FIRSCo Letterhead -
To Plan sponsors offering Spartan MARKET INDEX Fund - Fund #317 -
INVESTMENT ONLY PLANS
9/23/97
Dear Plan Sponsor:
Last April, Fidelity Investments(Registered trademark) substantially
decreased the expenses on the Spartan(Registered trademark)Market Index
Fund (Fidelity Market Index Fund). The fund is now one of most
competitive mutual funds seeking to track the S&P 500(Registered
trademark) available to you and your 401(k) plan participants. To
further streamline the index fund management process and support the
lower expenses, additional changes are being proposed that require
shareholder approval at the forthcoming shareholder meeting on November
19th. Shareholders who are invested in the fund as of September 22,
1997 will have the opportunity to evaluate and vote on the proposals.
The proposed changes, if adopted by shareholders are:
1a) To approve an Amended Management Contract for the fund. The proposed
amendment modifies the management contract with FMR in two ways. First,
the proposal would allow Bankers Trust Company (BT) to be appointed as
sub-advisor to the fund. The proposal would also modify the management fee
arrangement between the fund and FMR to make it consistent with other
Fidelity index funds.
Under the present management contract, the fund pays FMR an all-inclusive
management fee at an annual rate of 0.45% of average net assets. Under the
amended management contract, the fund would pay separately for management
fees and other operating expenses such as legal, printing, and transfer
agent costs. The management fee would be 0.24% of average net assets.
Fidelity has voluntarily agreed to limit the total operating expenses of
the fund to 0.19% of average net assets through December 31, 1999.
Excluded from the 0.19% limit on total operating expenses are BT's
sub-advisory fees associated with securities lending, which are estimated
at 0.002% of average net assets.
1b)To approve a new Sub-Advisory Agreement for the fund whereby BT would
be appointed sub-adviser.
2) permit the fund to invest without limit in the securities of other
investment companies, such as non-publicly offered money market funds. If
approved, and if BT is granted an exemptive order to permit the investment
of cash collateral from securities lending transactions in a BT-managed
money market fund, the fund would benefit in several ways. These benefits
include reducing costs and/or providing greater returns on the cash
collateral from the fund's securities lending program.
BT was selected as the sub-adviser for the three new Spartan equity index
funds Fidelity expects to offer later this fall. Shareholders in the
Spartan U.S. Equity Index Fund and Fidelity VIP II Index 500 Portfolio
will also hold shareholder meetings on November 19 to vote on the
appointment of BT as sub-adviser to their funds.
The proposal to appoint BT is part of Fidelity's ongoing effort to provide
services to the fund efficiently and at low cost. As one of the one of
the largest index portfolio asset managers, BT has achieved economies of
scale, investment management expertise including securities lending
activities and asset custody capabilities. If shareholders approve BT's
appointment as sub-adviser, BT would then provide day-to-day investment
management, custody and securities lending services for the fund. FMR
would still retain responsibility for overseeing BT's duties including
investment performance and would retain its other management functions,
subject to oversight by the Board of Trustees. All other fund services,
including shareholder account services, would be unchanged.
Should you have any questions or require further information, please
contact me..
FOR PLAN SPONSOR USE ONLY
6I-40281.001
ON FIRSCo Letterhead -
To RECORD KEEPING Plan sponsors SPARTAN MARKET Index Fund - Fund #317
9/23/97
Dear Plan Sponsor:
Last April, Fidelity Investments(Registered trademark) substantially
decreased the expenses on the Spartan(Registered trademark) Market Index
Fund (formerly Fidelity Market Index Fund). The fund is now one of most
competitive mutual funds seeking to track the S&P 500(Registered
trademark) available to you and your 401(k) plan participants. To further
streamline the index fund management process and support the lower
expenses, additional changes are being proposed that require shareholder
approval at the forthcoming shareholder meeting on November 19th.
Shareholders who are invested in the fund as of September 22, 1997 will
have the opportunity to evaluate and vote on the proposals. The proposed
changes, if adopted by shareholders are:
1a) To approve an Amended Management Contract for the fund. The proposed
amendment modifies the management contract with FMR in two ways. First,
the proposal would allow Bankers Trust Company (BT) to be appointed as
sub-advisor to the fund. The proposal would also modify the management fee
arrangement between the fund and FMR to make it consistent with other
Fidelity index funds.
Under the present management contract, the fund pays FMR an all-inclusive
management fee at an annual rate of 0.45% of average net assets. Under the
amended management contract, the fund would pay separately for management
fees and other operating expenses such as legal, printing, and transfer
agent costs. The management fee would be 0.24% of average net assets.
Fidelity has voluntarily agreed to limit the total operating expenses of
the fund to 0.19% of average net assets through December 31, 1999.
Excluded from the 0.19% limit on total operating expenses are BT's
sub-advisory fees associated with securities lending, which are estimated
at 0.002% of average net assets.
1b) To approve a new Sub-Advisory Agreement for the fund whereby BT would
be appointed sub-adviser.
2) To permit the fund to invest without limit in the securities of other
investment companies, such as non-publicly offered money market funds. If
approved, and if BT is granted an exemptive order to permit the investment
of cash collateral from securities lending transactions in a BT-managed
money market fund, the fund would benefit in several ways. These benefits
include reducing costs and/or providing greater returns on the cash
collateral from the fund's securities lending program.
BT was selected as the sub-adviser for the three new Spartan equity index
funds Fidelity expects to offer later this fall. Details on the new funds
can be found on the attachment. Shareholders in the Spartan U.S. Equity
Index Fund and Fidelity VIP II Index 500 Portfolio will also hold
shareholder meetings on November 19 to vote on the appointment of BT as
sub-adviser to their funds.
The proposal to appoint BT is part of Fidelity's ongoing effort to provide
services to the fund efficiently and at low cost. As one of the one of the
largest index portfolio asset managers, BT has achieved economies of
scale, investment management expertise including securities lending
activities and asset custody capabilities. If shareholders approve BT's
appointment as sub-adviser, BT would then provide day-to-day investment
management, custody and securities lending services for the fund. FMR
would still retain responsibility for overseeing BT's duties including
investment performance and would retain its other management duties,
subject to oversight by the Board of Trustees. All other fund services,
including shareholder account services, would be unchanged.
Fidelity Investments urges all fund shareholders to vote on these proposals
by proxy and to return their proxy cards as soon as possible. I will call
to request permission to telephone those participants in your plan who hold
investments in the fund - or, in the future, in other funds with proxies.
Allowing participants to receive reminder phone calls at home will help the
fund obtain quorum and keep expenses in line. Fidelity uses a professional
firm that will - if needed - call participants at home at convenient times
asking them to vote. Your cooperation will help ensure the effective
management of the fund's business.
FOR PLAN SPONSOR USE ONLY
6I-40345.001
: FIRSCo Letterhead -
To Plan sponsors offering Spartan U.S. EQUITY INDEX FUND Index Fund -
Fund 650 - INVESTMENT ONLY Plans
9/23/97
Dear Plan Sponsor:
Last April, Fidelity Investments(Registered trademark) substantially
decreased the expenses on the Spartan(Registered trademark) U.S. Equity
Index Fund (formerly Fidelity U.S. Equity Index Portfolio). The fund is
now one of most competitive mutual funds seeking to track the S&P
500(Registered trademark) available to you and your 401(k) plan
participants. To further streamline the index fund management process and
support the lower expenses, additional changes are being proposed that
require shareholder approval at the forthcoming shareholder meeting on
November 19th. Shareholders who are invested in the fund as of September
22, 1997 will have the opportunity to evaluate and vote on the proposals.
The proposed changes, if adopted by shareholders would:
a) modify the management contract with FMR reducing the management fee
payable by the fund to FMR, from 0.28% to 0.24% of the fund's average net
assets (with a 0.19% cap though December 31, 1999). Under the proposal,
any sub-adviser fees associated with securities lending (estimated at
0.002% of average net assets of the fund) will not be subject to the cap.
b) appoint Bankers Trust Company (BT) as sub-adviser to the fund.
BT was selected as the sub-adviser for the three new Spartan equity index
funds Fidelity expects to offer later this fall. Shareholders in the
Spartan Market Index Fund and Fidelity VIP II Index 500 Portfolio will also
hold shareholder meetings on November 19 to vote on the appointment of BT
as sub-adviser to their funds.
The proposal to appoint BT is part of Fidelity's ongoing effort to provide
services to the fund efficiently and at low cost. As one of the largest
index portfolio asset managers, BT has achieved economies of scale,
investment management expertise including securities lending activities and
asset custody capabilities. If shareholders approve BT's appointment as
sub-adviser, FMR will delegate some of its duties as the fund's manager
and investment advisor to BT. BT would then provide day- to-day
investment management, custody and securities lending services for the
fund. FMR would still retain responsibility for overseeing BT's duties
including investment performance and would retain its other management
functions, subject to oversight by the Board of Trustees. All other fund
services, including shareholder account services, would be unchanged.
Should you have any questions or require further information, please
contact me.
FOR PLAN SPONSORS ONLY
6I - 40284.001
FIRSCO LETTERHEAD -
To Plan sponsors Spartan U.S. Index Fund - Fund 650 - RECORD KEPT PLANS
- - ALSO: see bottom and keep or delete OPTIONAL P.S FOR -GOVN'T
SECURITIES FUND -054 IF PLAN ALSO OFFERS IT
9/23/97 - FIRST USE
- ------------------------------------------------
Dear Plan Sponsor:
Last April, Fidelity Investments(Registered trademark) substantially
decreased the expenses on the Spartan(Registered trademark) U.S. Equity
Index Fund (formerly Fidelity U.S. Equity Index Portfolio). The fund is
now one of most competitive mutual funds seeking to track the S&P
500(Registered trademark) available to you and your 401(k) plan
participants. To further streamline the index fund management process and
support the lower expenses, additional changes are being proposed that
require shareholder approval at the forthcoming shareholder meeting on
November 19th. Participants who are invested in the fund as of September
22, 1997 will have the opportunity to evaluate and vote on the proposals.
The proposed changes, if adopted by shareholders would:
a) modify the management contract with FMR reducing the management fee
payable by the fund to FMR, from 0.28% to 0.24% of the fund's average net
assets (with a 0.19% cap though December 31, 1999). Under the proposal,
any sub-adviser fees associated with securities lending (estimated at
0.002% of average net assets of the fund) will not be subject to the cap.
b) appoint Bankers Trust Company (BT) as sub-adviser to the fund.
BT was selected as the sub-adviser for the three new Spartan equity index
funds Fidelity expects to offer later this fall. Details on the new funds
can be found on the attachment. Shareholders in the Spartan Market Index
Fund and Fidelity VIP II Index 500 Portfolio will also hold shareholder
meetings on November 19 to vote on the appointment of BT as sub-adviser to
their funds. The proposal to appoint BT is part of Fidelity's ongoing
effort to provide services to the fund efficiently and at low cost. As one
of the largest index portfolio asset managers, BT has achieved economies of
scale, investment management expertise including securities lending
activities and asset custody capabilities. If shareholders approve BT's
appointment as sub-adviser, BT would then provide day-to-day investment
management, custody and securities lending services for the fund. FMR
would still retain responsibility for overseeing BT's duties including
investment performance and would retain its other management functions,
subject to oversight by the Board of Trustees. All other fund services,
including shareholder account services, would be unchanged.
Fidelity Investments urges all fund shareholders to vote on these proposals
by proxy and to return their proxy cards as soon as possible. I will be
calling you in the next few days to request your permission to telephone
those participants in your plan who hold investments in the fund reminding
them to vote - or, in the future, in other funds with proxies. Allowing
participants to receive phone calls at home will help the funds obtain
quorum and keep expenses in line. Fidelity uses an outside professional
firm that will - if needed - call participants at home at convenient times
asking them to vote. A proxy call-out authorization form is enclosed for
you to sign and return to me should you agree to allow participants to be
called if needed. Thank you for your consideration.
Sincerely,
- ----------------------------
NOTE: SECTION BELOW IS OPTIONAL IF PLAN USES : FIDELITY GOVERNMENT
SECURITIES FUND #054
P.S. IMPORTANT NOTE: In addition to the shareholder meetings mentioned
above, the Fidelity Government Securities Fund is also holding a
shareholder meeting on November 19, 1997. Proxy materials will be mailed
to shareholders of record as of September 22nd. Fidelity would also
appreciate authorization to call participants invested in the Fidelity
Government Securities Fund using the methodology described above - if
needed - to remind them to return their proxy cards.
encl.
FOR PLAN SPONSORS ONLY
6I - 39233.001
Q&A - FIDELITY'S NEW SPARTAN INDEX FUNDS
NEW FUNDS
Fidelity expects to launch three new index funds - Spartan(Registered
trademark) Total Market Index Fund, Spartan Extended Market Index Fund and
Spartan International Index Fund in the fall.
Q: WHY IS FIDELITY LAUNCHING THESE FUNDS?
A: The launching of these funds addresses two issues. First, plan sponsor,
participant and individual investor feedback has indicated increased
interest in index funds; assets in U.S. index funds - (about $93 billion
at the end of 1996) have grown threefold since 1994. By adding new index
funds, Fidelity is responding to plan sponsor and investor requests.
Second, the new funds will expand the choices available to plan sponsors
and participants seeking to supplement their actively-managed equity funds.
In addition to our strong line-up of diversified, actively-managed equity
funds, Fidelity's new funds will provide a more extensive range of
investment options for plan sponsors and their participants.
Q: WHAT ABOUT FIDELITY'S COMMITMENT TO ACTIVE INVESTMENT MANAGEMENT?
A: Fidelity firmly believes that thorough research and active investment
management can lead to outperformance of major market indices over time.
However, some participants and plan sponsors choose to supplement their
actively managed investment options with funds that seek to track specific
unmanaged benchmarks.
Q: WHAT ARE THE THREE NEW INDEX FUNDS?
A: Spartan Total Market Index Fund seeks a total return that corresponds to
that of the Wilshire 5000 Equity Index (Wilshire 5000);Spartan Extended
Market Index Fund seeks a total return that corresponds to that of the
Wilshire 4500 Equity Index (Wilshire 4500); and Spartan International Index
Fund seeks a total return that corresponds to that of the Morgan Stanley
Capital International Europe, Australasia and Far East Index (MSCI -
EAFE(Registered trademark) Index often called the EAFE index). These are
capitalization weighted indices.
Q: WHY DID FIDELITY CHOOSE THESE INDEXES AS BENCHMARKS FOR THE NEW FUNDS?
A: The three new index funds provide diversification to the S&P
500(Registered trademark) index funds already offered. Two of our existing
mutual funds - Spartan U.S. Equity Index Fund (formerly Fidelity U.S.
Equity Index Portfolio) and Spartan Market Index Fund ( formerly Fidelity
Market Index Fund and primarily a retail fund) - track the S&P 500. The new
index funds give our plan sponsors, plan participants and other Fidelity
investors opportunities to invest in funds that track broader, more
diversified indices than the S&P 500. The Wilshire 5000, for example,
represents a much broader sampling of stocks than the S&P 500 with less
emphasis on blue chip or "household name" stocks. The Wilshire 4500
focuses on small-to-medium sized companies and the EAFE Index tracks the
performance of the broad, international markets. The Wilshire 4500 index
will not contain the stocks found in the S&P 500 index.
Q: WHAT STOCKS ARE IN THESE WILSHIRE 5000 AND 4500 INDEXES?
A: The Wilshire 5000 consists of almost all U.S. headquartered stocks
that trade regularly on the NewYork Stock Exchange, American Stock Exchange
and NASDAQ for which market prices are readily available. It includes all
of the stocks in the S&P 500 except for a small number of foreign stocks
(11 as of 6/30/97) that are in the S&P 500. The domestic S&P 500 stocks
accounted for approximately 71% of the Wilshire 5000 as of 6/30/97. As of
then, over 7,000 capitalization weighted security returns were used to
adjust the index. At that time, the Wilshire 5000 capitalization was about
82% NYSE, 1% AMEX, and 17% OTC. The Wilshire 4500 contains the same
securities as the Wilshire 5000 excluding the S&P 500 stocks, giving the
index more of a small-to-medium-capitalization flavor. As of 6/30/97, its
capitalization was about 59% NYSE, 3% AMEX, and 38% OTC.
Q: WHAT DOES THE MSCI - EAFE INDEX REPRESENT?
A: EAFE stands for Morgan Stanley Capital International "Europe,
Australasia, Far-East" Index - often called the EAFE index. The EAFE is a
capitalization-weighted index composed of over 1000 foreign equity
securities. It is designed to be representative of developed countries only
and does not include most emerging market stocks. Currently, it includes
stocks of companies located in the following regions and countries:
Europe--Austria, Belgium, Denmark, Finland, France, Germany, Ireland,
Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United
Kingdom; Australasia--Australia and New Zealand; Far-East--Hong Kong,
Japan, Malaysia, and Singapore.
Q: HOW MUCH OF THE MARKET CAPITALIZATION OF EAFE DOES JAPAN REPRESENT?
A: Japan currently accounts for approximately 30% of the EAFE but has
represented over 60% in the past.
Q: WHAT IS THE EXPENSE STRUCTURE OF FIDELITY'S INDEX FUNDS?
A: With the expense ratio of Spartan U.S. Equity Index Fund capped at 19
basis points through 12/31/99, Fidelity offers an S&P 500 index fund with
one of the lowest expense caps on the market. The fund's present
contractual expense ratio is 28 basis points; however, a proposal to lower
the expense ratio to 24 basis points will be voted on by the fund's
shareholders at a special shareholder meeting on November 19, 1996. The
new index FUNDS will also have highly competitive expense ratios as shown
in the table below.
Q: SOME FUND FAMILIES CHARGE A PURCHASE OR TRANSACTION FEE ON THEIR INDEX
FUNDS. WILL FIDELITY IMPOSE SUCH FEES AS WELL?
A: PURCHASE FEES (OFTEN CALLED TRANSACTION FEES) WILL NOt BE ASSESSED ON
INVESTMENTS IN FIDELITY'S INDEX FUNDS THAT SEEK TO TRACK THE S&P 500 SUCH
AS THE SPARTAN U.S. EQUITY INDEX FUND OR THE SPARTAN MARKET INDEX FUND.
THESE FEES WILL ONLY BE ASSESSED ON INVESTMENTS IN THE THREE NEW SPARTAN
EQUITY INDEX FUNDS THAT ATTEMPT TO TRACK WILSHIRE 4500, WILSHIRE 5000, AND
EAFE INDEXES . Investors in these funds will benefit from the purchase
fees that each fund receives from ALL SHAREHOLDERS ON ALL PURCHASES OF
SHARES IN EACH FUND. These fees, which are part of the fund's own assets,
help the fund in its attempt to match the benchmark's returns by
offsetting some of the costs of trading. Trading increases brokerage,
transaction and other operating expenses that the benchmark index does not
incur. Such expenses reduce a fund's ability to track the benchmark
index's performance. Purchase fees serve investors by helping the fund to
defray these additional costs thereby improving the fund's ability to
track the benchmark's returns. Such fees also reduce the appeal of a
fund to short term trading by investors or groups of investors that might
engage in market timing or other volatile trading strategies. These fees
are shown in the table below.
Q: ARE PURCHASE FEES THE SAME AS LOADS?
A: No because they are paid directly to the fund and become part of the
fund's own assets. Neither Fidelity nor BT will receive any part of the
purchase fees. Loads, on the other hand, would be paid to the distributor
of a mutual fund in connection with the sale of the fund. The Spartan
index funds do not have loads.
Q: HOW WILL PURCHASE FEES AFFECT THE AMOUNT INVESTED?
A: The purchase fee will be incorporated into the offering price resulting
in an adjusted purchase price. The full amount of any investment will be
paid to the fund to purchase shares; fewer shares will be purchased than if
there were no purchase fee. The purchase fee is paid to the fund so in a
sense, the investor is paying himself and others in the fund to defray some
of the costs incurred when he invests.
Q: WHAT PRICE WILL BE QUOTED IN THE NEWSPAPERS AND OTHER DOCUMENTS?
A: Investors will see their fund's NAV or net asset value quoted in the
newspapers and data bases. This is the last closing price for the sale of
shares in the fund.
Q: DO OTHER FUND FAMILIES CHARGE PURCHASE FEES ON THEIR INDEX FUNDS?
A: Yes. Some of the largest managers of index mutual funds do. They may be
called "transaction fees" or other terms.
Q: WHY DO SOME INDEX FUNDS USE THEM?
A: For index funds to meet their objective of providing performance
that is close to a benchmark's, they need to be able to cover some of the
costs not incurred by the benchmark such as transaction, brokerage
commissions and other related expenses
Q: WHY DOESN'T THE SPARTAN U.S. EQUITY INDEX FUND CHARGE A PURCHASE FEE?
DOESN'T IT HAVE TRADING AND OTHER EXPENSES LIKE THE NEW INDEX FUNDS?
A: Yes, it does have these costs. But the depth of the market represented
by the S&P 500 and the relatively lower trading costs, commissions or
spreads of the stocks in the benchmark makes it easier for the fund to
absorb expenses without as great a potential impact on performance.
Investments in some stocks can involve higher trading costs. Funds that
track indexes comprising such securities may use purchase fees to offset
these expenses and to help keep performance in line. In addition, the
size of the Spartan U.S. Equity Index Fund at over $8.5 billion in assets
as of 8/31/97, also helps to offset these costs.
Q: I UNDERSTAND THAT FIDELITY HAS SELECTED BANKERS TRUST COMPANY (BT) TO
BE THE SUB-ADVISER AND TO PROVIDE DAY-TO-DAY INVESTMENT MANAGEMENT FOR ITS
SPARTAN EQUITY INDEX FUNDS. WHAT DOES THIS MEAN FOR INVESTORS AND WHY ISN'T
FIDELITY CONTINUING TO MANAGE THESE FUNDS IN-HOUSE?
A: Fidelity determined that a cost-efficient way to provide competitive
equity index mutual fund products going forward was to utilize the
services of Bankers Trust, a firm with a large presence in the passive and
quantitative asset management field. Having over $120 billion in assets
under management in these types of strategies as of 6/30/97 has given BT
the opportunity to achieve significant cost advantages. BT has put in
place the experienced staff, systems, trading capabilities and additional
organizational infrastructure needed for index fund management on a large
scale. This new arrangement benefits investors by combining Fidelity's
investment oversight and mutual fund management with the cost efficiencies
of one of the largest and most experienced index fund portfolio
managers.
Q: WILL THE EXISTING EQUITY FUNDS ALSO BE MANAGED BY BT?
A: Fidelity will seek the approval of shareholders of record as of 9/22/97,
of a sub-advisory contract with BT for the Spartan U.S. Equity Index Fund
in the proxy materials that will be sent in connection with the shareholder
meeting scheduled for 11/19/97. Shareholders of the Spartan Market Index
Fund (primarily retail) and the Fidelity VIP II Index 500 Fund (marketed by
companies offering variable annuities) will also be asked approve the
change in their respective funds.
Q: CAN YOU TELL US MORE ABOUT BT'S EXPERIENCE IN INDEX FUND MANAGEMENT?
A: Bankers Trust has managed index products for 20 years. With more than
$120 billion in quantitative and indexed investment strategies as of
6/30/97- including domestic and global index and enhanced index funds, the
firm ranks as the third largest investment manager of index assets. Some
$50 billion was in S&P 500 indexed funds. BT managed $250 billion overall
as of 6/30/97.
Q: HOW WILL THE FUNDS BE MANAGED?
A: Bankers Trust may use various methods to manage the index funds
including statistical sampling techniques which seek to replicate the index
returns while holding a smaller number of securities than the index
contains. The fund may hold many types of and employ different investment
strategies as indicated in its prospectus.
Q: MANY INDEX FUNDS TAKE ADVANTAGE OF SECURITIES LENDING OPPORTUNITIES
TO EARN ADDITIONAL INCOME TO DEFRAY FUND EXPENSES AND HELP PERFORMANCE
TRACK THEIR BENCHMARK. WILL THE FUNDS PARTICIPATE IN SECURITIES LENDING?
A: Yes, the funds expect to participate in securities lending activities
which can provide income to the funds.
Q: WHAT WILL FIDELITY'S ROLE BE GOING FORWARD IN INDEX FUNDS?
A: Fidelity will continue to manage the commingled S&P 500 index pooled
fund and the Fidelity U.S. Bond Index Fund in-house. In its role as
manager, Fidelity will be responsible for overseeing BT's performance and
will retain its other management responsibilities, subject to the oversight
of the Board of Trustees. However, BT will be responsible for day-to-day
fund management including security selection and trading. BT will also
serve as the custodian for the funds.
Q: DOES FIDELITY PLAN ADDITIONAL SUB-ADVISORY RELATIONSHIPS IN THE FUTURE?
A: No. The use of the sub-adviser for the equity mutual funds enables
Fidelity to meet the needs of retirement plans, plan participants and
individual investors for competitive index funds. It also enables us to
focus our resources on active management strategies. Fidelity is the
largest mutual fund manager with over $ 538 billion in assets under
management as of 7/31/97.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Benchmark Expense Cap Purchase Fees
SPARTAN TOTAL MARKET INDEX FUND Wilshire 5000 25 bp through 12/31/99 50 bp (0.50%)
SPARTAN EXTENDED MARKET INDEX FUND Wilshire 4500 25 bp through 12/31/99 75 bp (0.75%)
SPARTAN INTERNATIONAL INDEX FUND MSCI-EAFE 35 bp through 12/31/99 100 bp (1.00%)
</TABLE>
*SECURITIES LENDING MAY RESULT IN ADDITIONAL EXPENSES NOT SUBJECT TO THE
EXPENSE CAPS IN THE ESTIMATED AMOUNTS OF:
0.2 BP FOR THE SPARTAN U.S. EQUITY INDEX FUND, 0.8 BP FOR THE SPARTAN
TOTAL MARKET INDEX FUND; 0.8 BP FOR THE SPARTAN EXTENDED MARKET INDEX FUND
AND 6.0 BP FOR THE SPARTAN INTERNATIONAL INDEX FUND.
NOTE: THE SPARTAN U.S. EQUITY INDEX FUND AND THE SPARTAN MARKET INDEX
FUND DO NOT CHARGE PURCHASE FEES. THE SPARTAN MARKET INDEX FUND CHARGES
A 0.50% REDEMPTION FEE FOR SHARES HELD LESS THAN 90 DAYS.
THE MSCI - EAFE(Registered trademark) INDEX IS A REGISTERED SERVICE MARK
OF MORGAN STANLEY AND HAS BEEN LICENSED FOR USE BY FMR CORP. THE FUND IS
NEITHER SPONSORED BY NOR AFFILIATED WITH MORGAN STANLEY.
FOR PLAN SPONSORS ONLY
Fidelity Investments Institutional Services Company, Inc. 82 Devonshire
Street Boston, MA 02109
6I-38072.001
