5)
A manager-of-managers arrangement would permit FMR, with the approval
of the Board of Trustees, to hire, terminate, or replace sub-advisers
(including BT) and to materially modify a sub-advisory agreement, all
without shareholder approval. The proposed 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 of Trustees will
consider and approve any sub-advisory changes that FMR proposes under
the arrangement to ensure that the changes are in the best interest of
the fund and its shareholders. The Board of Trustees believes it is
appropriate to allow FMR to negotiate and renegotiate sub-advisory
arrangements for the fund without obtaining shareholder approval in
light of FMR's significant experience and expertise.
On May 19, 1999, FMR and the trust, on behalf of the fund, filed with
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. The fund cannot
implement such an arrangement unless it receives the necessary SEC
authorization. There can be no assurance that the SEC will grant the
requested authorization.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Board of Trustees has unanimously approved all of the
proposals and recommends that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of the fund on the record date. The record date
is July 19, 1999.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card(s) and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposals or
how to vote your shares, please call Fidelity at 1-800-544-8888.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust or other entity should
sign, "Ann B. Collins, Trustee."
